Perth's Rental Crisis: Housing Shortage and Surging Prices in 2023

It appears there is no end in sight for the rental crisis across the Perth Metropolitan region.

With a vacancy rate around 0.5%, there are around 1,500 properties available for rent.

This is a far cry from both what is considered the equilibrium (4,500 properties) and the peak of the oversupply in 2017 (11,000) .

Leasing timeframes are down from 70 days in 2017, to around 14days in 2023.

In case you were wondering, 0 days is an impossibility, as we must allow for checking tenants out and subsequent cleaning and/or property improvements and repairs.

With the number of sales listings sitting around 5,000, less than half of the of the equilibrium (11,000) there seems to be little to no relief or options for securing a property in either capacity.

Average days on market is reportedly around 10, which is significant drop from years gone by.

Rent prices have climbed nearly 20% in 2023 and sales prices are up around 9.5%.

With a sudden spike in interest rates in late 2022 and the first half of 2023, borrowing capacity had reduced significantly coupled with rising house prices.

It appears many households were in for a hiding to nothing.

With more stringent means-testing and less funds available to them for buying, tenants wanting to get out of the 'rent-trap' were condemned to remain on the carousel for another rotation.

Ironically, we are seeing tenants paying more in rent than the mortgage (of that property) would be.

It is alleged the shortfall of properties to satisfy the current demand is around 100,000.

At this stage, builders and developers are only able to produce around 15,000 per year.

This would suggest there is at least 6 more years of shortage which would indicate further price increases on both fronts.

With a trade skill shortage, material shortage and rising costs to build, builders folding or not taking further orders, this could create some serious headaches.

Additionally, a recent report suggested there was 200 people migrating to Western Australia per day.

This can only put further pressure on the housing market and will likely be a key driver of price surges.

Western Australia still has the second lowest median house price in Australia after Northern Territory.

We are seeing a number of properties being sold to interstate investors, taking advantage of the (comparatively) lower acquisition costs and serious rental yields.

We have worked with a number of investors this year to secure properties (as unofficial buyers agents) and have some mind-boggling results.

$500/wk rent returns on low-strata fee apartments purchased for $275K and $307k and $600/wk on a $435k house as examples.

If you want to learn more about the rental market or advice on expanding your portfolio, please feel free to contact our investment specialist Rob Woolmer on 0473 205 961 rob@contessi.com.au

Paulette Contessi 

Director/ Licensee

CONTESSI PROPERTIES