Perth Residential Market Insights – August 2020
Perth Rental Market
Rental squeeze pushing vacancy rates to 12-year low
The number of properties available for rent continued to drop across Perth’s property market in August, with only 3,206 properties available for lease in the week ending 30th August. This marks a decline of 51% compared to the level of stock available across the same period in 2019, and a drop of 10% compared to levels at the end of July 2020. Combined with sustained levels of tenant demand and limited oncoming supply due to subdued investor activity, these conditions have contributed to a marked lowering in Perth’s rental vacancy rate, which reached a 12 year-low across the month at just 1.6%.
Perth leading capital city markets for annual rental growth
Our property managers are seeing this rental tightening result in increasingly competitive tenant activity on-the-ground, which is in turn placing upwards pressure on rental prices for new tenancies – a trend which we expect to flow through to broader rental growth once WA’s emergency period is lifted. Perth posted the highest capital city annual rent increase of all Australian capital cities at 2.9% – a significant outperformance compared of the combined capital city average which remained unchanged (August, CoreLogic). Perth was also the only capital city market across Australia to record an increase in rental yields across the 12 months to June 2020, driven by a combination of the market’s affordability and improving rental conditions.
Perth Sales market
Buyer competition tightening as sales activity tracks higher
Sales activity continued to track higher across Perth throughout August, with the market recording its 12th consecutive week of over 700 transactions. While vacant land sales have returned to more sustainable levels following the initial surge of interest surrounding the government building grants, house sales have remained strong, driving a total of 4044 property transactions between 2nd and 30th August. This marks a 40% increase in total activity compared to the same period in 2019, with property sales averaging 863 per week in the three months to September 2020 compared to an average of 547 per week for the same 12 week period the year prior . This continued improvement has seen stock on market remain below 11,000 for 11 consecutive weeks (well below the accepted “balanced market” levels of 12,000 – 13,000). On the ground, our buyer’s agents continue to note strong attendance at home opens and higher competition from buyers when placing offers.
Perth the most affordable State, but some suburbs already growing
The latest Housing Affordability Report from the Real Estate Institute of Australia revealed that WA remains the most affordable state to buy, with only 24.0% of family income required to meet loan repayments, compared to 42.3% and 36.8% in New South Wales and Victoria. However, while overall prices have remained stable, tightening stock levels and growing competition from buyers has also translated into price growth within a number of suburbs, with REIWA reporting that 45% of suburbs experienced an increase in median sale price across August.