December 2019 is continuing to show a decrease of the number of rental listings. The trend has been gradually decreasing slightly over the last three to four months, which demonstrates we are heading in the right direction for rental demand to increase and a stimulant for more investors to get into the market.
We have seen a sharp decline in rental vacancy rates from its peak in 2017 (7.6%) to January 2019 where we saw it at 2.5%. Over the last 6 months, vacancy rates increased slightly to 2.9% and has continued to stay around that level. According to property investment experts in the market, it is generally understood that the 3% mark is where supply equals demand and prices remain the same.
That has been reflected in Perth’s median rent which has remained unchanged at $350 for houses and $340 per week for units.
Perth is seeing a lot of project development activity and with population starting to kick up a bit, we expect to see new entrants creating more demand for first time rentals therefore we should expect to see prices increases on the rental side before we do on the house buying side.
As far as timing goes, Perth is very much sitting at the bottom of the market. Coupled with low interest rates, low median house prices, and a bump in population growth, now is a prime time to be taking advantage of the property market.
Perth Rental Market
Perth’s tightening rental market may be set to point to a broader housing market recovery primarily driven by a turnaround in population growth.
The latest stats from REIWA show the rental vacancy rate has remained at 2.5% off the back of the September Quarter. REIWA deputy president Lisa Joyce said the Perth market was considered to have reached equilibrium when the vacancy rate hit 3%.
At its current level of 2.5%, demand is slowly outstripping supply meaning rents are likely to start increasing over time. According to the latest REIWA stats, there is 16% less stock available compared to the same time last year which is putting more pressure on the rental market.
REIWA members reported 5,998 properties for rent at the week ending 15 December 2019 which is in line with the previous week. Leasing activity has remained steady for December so far, with REIWA members reporting 978 properties leased as at the week ending 15 December 2019.
While there were recorded increases in median rent in some suburbs, the overall median rental price for Perth in December 2019 remains at $350.
The top Perth rental suburbs for the week ending 15 December 2019 were East Perth, Scarborough, Perth and Baldivis. The Perth suburbs with the most available rental properties are East Perth, Perth, South Perth and Mandurah.
Perth Sales Market
Sales activity decreased 14% in Perth during the week ending 15 December which can be attributed to a 10% fall in house sales, 8% fall in unit sales and a 51% fall in vacant land sales over that week.
According to Investors Edge, our overall our selling market is becoming tighter and we’re now at around 14,000 properties for sale, roughly a 11% decrease on six months and a 10.8% decrease on the same time last year. This is a key indicator that we’re heading towards conditions where we can see demand exceeding supply.
According to ABC, house price gains have been seen in Perth’s inner and western suburbs which have produced the first overall price for Perth’s property market in 18 months.
During November, house prices rose from 0.4% in the Greater Perth region, with median values sitting at $470,000 for houses and 335,000 for units.
CoreLogic head of research Tim Lawless has said that “while price growth was the culmination of a gradual improvement in market conditions, there were “firm signs” the nascent recovery would become something more substantial”. This trend can be underpinned by two key economic drivers – jobs and population growth. Mr Lawless stated that we’re finally starting to see population growth back to the 10-year-average.
According to CoreLogic data, the recovery we are seeing is being driven by premium properties in Perth’s inner and coastal suburbs – from Mosman Park to Wembley Downs – and the northern suburbs of Mount Lawley and Mount Hawthorn. Mr Lawless said that typically during a market recovery, it is the top end of the marketplace that moves first where the inherent scarcity of supply generally drives demand.
Given that we are seeing good indicators from the blue-chip suburbs, it’s good signs that we may start to see a ripple effect out to the more affordable areas of the market.
Top selling suburbs this week North of the river: Scarborough, Claremont, Dianella, and Duncraig. Top selling suburbs this week South of the river: Victoria Park, Canning Vale, Willetton, Applecross
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