Perth tenants continue to face record-high house rents with prices remaining at a six-year peak but new data shows the rapid rate of price growth has begun to stabilise.
While Perth house rents grew 13.9 per cent during the year to September to $450 a week – the highest annual change recorded since 2015 – prices remained unchanged during the quarter, according to the Domain Rent Report, released on Thursday.
Weekly unit rents remained unchanged during the September quarter at $380 and were $70 a week less than 2013 levels.
Domain chief of research and economics Nicola Powell said the stabilisation in rents was a marked change from the past year, which saw the biggest upward movement in asking rents in more than a decade.
“I think what the story really is for Perth is these steady asking rents are a real shift from the rapid rent growth that we had seen because there had been four consecutive quarters of strong rates of growth in asking rents,” she said.
“So, I think what it suggests is that maybe the peak rate of rent growth has passed because we have seen such a significant change in a very short rate of time.”
Dr Powell said Perth was now the third most affordable capital city in which to rent a house or unit.
“But we have to remember that mid-last year Perth had the most affordable rents, so it has been such a change,” she said.
In what may come as a surprise to some, the report revealed Melbourne is now the cheapest capital city in which to rent in Australia. The median asking rent for a house is $430 a week – $20 cheaper than Perth and $10 cheaper than Adelaide.
The Australian Prudential Regulation Authority’s (APRA) changes to reduce the maximum amount home buyers can borrow – which means banks will be required to assess whether potential borrowers could meet their repayments if interest rates rose at least 3 percentage points above their mortgage rate – would not affect the Perth first-home buyer market, Mr Cox believed.
“We don’t think that’s going to make a lot of difference in our marketplace in Western Australia. The first-home buyer activity is capped at $500,000 anyway with the government grants,” he said.
“A lot of the first-home buyer market is around that $400,000 to $450,000 where there is very strong demand. The three-point interest rate buffer that APRA is talking about would still only put a purchase up to the same price as a rental in most of these areas.
“You might have to pay $450 a week to rent, that three-point buffer still only puts you up to $450 a week in mortgage payments.”
Travis Coleman, head of WA for ACTON Real Estate, said among the biggest factors affecting the tight rental market was the influx of people returning to Perth to live.
“A lot of investors, previous investors, have sold their property and they’re selling them to owner-occupiers and not competing investors so that’s contributing to a lack of investment property in the market,” he said.
“It’s a hard job for a property manager at the moment because you are getting a huge number of applications for a property but you can literally rent it to only one person.
“So, we are finding a lot of people are contacting us and asking to be put on advanced lists of potential properties.”
Dr Powell said securing a lease was tough for tenants as they were operating in a landlords’ market.
“The ending of the rental moratorium will have resulted in a shift in tenancies, as renters unable to afford market-rate rent move to find cheaper alternatives or house shares,” she said.
“This may have reduced rental demand, along with more tenants becoming home owners.
“The additional rental demand from internal migration reached its highest point in eight years. While there remains a positive inward flow into Perth, it looks to be easing.
Dr Powell said this has been met with higher investment activity. Roughly a fifth of the value of home loans is for investors, providing the highest share of mortgages since 2018.
“If investment activity continues to bring new rental stock rather than a change in landlord, tenants should be provided a little relief,” she said.
– Lisa Calautti for Domain.com.au