Perth renters hit ‘affordability ceiling’ as prices hit record highs
Perth tenants now paying record prices for rents this quarter; The average price of a house in Perth has reached $750 to $50 more than the same period last year, making the market the third most expensive home in the country.
WA residents now pay $150 more a week than those looking to rent in Melbourne, with house prices rising to an average price of $700 a week.
However, Domain’s latest Rental Report It revealed on Thursday that despite higher prices in Western Australia, the market was growing significantly slower than in other states.
Perth rents rose 0.4 per cent in the June quarter; This equates to $3 a week and was the lowest increase of any Australian state. Sydney house rents rose 6.3 per cent ($50) to $850 a week, followed by Darwin, which rose 5.6 per cent ($40) to $760 a week.
Melbourne is currently the cheapest capital city to rent a typical house; During the same period, the average weekly price of $600 increased by 0.8 percent.
The increases follow the federal budget’s negative guidance and capital gains tax credit reforms aimed at improving young people’s chances of buying a home. Treasury modeling predicted a $2-a-week increase in rents.
The budget failed to provide short-term relief for renters, with no new increase in Commonwealth Rental Benefit and support for 80,000 new rental homes over the next decade. Investors are set to pay more tax on capital gains when selling, despite the budget grandfathering in negative regulatory provisions for existing homeowners.
A spokesman for federal housing minister Clare O’Neil said the government knew tenants were really struggling in a very tight rental market at the moment.
“That’s why we’re making renting easier, fairer and more affordable, with longer leases, stronger tenant protections and more help paying rent: increasing Commonwealth Rental Benefit by more than 50 per cent, delivering the first consecutive increases in 30 years,” the spokesperson said.
“Our policies increase supply overall and will put downward pressure on rents over time, but more importantly, we want more renters to become homeowners, and our tax changes will help 75,000 renters do that.”
The field’s chief housing economist, Dr. Nicola Powell attributed the slower rise in rental prices across Perth to tenants no longer being able to afford higher costs.
“Perth’s rental market is starting to show different rental conditions and what’s very interesting is that we’re seeing rent growth accelerating again on a national basis, but that’s not what we’re seeing in Perth,” Powell said.
“Perth is actually bucking this national trend and rents are still rising, but rents have only risen marginally in the last quarter.
“Rents are still at record highs, but the rate of increase is now starting to slow. To contextualise this, for homes this was the weakest June quarter we’ve seen in six years.”
“I think this probably indicates that renters have reached their affordability ceiling.”
Vacancy rates remained unchanged last year, but across Perth it was still a “landlord market”, Powell said.
In Perth, house prices have increased by 67 percent in the last five years, while housing prices have increased by 77 percent.
Gerard Burg, Head of Research at Cotality Australia, said the company’s data Rental Review, The report, also published on Thursday, shows that the June quarter signaled a shift in real estate dynamics, with house rents outpacing unit growth.
Median home rents rose 1.7 percent nationally in the quarter, compared with a 1.2 percent increase for units.
“This marks a significant slowdown for the housing sector, which outpaced housing with a 2.5 percent increase in the March quarter,” Burg said.
“Over the long term, unit rents have grown faster than houses, rising 46.3 per cent in the last five years compared to 38.5 per cent for residential properties. This has largely been driven by the post-pandemic recovery, particularly in Sydney and Melbourne.”
Of the Perth suburbs that saw the highest increases in house rental prices last year, the western and northern regions dominated this area.
Last year, home prices increased by 25 percent to an average of $1,250 in Floreat, followed by Sorrento, which increased by 22.2 percent to an average home price of $1,100, and Doubleview, which increased by 18.8 percent to an average home price of $950.
Iluka, 30km northwest of Perth, was among the top 10 suburbs that saw price increases last year.
House prices in the coastal suburb have risen by 16.3 per cent to an average of $1250, and local real estate agent Todd Utley said it was a “long-awaited” development.
“ [prices have] “They were probably sitting a little lower than they should have been initially,” he said.
“Rents for good-quality single floors reach $1,500 per week… and if you have a stylish double floor, you will be looking at a rent of $2,000 to $2,300 per week.”
Utley added that the homes were mostly boarded up by new immigrants to WA.
“A lot of people migrating to Western Australia want to base themselves in the area and buy in the area, rent in the area first,” he said.
“People from the UK and South Africa always have a strong network of family or friends in the area, so they come and research and rent there first, often for 12 months, before buying.”
Utley said what attracts tenants to the area is the size and location of the properties.
Suburbs that top the list of most expensive houses to rent include Swanbourne with an average price of $1650 a week, Dalkeith at $1600 and City Beach at $1400.
The highest suburban rental rate in all of WA was in the Pilbara. The average rental price for a house in Baynton (5 kilometers west of Karratha) will cost tenants $1800.
Shelter WA CEO Kath Snell says rent increases over the past five years have crippled Western Australians.
“Losing their home is the last thing people will allow, which means many Western Australians are sacrificing other basic needs to pay the rent,” he said.
“They’re going hungry, they’re cutting back on medication, and they’re living with fear and anxiety about how much the next rent increase will be.”
Prices may have only increased by $3 last quarter, he said, but people may not realize how much that amounts to over five years.
“All rent increases add up. West Australian tenants are paying $20,000 more per year in rent compared to 2021,” he said.
“Before the pandemic, Perth was seen as a safe haven with more affordable places to live in the nation’s capital, no longer so. We are now one of the most affordable.
“Tenants live in terrible properties that are unsafe, uncomfortable and make them sick because it is almost impossible to find somewhere else that is affordable.”
