The impact of low vacancy rates on tenants and landlords in Perth

low vacancy rates

The impact of low vacancy rates on tenants and landlords in Perth

In recent times, the landscape of the rental market in Perth has been significantly shaped by dwindling vacancy rates, presenting both challenges and opportunities for tenants and landlords alike. According to PropTrack's Rental Vacancy Rates for September, the national vacancy rate hit a record low, with projections indicating a further decrease in the foreseeable future. This downward trend is echoed in SQM Research's findings, which reported a 0.1 percent decrease in the national vacancy rate to 1.2 percent in August.

The ramifications of these low vacancy rates are palpable, with the combined capital city vacancy rate plummeting by 57 percent since the onset of the pandemic in March 2020. This scarcity of available rental properties, coupled with a nationwide figure of only 35,425 properties on the market, underscores the pressing need for additional rental stock. According to Domain, Australia requires between 40,000 to 70,000 additional rentals to rebalance the market—an indication of the severity of the housing shortage.

Impact on Tenants:

For tenants in Perth, navigating the rental market amidst low vacancy rates poses formidable challenges. The limited availability of properties translates to heightened competition, driving up rents and exerting pressure on household budgets. Prospective tenants are confronted with a narrower pool of options, often facing the prospect of bidding wars and the need to compromise on location or amenities. Furthermore, securing a rental property becomes increasingly arduous, with stringent application processes and the need for swift decision-making.

Impact on Landlords:

On the flip side, landlords in Perth stand to benefit from low vacancy rates, as reduced supply translates to increased demand for available properties. This translates to higher rental yields and a greater ability to dictate rental terms. Landlords may find themselves in a favorable position to negotiate higher rents, implement rent increases, or attract long-term tenants willing to secure leases at premium rates. However, it is crucial for landlords to strike a balance between maximizing returns and maintaining tenant satisfaction to ensure sustainable rental income streams.

In conclusion, the impact of low vacancy rates on tenants and landlords in Perth is multifaceted, with implications for affordability, housing accessibility, and market dynamics. While tenants grapple with heightened competition and rising rents, landlords enjoy increased rental yields and bargaining power. As stakeholders navigate these challenges and opportunities, policymakers, industry stakeholders, and the community at large must collaborate to address housing shortages and foster a balanced rental market that serves the interests of all parties involved.

Contact us for any type of real estate information.