Perth's Vacancy Rate Rises to 2%

In January 2025, Perth’s rental vacancy rate increased to 2%, the highest level since June 2020. This slight rise from 1.9% in December 2024 indicates a shift in the market, signalling a slight easing in the pressure on tenants that has characterised the city's rental market over the past few years. While the market remains competitive, the increase in vacancy rates offers renters more options and provides some potential relief. This change has been driven by a combination of factors, including evolving demand patterns and an increase in rental supply.

Shifts in Demand
A key factor contributing to the rise in vacancy rates is the change in tenant demand. Over recent months, there has been a trend of larger tenant households, with some individuals choosing to stay with family or house-share, thus reducing the number of people seeking rental properties. Additionally, the influx of first-home buyers entering the market is playing a significant role. As more renters transition into homeownership, they vacate rental properties, which adds to the supply of available rentals. This trend has been observed across Perth, with new home buyers freeing up properties that were previously occupied by tenants. According to industry experts, this shift is expected to continue as more first-home buyers secure properties. These dynamics have collectively reduced the overall demand for rental properties.

Increase in Rental Supply
On the supply side, the rise in vacancy rates is also linked to an increase in the availability of rental properties. The completion of newly built homes — particularly investor-owned properties — has added more rental options to the market. As tenants move into these newly completed homes, previously occupied rental properties are vacated, further contributing to the increase in supply. This trend is especially evident in areas where new developments are ongoing, with some outer suburbs seeing longer vacancy periods as tenants transition into new properties. However, it’s important to note that inner-city suburbs continue to experience strong demand, keeping their vacancy rates relatively low. These areas remain competitive due to the ongoing demand for properties close to the city centre.

Market Trends and Future Outlook
According to REIWA CEO Cath Hart, a balanced rental market typically has a vacancy rate between 2.5% and 3.5%. As Perth's vacancy rate rises to 2%, it is moving closer to this equilibrium point. If current trends continue, Perth could reach this balance by mid-2025, which could offer more options for tenants and potentially stabilise rental prices. The overall rental market remains tight, particularly in high-demand areas, but the increasing availability of rental properties in other regions may provide more breathing room for renters.

It’s important to remember that Perth’s market remains highly dynamic, and different suburbs are experiencing varying levels of competition. While the increased vacancy rate offers hope for more availability, rents are not likely to drop significantly in the short term. Tenants may find more opportunities to negotiate, but overall, rental prices will likely remain relatively high, particularly in sought-after areas. Landlords, on the other hand, may need to adjust their pricing strategies in response to the changing market dynamics and the longer vacancy periods in some areas.

While the recent rise in Perth’s vacancy rate provides some relief for renters, the market remains competitive, especially in inner-city suburbs. The balance between supply and demand is shifting, and if the trend continues, Perth may reach a more stable and balanced rental market by mid-2025. Renters may find more opportunities in the coming months, but high demand in popular suburbs means that it will still be a competitive market for many. For landlords, it’s crucial to stay informed about these changes and adjust rental pricing strategies accordingly.

If you'd like to talk about how this will affect your property plans, don't hesitate to contact the team at Bellcourt on 08 6141 7848