Perth unit rents on the rise

The increasing demand for accommodation in Perth could see the median weekly asking rent for units breach the $300 mark later this year, and even surpass the median rent for houses, according to market analysts Australian Property Monitors.

In its latest quarterly rental report, APM reported Perth’s median weekly unit rents had hit $295 in the March quarter, an increase of 5.4 per cent on the December quarter and just $5 off the new median rent for houses of $300.

Sydney was the only city to achieve equal unit and house rents, helped by a unit rent price jump of 5.6 per cent over three months to $380/week. 

APM general manager, Michael McNamara, said there was a chance unit rents in Perth could overtake houses this year depending on the level of new apartment stock coming on stream, however the market was entering a wider stabilisation phase.

“Perth rents will strengthen this year as many would-be home owners continue to delay their decision to buy because of high repayments,” he said.

“But we’re already seeing an improvement in the gross rental yields as rents rise, so I think more investors will be attracted back into the market which will limit rental price growth to a modest improvement.”

Perth’s gross rental yields for units increased 11.66 per cent over the past 12 months to 4.22 per cent in March, while houses remained relatively steady, rising 0.2 per cent over 12 months to 3.27 per cent.

Mr McNamara said the company monitored both newspaper and electronic rental listings and had drawn its results for the March quarter from a sample comprising about 1,200 properties.

“Because we calculate the median the same way each quarter there is a consistency there. People are paying above and below the asking prices so I think the most important thing is to watch the percentage change.”

Meanwhile, the Real Estate Institute of Western Australia is predicting the median of both unit and house rents to lift by more than $20 over the September and December quarters to reach an aggregate of $300/week by Christmas.

The agency recently reported house rents had risen four per cent between the December 2006 and March 2007 quarters to $280/week, with units stabilising at $250/week across the period.

REIWA director policy and research, Stewart Darby, said Perth’s median house rent would only hit $300/week in September.

“At the beginning of April the government got rid of the letting fee. This will not have any impact at all during the June quarter but the shortfall could be passed on to tenants leading to reasonable rent increases from September.”

Mr Darby said it would be some time before rental yields reached 5 per cent, which last occurred in 2003.

REIWA based its median statistics on the leases negotiated by real estate agents, which in the March quarter produced a sample of 3,000 transactions.