Frustrated with investors flocking to the WA capital, price-sensitive tenants are breaking leases early.
The decreasing number of jobs available in the mining sector, as well as an oversupply of stock from developers, have also contributed to the rising vacancy rate in Australia’s fastest growing capital.
According to the latest report from the Real Estate Institute of Western Australia (REIWA), in the three months to July the vacancy rate had grown to 3.6 per cent, the highest level since 2010.
Jarrad Mahon from Investors Edge Real Estate told Smart Property Investment’s sister publication Residential Property Manager that a softening in the Perth market had led to properties taking longer to let and to more tenants breaking their lease.
“There were a number of combined factors causing the softening,” he said.
“Rental returns have become really attractive. A lot of investors were buying into the market, which was bringing in more supply and more rental properties, but we had the number of tenants decreasing because jobs were slowing down in our mining sector.
“The other major reason that had reduced tenant numbers was that a lot of tenants were going and buying their first home to rent themselves.”
While it was normal for one or two tenants to break their lease in one month, Mr Mahon said, this had increased to eight or nine tenants over the last month.
“It’s quite a shock when you go from setting record rent prices to telling [investors] it’s not where it once was,” he said.