Friday, 8th of March 2024
The Top Performing Rental Suburbs Of 2023
If you’re looking to expand your property portfolio this year, or perhaps planning a revision of your current weekly rental rates, this article is definitely for you.
Whilst Perth property investors will use metrics such as vacancy rates, migration, forecasted interest rate changes and other economic factors to determine their rental returns, landlords should also be acutely aware of the rental growth and rental yield statistics in their property’s suburb. By understanding which suburbs are generating the highest yields, experiencing the most rental price growth or leasing the fastest, this can help inform future planning for any astute property investor.
We’ve saved you the time in pulling this data by compiling an overview of the highest-performing rental suburbs of 2023.
2023 Performance Review and Analysis
It was a year to remember for both property investors and tenants as we saw new records being set.
The rental market was surging with demand, with REIWA reporting the vacancy rate at 0.7% for more than 80% of the year. This coupled together with low supply saw rent prices reach new record heights at the end of 2023, where the median weekly rent for houses was $620, alongside a median weekly rent for units being $570.
Rental properties were leased swiftly throughout the year, with Perth’s median leasing time averaging around just two weeks, adding pressure to tenants scrambling to find a place to call home.
Given Perth continues to be one of the nation’s most affordable capital cities to buy and/or rent properties, we also saw growing interest from interstate investors looking to snap up bargains, thus increasing demand further. The market demand was further fuelled by strong migration growth over the year which placed upward pressure on property and rent prices.
These trends are tipped to continue throughout 2024, with property experts forecasting house prices to grow 10% throughout the year as reported here.
For a more detailed overview of the main rental headlines of 2023, or for some tips on staying ahead of the curve in 2024, we invite you to check out our article entitled Preparing Your Rental Property For 2024.
Unit Yields Lead The Way
While houses saw the most notable improvements in median sale price growth, it was in fact Perth units which led the way with rental yield.
The Southern suburb of Orelia was the leading suburb for unit rental yields, boasting a 9% yield in 2023 and a weekly median rent of $360 based on a median unit sale price of $208,000. Since units are generally a lot more affordable than houses, the market saw unit demand increase from buyers looking to enter the property ladder at an affordable price point as covered in this REIWA article.
Units are also selling faster which is further contributing to unit rental price growth, with Perth units recording a median of 13 days on market in January compared with 43 days 12 months ago.
“The Top 10 suburbs for units all recorded yields above 7.4 per cent, outshining the number one suburb for houses at 6.4 per cent. This is likely to be a reflection of the lower sale price growth of the unit market compared to houses in a rising rent environment.”
- REIWA CEO Cath Hart
Attractive Yields At The Market’s Lower End
As a result of the rising interest rates and reduced borrowing capacity, the market saw a notable spike in investor demand within Perth’s lower-priced suburbs. From this we saw extremely strong rental price growth leading to a rise in investor activity.
An example of this would be the Southern coastal suburb of Medina, which recorded the highest house rent yield of all Perth suburbs (6.4%) throughout 2023, with a median weekly rent averaging $440 per week based on a median house sale price of $360,000.
“Perth does offer affordable entry points and good opportunities for investors. The suburbs in the Top 10 list for houses have median sale prices below $500,000, while the suburbs in the Top 10 for units have median sale prices below $355,000.”
- REIWA CEO Cath Hart
Rental Growth Within Affluent Suburbs
At the upper echelon of Perth suburbs, some of most affluent areas enjoyed profound growth throughout 2023.
The coastal suburb of Swanbourne recorded an astonishing 57.5% median house rent increase throughout the year, with its median rent rising to $1,575 making it a clear standout suburb for house rental growth in 2023.
Meanwhile, the affluent suburb of Mosman Park saw the most notable rent price growth for units, seeing its median unit rent rise 35.7% to $475.
Perth’s Fastest Leasing Suburbs
Given the vacancy rate sat around 0.7% for most of 2023, it’s no surprise to hear that rental properties leased in record times over the year, spurred on by increasing competition from eager tenants moving fast to secure properties.
When it came to suburbs leasing times, the beachside community of Coogee took out the top spot for the fastest leasing suburb for houses, with vacancies leasing on average in just 10 days.
Further to this, the nearby suburb of Coolbellup ranked as the fastest leasing suburb for units with a median average of just 9 days.
Why NOT To Sell In 2024
Given we experienced a record-setting year of growth across the board in 2023 with a 10% price growth tipped for 2024, property investors would be wise to keep hold of their property for the year ahead to play the long game. As seen in this recent REIWA article, rents are already on the rise so far in 2024 and are tipped to remain on the rise.
Since the market saw the median house sale price reach a new high of $590,000, we saw a number of investors choosing to sell their assets in 2023. Not only did this reduce the number of available rental properties on the market, driving further pressure on vacancies, it meant those investors closed the door on future rental returns, growth and profitability in a high-demand market.
Housing supply is still the biggest challenge for the Perth property market, so any available rental properties will still be highly sought after within a market that is crying out for more availability.
Whilst the building industry is doing its best to address the supply issue with initiatives such as the DevelopmentWA Built To Rent Housing project and the Pier Street redevelopment in East Perth, the market is still well short of having enough properties for tenants, with recent reports even stating that building approvals are falling throughout the nation.
“The pressure on the rental market will only be eased by an increase in supply, which is unlikely. The building industry has completed an average of 14,000 new homes in the past three financial years and this is not forecast to rise dramatically in the coming year. While the State Government is implementing a series of measures to boost supply, it will take time to get more houses out of the ground.”
- REIWA CEO Cath Hart
Align Your Property With The Experts
If maximising your rental returns in the upcoming year is a priority, consider partnering with an experienced agency who can deliver exceptional returns within a buoyant market.
The award-winning team at Perth Property Management have been entrusted to manage a portfolio of Perth properties for our clients, helping to drive rental growth whilst ensuring our landlords are confident they are getting the most out of their asset.
We pride ourselves on a client-first approach that has garnered us numerous accolades across Western Australia and the nation. We invite you to reach out and discover how our 100% satisfaction guarantee can help you thrive in 2024.