Western Australia’s rental market is tightening further, with a 66% jump in rents over five years far outstripping wage growth of 18.5% and sharpening housing stress for tenants.
WA now leads the nation for rental increases, with tenants spending around a third of their pre-tax income on housing. Perth buyer’s agent Peter Gavalas (pictured) of Resolve Property Solutions said this is forcing renters to rethink where and how they live.
“When rents climb this fast relative to incomes, tenants become much more deliberate about where they live,” Gavalas said.
He noted that many renters are trading space for location efficiency.
“They're prioritising locations that reduce other costs, like suburbs with good public transport, walkable amenities, schools nearby,” Gavalas said. “That's driving strong, consistent demand for well-located units and townhouses, because those are the properties that make financial sense for someone on a tight budget.”
REIWA data show how competitive conditions have become: in March, properties were leased in a median of just 16 days, with vacancy rates low and new supply constrained. Rents rose 5.9% for houses and 6.1% for units over the past year, intensifying pressure on households already grappling with higher mortgage rates and living costs.
For brokers, that lack of stock is reinforced by recent rental snapshots, which put Perth’s vacancy rate at around 0.6% in early 2026 – well below the 2.5%–3.5% range usually seen as a balanced market. This highlights how little slack is left in WA’s rental system and why upward pressure on rents is likely to persist.
Gavalas cautioned against chasing headline rent growth alone, warning that rapid increases can hit an affordability ceiling and lead to vacancies and turnover. He argues that more resilient returns lie in areas where rent-to-income ratios remain manageable and tenant pools are broad and stable, reducing portfolio risks that can complicate serviceability and refinancing conversations.
There is little on the horizon to suggest conditions will ease quickly. Supply remains the central problem.
According to the Australian Bureau of Statistics, WA's population grew by 65,600 people in the 12 months to June 2025, yet the state approved just 23,052 new dwellings over the same period. Even accounting for the fact that not every new resident needs a separate home, the gap between demand and new supply is substantial, and construction timelines mean approved dwellings take months or years to reach the market.
“Until that changes, the gap between what landlords are charging and what tenants can comfortably pay is likely to persist,” Gavalas said.
The affordability squeeze is being compounded by higher borrowing costs, with the Reserve Bank lifting the cash rate to 4.1% in March. The central bank has signalled that restrictive settings may need to stay in place for longer.
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