Western Australia's rental vacancy rate has dropped to its lowest level in more than a decade, as experts warn of more pain ahead for those struggling to get a roof over their heads.
CoreLogic data shows the vacancy rate for houses and units in the greater Perth region has dipped to 0.6 per cent and 1 per cent, respectively, as the construction sector battles to keep up with demand from interstate and overseas migrants who have flocked to Western Australia over the past two years.
It is the lowest level recorded by the data firm in its current "series", which stretches back to 2009, with the crisis set to deepen as more workers head west to plug the skills shortage.
Those who do manage to find a rental are having to fork out more, with data released on Thursday showing the price of rents in Perth rose another 0.9 per cent in August, taking the annual rise to 8.5 per cent.
Rental crisis splitting up families
Shannon Hubble has lost count of the number of properties she has viewed over the past nine months in an effort to find a rental for her family.
Her family has been split up as a result, with Ms Hubble and her two young daughters living with her mum, while her partner and their pets bunk at his parents' house.
"It's just so hard, there are no other words for it," Ms Hubble said.
"I went to a viewing in Middle Swan the other day and there were 50 people there with cars parked all down the road, it's just terrible.
"I have applied for houses in Mandurah and even Geraldton, Jurien Bay and even done virtual walk-throughs down in Bunbury and I am just getting to that point where I am thinking of giving up, but I want what is best for our girls and I want to live together as a family.
"I have a full rental history and it's perfect but agents are saying people don't want pets or young children."
Influx of migrants adds to shortage
CoreLogic's Eliza Owen said a surge in interstate migration, coupled with the recent return of overseas migrants, had put a lot of pressure on the rental market.
Western Australia had its largest ever interstate migration inflow in the final quarter of 2021, with more than 13,000 people moving west following extended lockdowns in New South Wales and Victoria.
"You had a fairly long stretch where people were leaving Western Australia for other states and territories and that turned around from late 2020," Ms Owen said.
"Coupled with that, we saw share houses break up over COVID with a lot of people moving into their own space, so that trend really absorbed a lot of extra rental properties as well."
A decline in house prices before the recent upswing also weakened investor interest in Perth, which affected supply.
Rental crunch to worsen
Real Estate Institute of WA (REIWA) president Damian Collins said there was a "severe" shortage of housing in WA, with just 1905 rental properties advertised — the lowest number in more than a decade.
The last time the weekly active listings fell below 2,000 was in November, 2010.
"It has got worse and will likely continue to get worse because most of the people coming into WA through the migration programs will rent in the first instance," he said.
"The real problem is the building industry just doesn't have the capability to build the houses as quickly as we need them, which has been driven over five or six years by a very deep downturn in the housing construction market."
Mr Collins said there were also many families stuck in rentals due to big delays in construction projects, which had been exacerbated by building grants that were aimed at keeping the industry alive during the pandemic.
"That's a real logjam so we might see a slight improvement there when some of that housing gets finished over the next six to nine months," he said.
"But at the same time, if we get another 30,000 migrants coming through over the next year, most of them are going to want to rent first.
"So for every person getting out into the new homes built, we're likely to see at least another one to two people coming in who want to rent."
Shelter WA CEO Michelle Mackenzie said there was an urgent need to "have all options on the table when it comes to unlocking more affordable rental supply".
"We're incredibly supportive of the state government's commitment to increasing social housing and are confident that partnering with the community housing sector will help accelerate the delivery of much-needed homes," she said.
"We also strongly support measures to stabilise rent increases in the long-awaited reforms to WA's rental laws, which would provide so much comfort to WA's 700,000 renters and mean less people would be forced out of their rental and into homelessness by skyrocketing rents."
What will happen to Perth house prices?
Western Australia has fared better than most other states and territories, where rising interest rates have caused house prices to slump.
CoreLogic data shows while house prices dropped 5.9 per cent in Sydney and 3.8 per cent in Melbourne in the three months to August, they rose by 0.4 per cent in Perth.
Mr Collins said WA's strong economy, shortage of housing, higher incomes and the fact that Perth has the lowest house prices of all the capital cities will continue to cushion the blow from interest rate rises.
"The house prices are lower so the mortgage is lower, and the average income in WA is higher than all capital cities except Canberra," Mr Collins said.
Mr Collins anticipated demand would remain strong with just 8,000 properties advertised for sale, which had only happened twice in a decade.
"Half the houses are selling in two-and-a-half weeks, so that's certainly not reflective of a buyer's market; it's still very much a seller's market out there."
Mr Collins expects the Perth housing market will experience "moderate growth" in 2023.
"Obviously interest rates will have an impact but we pretty much know where they're likely to go and they'll probably rise another 1 per cent," he said.
"The big X-factor will be population growth; that will be the real issue as the CCI tell us there's 60,000 jobs or thereabouts in WA," he said.
"If we picked up another 30,000 to 40,000 migrants out of that national total of nearly 195,000 they're targeting, that would certainly put some significant upward pressure on the housing market."
WA 'not immune' to price falls
However, CoreLogic's Eliza Owen said house prices in Perth would likely dip further in the coming months and in 2023, after dropping slightly by 0.2 per cent in the month of August.
"Even though Perth has been relatively resilient in recent months, I don't think it's immune to property price falls amid the rate rises because of how aggressive those rate rises have been," Ms Owen said.
"We did see a slight decline in Perth dwelling values in August and that's something that might continue to accelerate over the coming months as rates continue to rise."
However, she anticipated the decline to be less severe than cities on the east coast, with price drops in the single digits or 10 per cent at most.
She expects the market to start picking back up towards the end of 2023 and into 2024 as the cash rate stabilises.
Mining boom defines 30 years of price rises
Those struggling to break into the market may take solace in data showing the rate of house price growth has slowed over the last decade.
The mining boom caused house values to spike by 104 per cent between 2002 and 2012, while they jumped 14 per cent between 2012 and 2022.
House prices jumped by 322.4 per cent and unit prices increased by 194.6 per cent over three decades.
"The big winning decade for Perth property was definitely that 2002-2012 period, which seemed like a once-in-a-lifetime transformation of the state, with dwelling values across Perth more than doubling between January 2000 and 2007," Ms Owen said.
"The Perth market will remain tied to what happens in the commodity space, particularly with how much employment it is generating across the state.
"It's almost reminiscent of the enormous mining boom period, but it's on a much smaller scale this time around."
