Western Australia's Rental Market: A Fragile Recovery Under Threat
After enduring several years of crisis conditions, Western Australia's rental market has shown tentative signs of improvement over the past eighteen months. While active lease listings remain stubbornly low, they have demonstrated relative stability month to month. Rent prices continue to sit at record highs, yet the rate of growth has slowed considerably compared to the previous two years. Notably, the vacancy rate remained above two percent throughout all of 2025, a significant increase from the record low of 0.4 percent recorded in March 2024.
This data points toward a market in cautious recovery, but industry experts warn against premature optimism. The delicate balance could be easily disrupted by policy changes currently under discussion.
The Looming Threat: Calls to Abolish No Grounds Terminations
Amid this fragile stability, strong calls have re-emerged to remove the provision for no grounds terminations in rental agreements. Proponents argue this change would enhance security and conditions for tenants. However, the Real Estate Institute of Western Australia (REIWA) urges extreme caution, pointing to concerning precedents set in other jurisdictions.
"We cannot afford to be complacent about actions which might affect the delicate state of the rental market," warns REIWA President Suzanne Brown. The institute highlights that while many eastern states have banned no grounds terminations, the experience in New Zealand offers a stark warning. A similar ban implemented there in 2020 was repealed in 2025 after being deemed counterproductive.
Lessons from Abroad: When Policy Backfires
New Zealand's Housing Minister, Chris Bishop, attributed severe market deterioration to the previous government's approach, which he described as a "war on landlords." The consequences were stark:
- An exodus of landlords from the rental market.
- Weekly rents increasing by approximately $170 since 2017.
- The social housing waitlist growing by around 20,000 families.
- Thousands of families forced into emergency housing motels.
Closer to home, Victoria's experience following the introduction of stricter tenancy laws is equally telling. Data from the Homes Victoria Rental Report indicates a 3.2 percent decline in rental properties between the September 2023 and June 2025 quarters.
Western Australia's Vulnerability and Investor Sentiment
Western Australia's market is particularly sensitive to investor behaviour. REIWA's modelling estimates that nearly 20,000 properties, representing 8.4 percent of rental stock, were removed from the market following the conclusion of COVID-19 rental moratoriums. This exodus directly contributed to plummeting vacancy rates and soaring rents.
Recent surveys underscore investor skittishness regarding legislative change. A 2025 REIWA Housing Issues survey revealed that:
- 74 percent of current investors stated changes to legislation would influence their decision to sell.
- 62 percent of potential investors said such changes would deter them from entering the residential property market.
"What if you're wrong? Is that a risk you're willing to take?" asks Brown, responding to assertions that removing no grounds terminations won't trigger sales. With population growth remaining high and both new and established housing markets constrained, demand for rentals continues unabated. Losing any portion of the existing rental stock could swiftly return Western Australia to the crisis conditions experienced just a few years ago.
The central question remains: in a market still finding its footing, can the state afford a policy gamble that might precipitate another investor exodus? The evidence from overseas and interstate suggests the stakes are perilously high.
