Perth inner-city living is becoming more affordable for renters but less lucrative for investors, with vacancy rates at a four-year high, rents falling and a flood of new developments coming on to the market.
But industry opinion is divided over whether conditions signal an apartment glut or merely a market returning to balance after several unsustainable years.
Figures from SQM Research in Sydney put Perth's inner-city rental vacancy rate at 5.6 per cent, almost twice that of a market in equilibrium.
That compares with the 4.1 per cent rate calculated by the Real Estate Institute of WA for the entire metropolitan area, though different methodologies make direct comparison difficult.
Many CBD apartment rents have been falling and anecdotally the days of 30 to 40 people turning up to a home open are over.
But developers say demand for buying off-the-plan - most developers need pre-sales of about 50 per cent before they can get finance - remains strong.
Mark Hay Realty Group principal Mark Hay said conditions reflected a market that had overshot and was correcting itself.
He said investors should be cautious because many new apartments had come on to the market and there was potential for "a bit of oversupply" in the rental market in the short term.
"I'm not saying there is a pending oversupply, what I'm saying is you've got to be cautious," he said.
SQM head of research Louis Christopher said he believed there was a glut in apartment properties in some Australian capital cities, including Perth.
"Not only do we have high vacancy rates in the CBD of Perth, it's also been rising upwards in the last year," he said. "Landlords have been slashing rents in the CBD just to try to find a tenant.
"It's a great time to live in the Perth CBD if you want to rent. It's not so good if you're a landlord."
REIWA deputy president Hayden Groves said the market for Perth apartments was bouncing back from tight conditions in 2012 when demand outstripped supply so severely rental vacancy rates fell to 1.7 per cent.
"Any property investor knows you've got to take the good with the bad and it's just a more challenging time," he said. "We're probably close to, if not at, the tipping point of the rental market. My view is we'll start to see demand for rentals (recover)."
Real Estate 88 selling agent Brendon Habak said he believed the market was already balanced.