Western Australia is in need of more property investors as it faces risks of a rental crisis, according to the Real Estate Institute of Western Australia (REIWA).

Rental listings in Perth remained on a downtrend in September, dropping by 8% to 2,926. This is the lowest level of listings since 2012.

Damian Collins, president of REIWA, said the state's "reasonable rental shortage" during the early months of the year has turned into a "severe" one.

"We are now on the brink of a rental crisis," he said. "With Perth’s vacancy rate sitting at 1.3%, it is no surprise that we are seeing listings for rent continue to lower. In addition, a number of our regional members are reporting vacancy rates close to zero, so the impact is being felt across the entire state."

The number of days before a property gets leased also dropped significantly, down to 19 days. This is the fastest days-on-market for rental properties since June 2013.

While median rents remained stable in the month at $360 per week, some suburbs are already experiencing increases, including Quinns Rock, North Perth, Dianella, and Como. Collins said this makes it crucial for the state government to encourage more investment in property to accommodate returning expats and existing tenants.

"There is the possibility we will run out of properties next year unless something is done to entice investors back and encourage first-home buying in established areas," he said.

Collins recently called out the state government's decision to extend the ban on rent increases and the moratorium on evictions, saying this will create problems not only for landlords but also for tenants. 

"If the current ban on increasing rents is lifted in March 2021, it will be reasonable to assume that landlords will have to significantly increase rents to match the market," he said. This will mean that tenants do not have the opportunity to have their rent increased, in small, manageable increments but will probably face a sharp price correction."