The Bankwest Curtin Economics Centre’s recent Building for the Future report laid bare the ongoing challenges faced by Western Australia’s private rental market.Rental vacancy rates have plummeted, and this has driven up rents to a level that creates genuine hardship for tenants.However, there are tangible and significant economic impacts alongside the adverse social effects from a shortage of rental properties amid ongoing affordability concerns.Housing strategy interfaces with so many other of the state’s key economic priorities, from industry diversification and regional economic development through to workforce and skills.The current lack of rental stock in WA presents an immediate risk to the state’s response to skills shortages and its return to population growth.The state has undergone a contraction in rental supply with around 19,000 landlords selling up in WA, which means vacancy rates will remain low.And the financial incentives introduced through the pandemic for new home purchases haven’t yet led to an increase in the supply of new homes.Data from the Australian Bureau of Statistics suggests that housing investors may be holding back.We’ve seen home loans to property investors down 15 per cent over the past year in WA and by a third in Australia.Rising interest rates, high costs of living and concerns about the global economy are making potential investors cautious.And arguments have been raised that some of the provisions in proposed tenancy law reform legislation are adding to these disincentives, particularly related to rent bidding, minimum standards for dwelling conditions, the right to keep pets, and most controversially, the removal of ‘no-grounds’ evictions of tenants.Regulatory measures should provide basic security of tenure and minimum housing conditions, while at the same time recognising that private rental supply relies heavily on decisions by investors.This debate needs to be resolved in a way that balances the need to drive increased supply of private rental accommodation with the necessary protections afforded to tenants.And measures need to be enacted quickly.Weekly rental costs in Perth have risen by 15 per cent in the past year and by $150 a week across all house types since the start of the pandemic.We’re seeing rental costs rising across the board in regional centres as well, particularly in the tourism centres in Broome and Busselton and mining regions of Port Hedland, Karratha and Kalgoorlie.And there’s not likely to be much relief for private renters for at least the rest of this year.It generally takes somewhere between six and nine months for rental costs to fall once the rental market starts to ease.So even if rental vacancy rates increased tomorrow, we wouldn’t see lower rents for at least nine months.This is why immediate action was needed in the federal budget to increase the Commonwealth Rent Assistance scheme.And while a 30 per cent increase would have been our preferred outcome, the 15 per cent rise next year, as announced by Treasurer Jim Chalmers last week, is a welcome step in the right direction.However, consideration should also be given to a more structural reform to CRA over the longer term so that it keeps pace with prevailing rental market conditions.Professor Alan Duncan is director of the Bankwest Curtin Economics Centre