Booming Perth races ahead while Sydney and Melbourne prices retreat

If three months ago you were deliberating on a property purchase, you’ve saved some money by holding off if that property was in Sydney or Melbourne but lost almost $70,000 if it was a median-priced home in Perth.

The latest monthly property data shows that Perth property prices are rocketing upwards, while the country’s two biggest property markets have slipped backwards.

Nationally, property prices continued their upwards march. After rising 0.8 per cent in February, they were up another 0.7 per cent in March, according to Cotality data released Wednesday (1 April).

Regional property prices have almost doubled the pace of the capital cities over the past month and quarter.

Perth has now joined Sydney and Brisbane as the capitals with a median dwelling value above $1 million.

Tim Lawless, Research Director, Cotality, said the Western Australian capital was accelerating in the face of higher interest rates and lower sentiment.

Housing values across the western capital were up 2.5 per cent in the month of March to be 7.3 per cent higher over the quarter.

“In dollar terms, the 7.3 per cent rise in Perth home values over the quarter has added approximately $69,000 to the median dwelling value,” Mr Lawless said.

“Clearly this pace of growth is unsustainable, but continues to be supported by low supply, with advertised stock levels tracking about 40 per cent below the five - year average for this time of the year.”

While the national property market has become a two-speed one characterised by rapid price gains in the mid-sized capitals Perth, Brisbane and Adelaide (and more recently, the smaller Darwin market), a similar picture is emerging within Sydney and Melbourne.

They themselves are now cementing positions as two-speed markets, fuelled by the lower quartile of properties and suppressed by the least affordable segments of those markets.

“Conditions are diverging across the broad value tiers, with lower quartile markets leading the pace,” Mr Lawless said.

“This trend is evident across every capital except Hobart and Canberra, but most pronounced in Sydney where upper quartile dwelling values have fallen by 1.8 per cent through the March quarter while lower quartile values are 1.8 per cent higher.

“Strength across the lower quartile value tier is tied to increased competition for lower priced housing.

“Serviceability constraints are deflecting buyer demand towards the lower end of the market, competing with a pickup in first home buyers taking advantage of stimulus and elevated levels of investor activity.”

PropTrack, which also released its monthly property performance report Wednesday, found national home prices had hit a fresh peak in March, but noted that a broad-based slowdown was emerging across the country.

Eleanor Creagh, REA Group Senior Economist, said momentum has eased, with more than three quarters of SA4 regions recording a deceleration in monthly growth relative to February.

“This points to a slowdown in growth emerging across the country and a clear turning point in the cycle, as rising interest rates weigh.

“While price declines remain limited, they are beginning to emerge in some inner and middle ring markets, most notably in Sydney and Melbourne.

“Recent rate rises will weigh on buyer sentiment, borrowing capacity, and erode already poor affordability, though a resilient labour market, population growth and first-home buyer support continue to underpin demand against limited supply.

“Overall, the market is shifting into a slower-growth phase, with a rising likelihood of flat or declining prices in some markets in the months ahead, even as structural supply shortages cushion the moderation,” Ms Creagh said.

Crises not extending to property market

The supply issues driving prices higher are being exacerbated by the reluctance of owners to sell when every month delivers tens of thousands in on-paper dollar gains.

Steve Douglas, Executive Chairman, SMATS Group, said Perth and Brisbane would continue to run hot but not at the formula one pace at which they have been racing along.

“I’d expect Perth and Brisbane to cool from double-digit to mid-single digit growth - more from buyer fatigue than anything else - but to stay strong and positive in the short to medium term,” he said.

“Perth was being driven by a lack of supply, in both listings and new builds, and an increasingly affluent population and despite a lift in interest rates, which are still actually below the long term average.”

Wage growth in Western Australia leads the nation. It was around 4.1 per cent to 4.2 per cent in year-ended terms for late 2025/early 2026, compared to the national average of approximately 3.4 per cent over the same period.

Nationally, government policy and international geopolitical upheavals would only add to price pressure, Mr Douglas added.

“Australia always does well in a crisis, as migrants and expats come home early or stop procrastinating about their property plans, and the small number of extra buyers soaks up an already acute shortage of stock availability.

“Federal government discussions around a capital gains tax discount reduction for property investors can only lead to even higher prices, as most will delay their decision to sell or rotate property, leading to even more diminished listings.

“The government should be encouraging private investment to lift housing stock and should also direct all housing industry incentives solely to new property acquisition, for example the 5 per cent first home buyer deposit scheme should only apply to new property, not established homes,” Mr Douglas said.

Population growth easing

Weighing less heavily on the market is population growth, which has largely normalised after the post COVID catch up.

While population gains still add to underlying housing demand, they are increasingly being offset by affordability constraints, tighter credit conditions and uncertainty around future household expenses, according to Mr Lawless.

The population of Australia’s capital cities grew by 324,700 people in the 2024–25 financial year, according to figures released Tuesday (31 March) by the Australian Bureau of Statistics (ABS). 

Phil Browning, ABS Head of Demography, said Australia's capital cities grew by 1.8 per cent last financial year. This was almost 100,000 people less than in 2023–24, when the capital cities grew by 2.3 per cent.

“Net overseas migration remained the main driver of capital city growth despite falling by 109,400 people compared with the previous year.”

Notably, it was Perth that had the highest growth rate of all capitals (2.4 per cent), followed by Brisbane (2.1 per cent).

Those who expect Melbourne property to undergo a resurgence soon can point to its firm 2.0 per cent population growth rate as supporting evidence.

Darwin was the only capital that grew faster (1.7 per cent) than the previous year (1.5 per cent), just as its annual median property price has shot up 19.7 per cent.