Has Perth's property market finally reached its peak?

Perth has spent the past several years defying expectations.

While much of the national conversation has centred on Sydney’s affordability challenges, Melbourne’s underperformance and Brisbane’s post-pandemic surge, Perth has emphatically emerged as Australia’s strongest housing market.

The numbers tell the story. According to Cotality, Perth dwelling values rose a further 1.5 per cent in May alone, matching Darwin as the fastest-growing capital city market in the country. Annual growth sits at an astonishing 25.8 per cent, while values have climbed more than 91 per cent over the past five years.

After such a remarkable run, it is hardly surprising that buyers, investors and industry commentators are beginning to ask whether Perth’s boom is nearing its end.

The consensus among market observers appears to be that growth is likely to slow, but a repeat of Perth’s last major downturn remains unlikely.

Why this cycle is different

One reason the market continues to surprise is that many comparisons are being drawn with Perth’s experience following the end of the mining investment boom.

Between 2014 and 2020, Perth experienced one of Australia’s longest housing downturns, with values declining for years.

Julie Kelley, Global Sales and Marketing Manager at aussieproperty.com, believes the current market bears little resemblance to that period.

“While comparisons are often made to that post-mining boom downturn, the market fundamentals today are quite different,” Ms Kelley said.

“Back then, Perth was dealing with falling population growth, softer employment conditions and an oversupply of housing.

“Today, population growth remains strong, vacancy rates are extremely tight and new housing supply is struggling to keep pace with demand.

“That should help prevent the sort of prolonged correction we saw a decade ago, although growth rates will inevitably moderate over time.”

That view is shared by You & Me Personalised Property buyers agent Simon Deering, who notes that Perth’s recent gains need to be considered in the context of the market’s previous underperformance.

“People see the growth since Covid and assume Perth must be exhausted,” Mr Deering said.

“But from around 2014-2020, Perth went through a prolonged downturn. In many areas, prices have only recently recovered from that period.”

While national headlines often focus on Perth’s recent growth rates, many local market participants argue the city has spent much of the past decade playing catch-up.

Supply remains Perth’s biggest advantage

The strongest argument against an imminent downturn is arguably Perth’s ongoing supply shortage.

Population growth continues to outpace new housing construction, creating a structural imbalance that has underpinned both prices and rents.

According to figures cited by Mr Deering, Western Australia added almost 66,000 residents in the year to September 2025 while completing just over 22,000 dwellings during the same period.

“The market can’t really change until supply changes,” he said.

“And supply won’t suddenly increase as the building industry is still struggling to keep up.

“We’re simply not building enough homes to match demand.”

The effects of that imbalance are visible across the market.

Vacancy rates remain among the lowest in the country, rental competition remains intense and prices continue to rise despite higher borrowing costs and affordability pressures.

For many investors, Perth remains one of the few capital cities offering both attractive rental returns and capital growth potential.

Ms Kelley believes this combination continues to attract significant interstate interest.

“Perth’s comparatively strong rental yields are certainly attracting interstate investors,” she said.

“Many eastern states investors are finding it increasingly difficult to achieve positive cash flow outcomes in their home markets, whereas Perth continues to offer a combination of yield and capital growth potential.”

Current gross rental yields sit at 3.6 per cent, comfortably above Sydney’s 3.1 per cent and Brisbane’s 3.3 per cent, reinforcing Perth’s appeal among investors seeking stronger income performance.

Growth is likely to slow

Despite the positive outlook, few experts expect Perth’s recent pace of growth to continue indefinitely.

Annual growth approaching 26 per cent is difficult for any market to sustain over the long term, particularly as affordability pressures begin to emerge.

Ms Kelley expects Perth to remain one of Australia’s better-performing markets but acknowledges the pace of gains is likely to moderate.

“The current price growth rate is unlikely to be sustained indefinitely, but I would expect Perth to remain one of Australia’s stronger-performing capital city markets through the remainder of the year,” she said.

“Relative affordability compared to Sydney, Melbourne and Brisbane, combined with a resilient economy and continued interstate and overseas migration, remains supportive.”

That economic strength was highlighted by income data released on Thursday (11 June) by the Commonwealth Bank. Western Australia again recorded the strongest wages growth in the country at 3.8 per cent annual growth in May. 

Tom Carlin, Director of Carlin Team Real Estate, is already seeing evidence of a more balanced market emerging.

“I do think that with rising interest rates and cost of living pressures Perth will see a slowdown over the next 12 to 18 months and this is already starting to show signs with the rising number of listings against sales each week,” Mr Carlin told API Magazine.

That assessment aligns with recent commentary from Cotality Research Director Tim Lawless, who has observed that most Australian housing markets are gradually losing momentum as affordability constraints and higher borrowing costs weigh on demand.

Importantly, slowing growth and falling prices are not the same thing.

Most experts expect Perth to transition from a period of exceptional growth to one of more sustainable gains rather than experience a sharp correction.

Not every property will perform equally

Another emerging theme is the growing divergence between different parts of the market.

Chris Hinchliffe, Director of Residential at Herron Todd White, warns that buyers should not assume broad market growth will continue lifting all properties equally.

“Purchasing at the median price does not necessarily equate to securing a high-quality or low-risk asset,” Mr Hinchliffe said.

As affordability pressures increase and buyers become more selective, quality assets in established locations are expected to outperform lower-quality stock.

This trend is already becoming evident across Perth, where inner-city apartments, established family homes and well-located villas are increasingly attracting attention from both owner-occupiers and investors, Mr Hinchliffe added.

If market conditions soften, analysts expect the gap between high-performing and underperforming properties to widen further.

Rather than a market-wide downturn, Perth may increasingly become a market where careful asset selection determines outcomes.

What could bring the boom undone?

The greatest threats to Perth’s housing market remain external rather than local.

Interest rate increases, weakening consumer confidence, deteriorating economic conditions or a substantial increase in housing supply could all reduce upward pressure on prices.

Federal housing and tax reforms may also influence investor activity.

Ms Kelley argues the market’s underlying fundamentals remain the dominant force.

“As for the Federal Budget measures, any impact is likely to be concentrated in investor-driven segments of the market, however, Perth’s underlying supply-demand imbalance remains the dominant factor influencing prices and rental performance.”

Mr Carlin similarly expects some impact from reduced investor activity but does not see it fundamentally altering the market’s trajectory.

“The federal budget does have an impact on things too, and will definitely assist in slowing the Perth market down due to the investment pull back,” he said.

Yet even those forecasting slower growth stop well short of predicting a repeat of the post-mining boom correction.

Western Australia’s economy remains robust, unemployment remains low and population growth continues to support housing demand. The state’s budget surpluses and infrastructure investment are additional factors supporting confidence.

No property market goes up forever, and Perth is unlikely to be an exception.

But while the extraordinary pace of the past two years may be difficult to maintain, the evidence suggests the city is moving towards a more mature phase of the cycle rather than approaching a cliff edge.