Perth market forges ahead despite national downturn fears

While headlines are warning of a nationwide housing downturn, Perth continues to defy the odds with a property market that is still firmly moving in the opposite direction.

Strong population growth, tight supply and relatively affordable prices compared to its eastern states counterparts are continuing to drive demand and price growth across Western Australia.

Investor lending in the state hit a five-year high in March, surging to $462 million.

While reflective of rising property prices, it’s clear this has not yet been a deterrent for many investors still hoping to cash in on a strong market.

Perth home values have continued to outperform many capital cities, particularly as we begin to see month-on-month declines in value for Sydney and Melbourne.

According to Cotality, Perth’s median home value increased by 25.8 per cent annually and 1.5 per cent in May, ranking first among all capital cities.

Affordability still driving investor demand

Despite a 99.3 per cent price growth for Perth over the last five years according to PropTrack, Perth remains significantly cheaper than Sydney, Melbourne and Brisbane.

This pricing gap continues to attract interstate investors in search of lower entry costs and stronger rental yields.

Investor borrowing across Australia grew at its fastest annual pace in a decade by March 2026, with property investors borrowing an additional $42 billion over the year, according to the Reserve Bank of Australia.

A large part of this investment has been directed into Western Australia, where vacancy rates remain historically low and demand for rentals is higher than ever.

Tight supply conditions are also adding fuel to the fire.

As Australia’s most isolated city, Perth’s construction pipeline has struggled to keep pace with the need for new housing, with labour and materials shortages, in addition to the high cost of transporting materials, all taking a toll.

Despite residential building costs cooling across most states, prices have continued to climb in Western Australia according to Australian Bureau of Statistics data.

Budget announcements could slow momentum

Attention is also turning to how the recent Federal Budget announcement could reshape investor interest in Perth.

While the current figures point to a continued growth market in Western Australia, changes to negative gearing for investors could soften this growth.

The decision to incentivise investment in newly built stock will likely result in a redirection of where investors place their capital, rather than removing them from the market altogether.

For Perth, that distinction is important when we look at the supply issues we’re already facing.

Off-the-plan developments and newly completed homes will become a more popular choice for investors, but will present a challenge for developers in keeping pace with this new level of demand and may see prices surge within this sector.

At the same time, economists warn that if a reduction in investor activity does occur, further pressure could be placed on our rental markets, resulting in rent increases rather than improving affordability as the changes aimed to do.

Perth market backed by strong foundations

Although the pace of growth may moderate slightly with changes to investor activity, Perth remains in a very strong position.

The market demonstrates a level of resilience that is not currently being seen in the eastern states, a positive sign for investors but also a delicate balance for long-term affordability.

Unlike the sharper downturns we’re beginning to see play out in Sydney and Melbourne, Perth seems set for a more gradual easing in price growth with a shift in investor demand and behaviour.

For now, the market remains supported by affordability advantages, supply limitations and a sought-after rental market.

Perth continues to stand out among national conditions, providing a strong value proposition for investors during these uncertain national and global times.