Perth property in audacious overtaking move to go past Melbourne
Melbourne might still be the second largest property market in Australia, but in terms of property values it has just been overtaken by a Perth market that refuses to be subdued.
Perth’s median property price has eclipsed that of Melbourne’s for the first time in a decade.
The benchmark price comparison reflects just how far Perth’s property market has come in the past five years. In 2021, the West Australian capital was priced almost 40 per cent below Melbourne median dwelling value.
Today, according to PropTrack, Perth’s median home value of $787,000 has overtaken Melbourne’s, which sits at $782,000.
While Perth’s capital growth rates have slowed, along with those of mid-sized capitals Brisbane and Adelaide, what was a chasm between Melbourne and Perth has become less of a gap and varies according to who is doing the measuring.
PropTrack actually has Melbourne’s monthly home price growth at 0.8 per cent compared to 0.4 for Perth. Cotality (formerly CoreLogic) flips that to 0.7 per cent for Perth and 0.4 for Melbourne but regardless of source, it seems evident that Perth’s market is moderating and Melbourne’s turning a corner.
Melbourne’s quarterly growth of 1.2 per cent is approaching Perth’s 1.6 per cent, and eclipses Sydney’s 1.1 per cent.
Eleanor Creagh, Senior Economist, REA Group, said Perth’s relative affordability in the wake of the 2010s spent in the doldrums had driven property prices over the past few years.
She said the overtaking manoeuvre reflected Melbourne’s relative weakness compared to Perth’s persistent outperformance in recent years and affordability-driven demand.
“Price growth across the capitals is starting to converge.
“Melbourne, which previously lagged the other capitals, is now seeing home price growth pick up.
“Cities such as Perth and Brisbane are now seeing growth moderate after strong outperformance.
“The growth seen in all capital cities is underpinned by improved buyer sentiment and renewed confidence following interest rate cuts.”
As well as its move up the property price pecking order, Perth can also lay claim to another point of difference.
Perth is the only real estate market in Australia where houses earned more than its residents’ incomes.
It’s not a terrible time to be a homeowner with a job in the West. Not only do Perth people earn the second highest annual income across the country, but their houses made the biggest gains in the last 12 months. Perth house prices surged by $95,022, climbing from $812,482 to $907,504.
This compares to Adelaide, where it’s neck and neck between annual personal income and house price growth, with both sitting at just over $63,000 per annum. Brisbane homeowners are just keeping their noses in front, earning roughly $2,000 more than their houses appreciated.
The gap widens in Melbourne and Canberra, which have the greatest disparity between personal income and house price growth - Melbournians made 5.5 times more than their properties, while Canberrans pulled in five times what their houses did.
Ray White Senior Data Analyst Atom Go Tian said Perth dominates the list where houses earn more than people, whereas Melbourne could lay claim to seven of the top ten suburbs in which income outperformed property.
More homes hitting the market
If listings are anything to go by, greater supply should be easing competition at a similar pace in Perth and Melbourne. Melbourne rose by 8.6 per cent to 41,862, although this figure represents a 0.6 per cent annual decline. Perth saw strong monthly growth of 8.1 per cent, with listings up 20.5 per cent compared to May 2024, according to SQM Research.
A possible indicator of the relative resilience of Perth and Melbourne’s economies can be found in the distressed listings in Western Australia and Victoria. That measure rose 8.1 per cent in the latter and fell 20.7 per cent in the West.
When it comes to apartments, prices in Perth over the past month and quarter have been around double the pace of Melbourne units, while on a year-on-year basis Perth prices were up 13.1 per cent, compared to a fall of 1.6 per cent in Melbourne.
Research conducted by Nuestar and Hotspotting found that nationally 63 per cent of apartment markets outperformed houses.
Three quarters of Perth’s apartment markets are outperforming houses.
Michael Wilkins, Director of Property at Nuestar, said apartments in Perth are continuing to offer significant investment potential for both homeowners and investors.
“A Perth project in Como is typical of what works in today’s market.
“Its key fundamentals are river frontage, views, public transport and easy access to the CBD, surrounded by older homes with new architectural rebuilds happening,” he said.
“The median apartment price in Como increased 27 per cent in the past 12 months, compared to 21 per cent for houses, and the yields are significantly higher.
“In another inner Perth suburb, Maylands, houses have increased 16 per cent but units are up 21 per cent with 6.5 per cent yields, compared to 3.9 per cent for houses.”
