Perth's property market is turning, but has it hit the bottom?

After several years of rapid price growth, Perth’s property market is currently in decline but a recovery in 2027 is a strong likelihood.

Rising interest rates, stretched household budgets and shifting buyer sentiment are cooling demand, leaving many prospective purchasers wondering whether to buy now or wait for prices to fall further.

While further declines remain possible, the changing market may offer something buyers have struggled to find in recent years: greater choice, more room to negotiate and an opportunity to make considered purchasing decisions without the same pressure to compete.

A real estate correction is underway

Australia’s acute housing shortage will drive property prices higher again next year, prompting Westpac Chief Executive, Anthony Miller, to urge the federal government to subsidise construction costs rather than focus on demand stimulus such as first home buyer grants.

Following post-budget market drops, where Westpac saw first home buyer and investor mortgage applications tumble 30 per cent and 26 per cent respectively, the bank expects the downturn to bottom out at 7 per cent before values climb.

“We are, at this point, forecasting that house prices will rise 3 per cent in 2027 and 8 per cent in 2028, because what cannot be ignored is that the demand is very much larger than the supply side, and so without trying to belittle the entire debate, basics don’t change,” Miller said.

Perth’s fundamentals still strong

Despite the slowdown, Perth retains several factors that could support its longer-term housing outlook.

Western Australia’s population grew by approximately 64,000 people in the year to March 2026, according to the WA Residential Demand Index.

Meanwhile, housing construction continues to fall short of underlying demand, although the supply gap has narrowed considerably since 2023. Rental vacancy remains tight at just 0.6 per cent, according to SQM Research.

Property prices are influenced by more than interest rates and short-term sentiment. Population growth, employment and the availability of housing all contribute to underlying demand.

The current environment also differs from Western Australia’s 2014–2019 downturn, when interstate departures and excess housing supply contributed to prolonged weakness.

While these factors cannot prevent further price falls, they provide a degree of resilience and suggest the market may be moving towards a more balanced period rather than necessarily repeating its previous cycle.

A longer-term property perspective

The WA Residential Demand Index’s base-case forecast suggests Perth’s median house price could remain close to current levels through September 2028, with conditions potentially improving as interest rates eventually ease. Alternative scenarios range from further declines to renewed growth, highlighting the uncertainty surrounding any forecast.

Trying to pinpoint the exact market bottom is a risky strategy. Waiting could deliver a lower purchase price, but buyers also face the possibility that competition will return sooner than expected in particular locations.

For owner-occupiers planning to stay for several years, the more relevant questions may be whether the property meets their needs, whether the price is reasonable and whether repayments are sustainable.

Perth’s property market faces genuine headwinds, and buyers should not assume the correction has finished. Yet population growth, tight rental conditions and limited housing supply continue to provide reasons for measured optimism.

The next phase may favour preparation over speculation. For buyers who understand their financial position and are willing to research carefully, a cooling market could present an opportunity to secure the right property on more considered terms.

Buying off-the-plan advantages

Buying off-the-plan allows purchasers to focus on a property’s agreed price, location and long-term suitability rather than attempting to predict every short-term market movement.

For buyers who are financially prepared and focused on long-term ownership, off-the-plan apartments can offer a way to secure a new home, plan ahead and potentially access locations that might otherwise be out of reach.

For first home buyers, professionals, downsizers and investors, a well-designed apartment may provide access to desirable locations, lifestyle amenities and convenient transport links at a lower purchase price than a comparable house in the same area.

Looking beyond short-term movements

With forecasts pointing to continued uncertainty in Perth’s property market, buyers may be tempted to wait until prices reach their lowest point but identifying the bottom of a market is notoriously difficult.

With affordability continuing to challenge Perth buyers, apartments can offer an alternative to purchasing a detached house, particularly in established suburbs where land values and house prices have risen significantly.

For first home buyers, professionals, downsizers and investors, a well-designed apartment may provide access to desirable locations, lifestyle amenities and convenient transport links at a lower purchase price than a comparable house in the same area.