Perth Housing Market Sees Record Land Prices as Supply Increases
New data reveals that Perth's residential land prices have reached another record high, with the average lot selling for $400,000 in the December quarter of 2026. According to figures from the Urban Development Institute of Australia (UDIA), this represents an 80 per cent surge since March 2020, highlighting ongoing affordability challenges for homebuyers in the region.
Strong Supply Growth Eases Market Constraints
Despite the soaring prices, supply is showing significant improvement. A total of 2,542 land parcels were sold in Greater Perth during the December quarter, marking the third-highest volume in the past five years. This follows a robust September quarter and aligns with UDIA forecasts predicting an additional 7,500 lots under construction over the next 12 months.
The booming supply volumes indicate that previous constraints in the land development sector have substantially eased. This news comes as a relief to families, especially after reports of buyers camping outside sales offices, such as in Burns Beach, to secure land during the summer months.
Demand and Economic Factors Influence Market Dynamics
UDIA WA chief Tanya Steinbeck noted that demand remains strong, driven by Perth's highest population growth in the country and a robust economy. However, she highlighted that developers face ongoing challenges with infrastructure, including power, water, and roads, which could slow delivery.
On the financial front, recent reports from listed land developers show substantial profits. For instance, Peet's operating profit more than doubled in the first half of the financial year, while Cedar Wood's bottom line surged over 160 per cent. Sydney-based Stockland also reported a 20 per cent profit increase, attributing activity to eager first-home buyers and a structural shortage.
Interest Rate Hikes Expected to Cool Demand
The Reserve Bank of Australia recently increased the cash rate from 3.6 per cent to 3.85 per cent, with markets anticipating a 90 per cent chance of another hike by June 2026. Historical data from the Australian Bureau of Statistics shows that when the RBA began a hiking cycle in May 2022, loans for owner-occupiers buying land in Western Australia dropped by about 30 per cent over the following 18 months.
Stockland warned investors that while demand is high, interest rates will be a decisive factor in slowing market activity. This suggests that the combination of rising rates and increased supply could help moderate price growth in the coming year.
Government Initiatives to Boost Housing Supply
A State Government spokeswoman announced that DevelopmentWA is building 6,000 lots for metropolitan Perth, set to come online over the next four years. These developments, located in suburbs like Karnup, East Wanneroo, Brabham, Alkimos, and Yanchep, will have the capacity for nearly 11,000 homes, including infill and built-form projects.
This initiative aims to address the housing shortage and support sustainable growth in the region, providing more options for buyers amidst the evolving market conditions.
