Perth's property market, which has experienced years of rapid price growth, may be on the verge of a significant slowdown as rising interest rates and tax changes drive investors to exit. According to new data, the number of investors listing properties for sale has surged, while demand from buyers is cooling. This shift could mark the end of the prolonged boom that has seen house prices skyrocket.
Investors Flock to Sell
Recent figures from the Real Estate Institute of Western Australia (REIWA) show that investor listings have increased by over 20% compared to the same period last year. Many investors are citing higher mortgage repayments due to consecutive rate hikes by the Reserve Bank of Australia (RBA) as a key reason for selling. Additionally, changes to state tax policies have reduced the attractiveness of holding investment properties.
Impact on Prices
With more supply entering the market and demand weakening, property prices are expected to stabilise or even decline in some suburbs. REIWA president Joe White noted that while Perth has not yet seen widespread price drops, the trend is clear. “We are moving from a seller’s market to a more balanced one,” he said. “Buyers now have more negotiating power.”
Buyers Gain Upper Hand
First-home buyers, who have struggled to compete with investors in recent years, may benefit from the shift. Lower competition and more properties on the market could improve affordability. However, higher interest rates also mean higher borrowing costs, which may offset some gains.
Economic Factors
The RBA’s aggressive rate tightening cycle, aimed at curbing inflation, has been a major factor. Since May 2022, the cash rate has risen from 0.1% to 4.35%, increasing mortgage costs significantly. Meanwhile, the Western Australian government’s decision to increase land tax and stamp duty for investors has further dampened enthusiasm.
Outlook for Perth Property
Industry experts predict that the market will continue to cool over the next 12 months, with price growth slowing to single digits or even turning negative in some areas. However, Perth’s strong economy, driven by mining and resources, may provide a floor for prices. “We are not expecting a crash, but a correction is likely,” said economist Sarah Johnson. “Investors should be prepared for lower returns.”
For homeowners, the end of the boom may mean slower equity growth, but those not planning to sell soon are less affected. Real estate agents advise sellers to price realistically in the current market.
