Western Australia's property market continues to show resilience as Perth's housing values surge despite a broader national slowdown. New data from Cotality reveals that Perth dwelling values rose by 1.5% in May, pushing the city's median home value to approximately $1.05 million. This makes Perth the strongest-performing capital city market in Australia, even as other regions face headwinds.
National Trends and East Coast Slowdown
Across Australia, combined capital city dwelling values slipped by 0.1% in May. Sydney and Melbourne continue to weaken under the pressure of affordability constraints, higher borrowing costs, and softer buyer demand. However, several areas in Western Australia are bucking the trend. Regional areas outside Perth saw dwelling values increase by 1.9% in May, more than triple the national regional growth rate. Unit prices in regional WA recorded some of the strongest gains, climbing 3% over the month.
Impact of Federal Budget Changes
The strength of Perth's market is particularly notable given expectations that recent federal budget changes targeting property investors would cool demand. Mortgage broker Loan Market Group reported that investor lending through Perth brokers fell 22% in the week after the Budget announcements compared with the previous four-month average. Despite this, prices have continued to climb.
Cotality noted that demand-side pressures are building, including tax changes, higher interest rates, and broader cost-of-living concerns. However, the firm emphasized that housing supply remains severely constrained, with elevated construction costs and project feasibility challenges limiting new stock. “Even where approvals and commencements have risen, this upswing is yet to flow through to a material rise in completions,” the report stated.
Underlying Demand Drivers
Population growth and tight rental markets continue to support underlying housing demand, despite signs of investor activity easing. Housing Minister Clare O'Neil said Treasury expects the Budget's housing measures to have only a modest effect on prices, arguing the changes were designed primarily to improve affordability and help renters transition into home ownership.
Perth's runaway property market has been building for months, with multiple forecasts warning of a growing divergence from the rest of the country. Earlier this year, the Real Estate Institute of Western Australia predicted Perth house and unit prices could rise by as much as 20% in 2026 if current trends continue. REIWA president Suzanne Brown said Perth was experiencing “strong demand” while new listings remained below long-term averages.
Affordability Crisis
The city's affordability crisis has become increasingly visible at ground level. In a separate report on first-home buyers, Perth real estate agent Aman Singh described fierce competition and rapidly rising prices as the “new normal,” warning buyers that many properties are selling tens of thousands of dollars above asking price. “Put your best offer forward, there may not be a second opportunity,” Singh said.
News.com.au previously reported that Perth homeowners could effectively be “earning about $500 a day” through property value growth as prices surged “beyond expectations,” even as higher interest rates and economic uncertainty weighed on buyers.
