Perth’s property market has continued to experience significant growth, with the median house price ($785,250) surpassing Melbourne’s ($776,045) for the first time since 2014. This surge has been driven by post-pandemic migration, demand for lifestyle-focused homes, and Perth’s strong population growth. While this has positioned Perth as a leading player in the Australian real estate landscape, it has also impacted affordability. According to REIWA, the proportion of family income needed to meet loan repayments has increased to 39.5 per cent, largely due to strong price growth and rising mortgage costs.
The rapid rise in property prices is creating challenges for the broader market. Mortgage repayments have increased by nearly 50 per cent over the past year, putting pressure on affordability and stretching budgets. The combination of high demand, limited supply, and ongoing economic growth is driving prices upward, impacting not just buyers but also those looking to refinance or upgrade their properties.
Market Outlook
Continued Growth in Key Suburbs
High-demand areas near the coast and river are seeing consistent price increases as more buyers seek out homes in riverside and seaside suburbs. These lifestyle suburbs will likely continue to experience growth due to their desirability and limited availability.
Supply and Construction Challenges
While demand remains strong, the supply of new homes is being constrained by ongoing construction delays and rising costs for building materials. These factors will likely keep upward pressure on prices, affecting affordability in the near term.
Increased Loan Activity
Interestingly, the affordability decline has not discouraged homebuyers. REIWA is reporting a 13 per cent increase in loan activity over the June quarter, with first-home buyers making up a significant portion of the market. The average loan size for first-home buyers has also grown by 17 per cent year-on-year, reflecting the strong demand despite rising prices.
What This Means for Buyers and Sellers
For buyers, the competition for properties remains strong, especially in sought-after suburbs. Acting quickly and staying informed about your borrowing capacity remains essential. For sellers, the current market conditions present an excellent opportunity to achieve competitive offers, as demand continues to outpace supply. With rising prices and affordability challenges, it’s more important than ever to have expert advice. If you’re thinking of buying or selling, please reach out, we’d love to help you.
