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What will Perth’s property market do in 2025?

The only way was up in 2024 for Perth’s property market, despite sky-high interest rates hurting mortgage holders and bringing house prices down over east.

Perth’s market exceeded many forecast predictions, recording a rise of more than 20 per cent off the back of record migration, an embattled construction industry, relentless inflationary pressures and a chronic undersupply of housing. Since 2019, Perth house prices have risen from a median of $484,788 to hit a record high of $882,075.

Residential Property: Strong Demand with Rising Prices

The Perth residential property market has seen a significant rebound since 2020, following a period of stagnation in the late 2010s. In 2025, this upward trend is expected to continue, driven by increasing demand for both new and established homes. There are several key reasons behind this positive outlook:

Population Growth: Western Australia’s population is growing steadily, aided by interstate migration from other states as well as international immigration. Perth is becoming an increasingly attractive destination due to its affordable lifestyle and relatively lower cost of living compared to Sydney and Melbourne. Population growth is a key driver of housing demand, particularly in the suburbs and outer areas of Perth.
Low Interest Rates: While interest rates are expected to gradually rise in the coming years, the Reserve Bank of Australia (RBA) has maintained historically low rates for some time. While this makes borrowing more accessible, it’s expected that the low rates will continue to support demand for property in 2025, particularly among first-time homebuyers and investors.
Limited Supply of Land: Perth’s inner suburbs have limited available land for new development, especially as urban sprawl is being restricted in favour of more sustainable growth. This limitation, combined with high demand, is expected to contribute to price increases, particularly for properties close to the city centre or near transport hubs.

Commercial Property: Mixed Performance

The commercial property market in Perth, particularly office space and retail, has faced challenges in recent years, partly due to the COVID-19 pandemic and the increasing shift towards remote work. However, there are signs of recovery as businesses adjust to the new normal and demand for office space starts to stabilise. Perth’s commercial property market in 2025 is likely to experience a mixed performance:

Office Space: With businesses adjusting to hybrid and flexible work models, demand for traditional office space in Perth may remain subdued in the short term. However, there is likely to be demand for modern, flexible office spaces, particularly in the CBD and other key business districts, as companies seek to reconfigure their office environments to support new ways of working.
Retail: The retail sector, especially bricks-and-mortar stores, has been under pressure due to the rise of online shopping. However, Perth’s retail property market may see some growth in 2025, as consumer confidence returns and more people return to physical stores. Local shopping precincts and suburban retail areas could see renewed interest as foot traffic rebounds.
Industrial and Logistics: The industrial sector, particularly warehousing and logistics, has been one of the strongest performers in Perth in recent years. This trend is expected to continue, as demand for storage space and distribution hubs rises, fueled by the growth of e-commerce and Perth’s position as a key trading hub in Western Australia.

Key Drivers to Watch in 2025

Several key factors will influence Perth’s property market in 2025. Investors, buyers, and sellers should keep an eye on the following:

Interest Rate Movements: While interest rates are expected to remain relatively low for the time being, the RBA’s decisions regarding rate hikes will play a crucial role in shaping the affordability of borrowing. Even a small increase could have a significant impact on property prices and market sentiment.
Infrastructure Projects: Major infrastructure projects in Perth, such as the METRONET rail expansion and the development of new residential communities, will drive demand for housing and property investments in certain areas. These projects are expected to boost accessibility, improve urban amenities, and stimulate economic growth.
Government Policy: Both state and federal government policies will play an important role in the property market. Any changes to housing affordability schemes, taxation (such as capital gains tax), or foreign investment regulations could impact the market.
Global Economic Factors: Global economic uncertainty, particularly in relation to commodity prices, inflation, and geopolitical tensions, could influence Perth’s economy and property market. Fluctuations in the mining sector, for instance, could directly impact property prices in certain areas of Perth, particularly those linked to resource industries.

Forecast for Perth’s Property Market in 2025

In summary, the Perth property market is expected to see moderate but consistent growth in 2025. Residential property will likely remain in demand due to population growth, low interest rates, and limited land supply, driving price increases. However, there may be challenges for certain sectors, particularly commercial office space, as remote working trends continue.

For investors, Perth presents an opportunity for capital growth, particularly in well-located residential areas and industrial properties. Buyers should remain cautious and consider long-term trends, such as infrastructure developments, before making significant decisions.

As Perth continues its economic recovery and diversification, the property market in 2025 will reflect these shifts, creating a dynamic landscape for all stakeholders. The key to success in the Perth property market will be understanding local conditions, staying informed on policy changes, and adapting to evolving market trends.

Currently, the city is providing reasonable value for properties, but it’s heading toward becoming overvalued. Looking ahead, we’re expecting growth in the range of 10 to 12 percent, but that growth is beginning to enter overvalued territory.

After that, we might experience a flat period. While it may not be a sharp downturn, property values could potentially drop by 10 to 20 percent in real terms over time.

What suburbs will have the strongest growth in coming years?

2025’s theme will be amenity. As interest rates invariably start to drop, homeowners will use this increased serviceability to grapple their way up the amenity ladder using the equity they’ve created over the last few years.

Whilst the lower quartile is not expected to drop in value, the buyer pool will move up the ladder at the expense of those areas that previously offered access and affordability, but not amenity. The ones to watch are Riverton, Willetton, North Beach, Mount Lawley, Wembley, Melville and Mindarie.

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If you have any questions or would like further information, please feel free to give our office on 08 9221 5522 or via email – info@camdenprofessionals.com.au or arrange a time for a meeting so we can discuss your requirements in more detail.

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General Advice Warning

The material on this page and on this website has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained on this page and on this website is General Advice and does not take into account any person’s particular investment objectives, financial situation and particular needs.

Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. In addition, the examples provided on this page and on this website are for illustrative purposes only.

Although every effort has been made to verify the accuracy of the information contained on this page and on this website, Camden Professionals, its officers, representatives, employees, and agents disclaim all liability [except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained in this website or any loss or damage suffered by any person directly or indirectly through relying on this information.

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Property Investment- Houses versus Units

As 2024 unfolds, a notable shift is occurring in Australia’s property market: while house prices continue to soar, units are becoming increasingly attractive. The once-clear distinction between the cost of houses and units has evolved, with significant implications for buyers and investors alike.

Widening Price Gap

Over the past four years, the price gap between houses and units in Australia has reached unprecedented levels. Historically, houses have commanded higher prices than units. However, the pandemic has dramatically exacerbated this disparity. House prices have surged by 44.2% compared to pre-pandemic levels, while units have seen a more modest increase of 21.7%. By March 2024, the median house price premium had expanded from 8.4% to a staggering 32%, as reported by PropTrack. In Sydney, this gap is even more pronounced, with houses costing nearly twice as much as units, translating to a significant $710,000 difference.

Factors Behind the Disparity

Eleanor Creagh, Senior Economist at PropTrack, explains that the pandemic has fundamentally altered housing preferences. “Australians now place a higher value on larger living spaces and home offices, rather than proximity to central business districts. This shift, combined with historically low interest rates, has enabled buyers to take on larger mortgages, further driving up house prices,” she noted.

Despite houses outperforming units in 83 out of 88 SA4 regions across the country, the dramatic increase in house prices has made units more attractive in 2024. Creagh notes that units have shown stronger price growth early this year, with a 2.00% increase compared to 1.48% for houses. Cities like Melbourne and Brisbane have seen unit prices rise faster than house prices over the past year, suggesting a trend toward more budget-friendly housing options due to worsening affordability.

Capital City Trends

In every Australian capital city, except Canberra and Darwin, unit prices are growing faster than house prices. Perth, with its more affordable market, has seen a slight lead in unit price growth, while in regional Queensland, unit prices are nearly doubling the pace of house growth. Melbourne stands out with unit prices rising nearly three times faster than house prices, highlighting the ongoing demand for affordable, well-located living spaces in urban areas.

Several factors are driving this shift:

Affordability Constraints: As house prices become increasingly out of reach, buyers are turning to units as a more affordable alternative.
Population Growth and Housing Shortages: These factors are driving demand in the unit market.
Investor and First-Home Buyer Activity: Both groups are attracted to units for their better rental yields and more accessible prices.

In over 60% of suburbs within capital cities, unit prices have risen faster than house prices. For example, 75% of suburbs in Melbourne and nearly 80% in Brisbane have seen faster growth in unit prices.

Outlook

The current disparity between houses and units presents a notable opportunity. With housing affordability continuing to be a significant issue, the medium to high-density housing sector is likely to remain attractive to buyers. Units offer the advantage of proximity to transportation, employment hubs, and amenities such as schools, parks, and cafes. Given the stability of interest rates and the anticipation of a potential decrease later in 2024, demand for units is expected to remain strong.

This evolving market dynamic suggests that while houses may continue to dominate in terms of price, units are emerging as a viable and increasingly popular alternative for those navigating today’s challenging property landscape.

Source: Prop Track

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Top 5 Perth Property Locations

Perth property prices recently hit new records. Data from the Real Estate Institute of Western Australia revealed Perth’s real estate market broke house price records across the 2022-2023 financial year. As July wrapped up, REIWA data also revealed Perth house prices beat the 2014 peak, reaching a new high of $560,000.

A new Hotspotting report on the Perth property market reveals that the growth is yet to stop, as Perth’s full potential has not been fully realised. Hotspotting Director, Terry Ryder, said Perth continues to be Australia’s strongest property market, with a busy and competitive housing scene and rising prices.

The housing market in Perth is expected to continue experiencing price increases in the near future, which can be attributed to the fact that it continues to offer affordability compared to other major cities in Australia.”

Perth property prices are predicted to grow by 8%, according to Westpac, with PropTrack also predicting strong dwelling price growth for Perth.

Perth’s top five property hotspots

City of Stirling
City of Canning
City of Armadale
City of Belmont
City of Gosnells

City of Stirling

Ranked as Hotspotting’s number one national growth star in the Autumn 2023 Price Predictor Index, the LGA is the largest in Western Australia and is the second largest employment area in the state.

Of the 24 Stirling suburbs in the winter analysis, 19 were found to have positive sales patterns – only one down from that of the Autumn report.

The attractive location and a growing range of quality amenities are also significant attractions for the area. According to reports it is unsurprising that the Stirling postcode of 6061 – Balga and Nollamara – now attracts some of the highest numbers of first home buyers in WA.

City of Canning

Another Perth location hailed for its affordability is the City of Canning, with many locations recording median house prices in the $400,000s to $500,000s range.

Most of Canning City suburbs recorded growth in their median house price in 2022 and in 2023 to date. Parkwood experienced a 10% annual rise to reach a median of $570,000 based on 79 sales.

Shelley also saw stand out annual growth of 19 per cent, based on 43 sales. Canning City’s average annual growth over the past decade remains modest at four to five per cent.

However, with the growth currently being experienced in this precinct, it’s likely these figures will improve in the near future according to Proptrack reports.

City of Armadale

Sitting close to an hour out of Perth, the City of Armadale also plays the affordability card well, with medians ranging between $300,000 to $400,000.

The Autumn 2023 edition of The Price Predictor Index found that the stand-out precincts were municipalities towards the bottom end of the Perth market, including the LGAs of Armadale and nearby Canning.

Of the 10 City of Armadale suburbs in the report’s analysis, seven were rising or consistent markets, which included Camillo (median house price $335,000), Kelmscott ($380,000) and the suburb of Armadale ($315,000). Armadale is the most affordable location and the most popular with buyers, recording 448 house sales in the past year, more than double the number sold two years earlier.

Camillo leads the pack, with its median house price up 14% from a year ago, according to CoreLogic data. Armadale and Seville Grove ($405,000) were not far behind, up 13%. Brookdale ($350,000) and Piara Waters ($625,000) both rose 12% over the year.

City of Belmont

Close to both the Perth CBD and the airport, the suburb is set to benefit from a range of major infrastructure projects, including the airport expansion, airport rail line, and Tonkin Highway upgrade. Rivervale is the busiest suburb for property sales in the LGA, recording 143 house sales and 327 unit sales in the year to May 2023, according to CoreLogic.

The suburb has seen its median house price increase by six per cent during this time to $625,000 and rental yields for houses in the LGA are typically 4.5% to 5.5%.

The best yields can be found in Cloverdale, where the typical yield of 5.5% is based on purchase price of $490,000 and a weekly rent of $480.

Units are generally cheaper to buy and typically priced in the $300,000s. Yields are higher in the unit sector – typically around 6.5% to seven per cent.

City of Gosnells

Next door to Armadale, this LGA is set to benefit from billions of dollars going into the shipping industry and renewables projects. More than 40,000 people are projected to move into the Gosnells LGA by 2036, which means around 20 new homes will need to be built per week. Like Armadale, the City of Gosnells tends to have homes within the $300,000 to $400,000 range.

Source: Core Logic, Proptrack, www.propertytribune.com.au

How can we help? if you have any questions or would like further information, please feel free to give our office on 08 9221 5522 or via email – info@camdenprofessionals.com.au or arrange a time for a meeting so we can discuss your requirements in more detail.

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How much money do you need to purchase a home or unit in Perth

The sizeable sums needed to secure and service a loan for a median-priced house are the result of 11 cash rate rises since May last year, which have slashed buyer borrowing power faster than prices and increased mortgage costs. With more rate rises still expected this year to slow down inflation, the biggest issue in the housing market is mortgage stress. We look at how much you need to earn to be able to afford a housing loan as well as what income levels are needed to avoid mortgage stress.

Although the house prices on the west coast continue to rise new Canstar modelling shows a Sydney buyer who purchased a house for about $1.46 million – the median price for the March quarter on Domain data – would have needed a gross annual income of $255,600 to have sufficient borrowing capacity to purchase with a 20 per cent deposit.

That is $50,700 more than was needed the previous March, despite a sharp fall in house prices since, and more than triple the $78,800 median pay of full-time employees last year, according to the latest Australian Bureau of Statistics figures. Average full-time earnings sit at $94,000.

Sydney house hunters need to earn more than $250,000 to borrow enough to purchase a typical home, while their Melbourne counterparts need almost $180,000, making homeownership near impossible for the average Australian. Brisbane and Perth buyers needed almost $145,000 and $124,000 respectively, requiring a pay rise of more than $27,000 from the previous year.

The table below sets out the data applicable to Perth.

How much income you need to purchase a unit in Perth and service the loan

	March 2022	March 2023	Change
Median house price	$364,054	$360,428	-$3,626
Loan amount (80% LVR)	$291,243	$1,167,885	-$107,469

Gross annual income (Single) required to…
Have sufficient borrowing power	$65,200	$78,500	$13,300
Avoid mortgage stress	$49,200	$70,200	$21,000

How much income you need to purchase a house in Perth and service the loan

	March 2022	March 2023	Change
Median house price	$633,762	$672,177	$38,415
Loan amount (80% LVR)	$507,010	$537,742	$30,732

Gross annual income required to…
Have sufficient borrowing power	$93,900	$123,900	$30,000
Avoid mortgage stress	$85,600	$130,800	$45,200

Notes:

The modelling assumed a single buyer purchased in March, when the cash rate was 3.6 per cent, with a 20 per cent deposit and no existing equity. It shows the income required to secure a 30-year loan with a variable mortgage rate of 6.13 per cent, and a 3 per cent interest rate serviceability buffer.

The cash rate has since lifted to 3.85 per cent and could rise again when the Reserve Bank meets on Tuesday.

Canstar group executive Steve Mickenbecker said the modelling showed how challenging the market was for first home buyers, and noted the situation had likely worsened since earlier this year – given another increase to the cash rate and an uptick in property prices. In Perth, a buyer would need a $30,000 increase in income as at March 2023, when compared to purchasing a home in 2022 – the average household income required in 2022 was $93,900 compared to $123,900.

“For single first home buyers, 99 per cent of them are going to be excluded from buying a house at the median price,” Mickenbecker said.

AMP Capital chief economist Dr Shane Oliver said first home buyers would find it almost impossible to get into the market at the median house price. “Prices are still down from their highs, so that is helping, but the roughly doubling interest rates are working against that,” Oliver said. “That means even if you have a 20 per cent deposit saved up, you’d be struggling to buy at the median.”

“Tax data shows that only 1 per cent or 2 per cent of Australians earn above $180,000 a year, so you’d have to be relying on having two high-income earners, or alternatively, relying on the Bank of Mum and Dad to be able to buy,” he said.

Oliver said with inflation at 6.8 per cent, there was likely another rate rise to come on this month, or next month. The Agency’s Catherine Murphy said first home buyers had been able to stretch themselves to buy at close to the median house price, when interest rates were at record lows, but were now priced out.

Source: Canstar & smh.com.au

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Housing prices continue to rise | Stock Diversity and Affordability

Australian housing values were 1.3% higher in November marking the 14th consecutive month where CoreLogic’s national home value index recorded positive value growth. The November update takes national housing values 22.2% higher over the past 12 months, adding approximately $126,700 to the median value of an Australian home.

Although values are continuing to rise, the November result was the softest outcome since January when values rose 0.9%. Since a cyclical peak in the rate of growth in March, when housing values rose at 2.8%, there has been a notable trend towards milder price growth.

Capital City Pricing Trends

The capital city trends are showing greater diversity, with Brisbane and Adelaide now recording the fastest pace of growth, while conditions across Sydney and Melbourne have slowed more sharply.

Brisbane and Adelaide are the only capital cities yet to experience a slowdown, with the monthly rate of growth reaching a new cyclical high across both cities in November. Brisbane home values were up 2.9% in November (highest since Oct 2003) while Adelaide values were up 2.5% (highest since February 1993). In dollar terms that equates to a monthly rise of approximately $18,500 and $13,500 respectively based on median values.

On the other hand, Sydney and Melbourne have seen demand more heavily impacted from affordability pressures and negative migration from both an interstate and overseas perspective.

Different supply dynamics are also creating divergent trends across Australian capital cities. In the four week period to November 28, total stock available for sale across Adelaide was -32.0% lower than the five year average, and -33.9% lower across Brisbane.

Across Sydney and Melbourne however, stock levels have become far more normalised in recent weeks, with Sydney total listings sitting just -2.6% below the five year average, while stock levels across Melbourne are 7.9% above the five year average.

Houses have continued to outperform units, with capital city values up 1.2% and 0.7% respectively over the month. However, the quarterly rate of growth is now the narrowest it has been since October last year, with 1.6 percentage points between the two broad housing types.

Based on median values, capital city houses are now 37.9% more expensive than capital city units – the largest difference on record. In dollar value terms, a capital city house is averaging approximately $240,500 more than a capital city unit. In Sydney, where the gap between house and unit values is the widest, a house costs $523,000 more on average than a unit.

Regional Housing Market Conditions

The slowdown in housing market conditions is less obvious across the regional areas of Australia, where the monthly pace of capital gains has accelerated over the past three months. Across the combined ‘rest-of-state’ regions of Australia, housing values were up 2.2% in November, double the monthly rate recorded across the combined capital cities (1.1%). Regional Tasmania (2.5% month / 29.8% year) and regional NSW (2.4% month / 29.1% year) have been the standouts from a capital growth perspective.

Across regional Australia, the strongest growth trends remain skewed towards the coastal and lifestyle markets with NSW’s Southern Highlands and Shoalhaven recording the highest quarterly growth rate (9.7%) followed by the Hunter Valley (excluding Newcastle) (8.9%) and Tasmania’s Launceston and North East region (7.7%).

Demand for housing across regional markets, especially those within commuting distance of the major cities, is continuing to benefit from the rise in popularity of remote working arrangements, along with renewed demand for coastal and lifestyle properties, and in many cases, more affordable housing options.

Source: CoreLogic – Tim Lawless

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Housing Prices – Where To Next?

Expecting the government to cool house prices? Don’t hold your breath

Last month saw bumper returns in the housing market, prompting some to ask whether the government will intervene to cool things down as has recently happened in NZ?

But those who are expecting a clamp-down don’t understand how lending works nor how a rising property market is key to the Reserve Bank’s plans for our economy’s growth. Sydney property recently experienced 3.7 per cent growth – the last time it hit more than 3 per cent monthly growth was in August 1988. And all capital cities also experienced growth.

Many economists predict price growth of around 15 per cent for the period up to the end of 2022, which has prompted angst regarding housing affordability with many expecting the banking regulator (APRA) to step in to limit how much can be lent.

But, at a recent parliamentary enquiry, the APRA Chairman emphasised that it was the regulator of the banks not property. He told Canberra “It’s not our job to solve house prices and it’s not our job to solve house pricing affordability. The extent to which there is dynamic emerging of increased risk taking by the community … at this stage it’s not evident”

Most brokers will tell you that the banks are still taking a prudent approach to lending: debt-to-income ratios and loan-value-ratios still remain low. In truth, the reason why Australians can borrow more is because interest rates remain low – and if prices continue to rise, many wont be able to borrow enough. In itself, this will act as a brake on the property market.

But higher house prices are part of a recovery scenario for the Reserve Bank as it aims to lift inflation back to its 2 to 3 per cent target range.

And the wealth effect is key to Australia’s growth. The wealthier we feel, the more likely we are to go and spend on other products and services. As such the Reserve Bank of Australia has a firm commitment to a 0.1 per cent cash rate until at least 2024.

The Reserve Bank of New Zealand did recently announce changes so that borrowers must now have a 30 per cent deposit. And, by May, investors can only borrow up to 60 per cent of a property’s value. But the NZ property market is more dominated by investor than ours.

Source: Graeme Salt, Director, Origin Finance

General Advice Warning

Although every effort has been made to verify the accuracy of the information contained on this page and on this website, Camden Professionals,its officers, representatives, employees, and agents disclaim all liability [except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained in this website or any loss or damage suffered by any person directly or indirectly through relying on this information.

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Frequently Asked Questions

What will Perth’s property market do in 2025?

Property Investment- Houses versus Units

Top 5 Perth Property Locations

How much money do you need to purchase a home or unit in Perth

Housing prices continue to rise | Stock Diversity and Affordability

Capital City Pricing Trends

Regional Housing Market Conditions

Housing Prices – Where To Next?

Expecting the government to cool house prices? Don’t hold your breath