Homeowners in one red-hot capital city have experienced jackpot-sized property gains in recent years. But as conditions cool, many are wondering if the winning streak could be coming to an end.
Home prices have almost doubled in Perth over the past five years, making it the hottest capital city property market in the country.
Like much of the country, momentum has cooled since the Reserve Bank began hiking interest rates earlier this year. But local agents say conditions are normalising rather than falling off a cliff.
Sean Hughes, real estate agent and director at Haiven Property, likened the Perth market to red-hot desert conditions.
“It’s like living in the desert, say Las Vegas, where it’s 47 degrees every day,” he said.
“You acclimatise to that and if it drops to 35 degrees, everyone reaches for a jumper, even though 35 is still a hot day.
“That’s what’s happened in the housing market. People got used to homes selling in six days before the first home open, with 20 offers and $1.7 million achieved when the owner wanted $1.5 million. That’s not a normal market.”
Jump ahead to see the Perth suburbs with the fastest annual price growth.
Perth’s median home price has skyrocketed 96.2% over the past five years. Picture: Getty
While Perth’s median home price declined 0.5% in the month of June, it follows a lucky run that’s been the envy of homeowners in many parts of the country.
Perth’s median home price increased 17.1% to $1.01 million in June compared to a year ago, and was 96.2% higher than five years ago, according to the latest PropTrack Home Price Index.
John Percudani, real estate agent and managing director at Realmark, said while transaction activity has eased from last year's extraordinary pace, it shouldn't be mistaken for weakness.
“Perth remains one of Australia's most active markets, even with sales volumes sitting below last year's highs,” he said.
Fastest growing suburbs in Perth - houses
| Suburb | Location | Median sale price | Annual price change |
| Bicton | Perth - South West | $2,240,000 | 47.6% |
| Parkerville | Perth - North East | $1,465,000 | 36.3% |
| City Beach | Perth - Inner | $4,150,000 | 35.6% |
| Osborne Park | Perth - North West | $1,023,000 | 33.8% |
| Kallaroo | Perth - North West | $1,525,000 | 32.6% |
| Mosman Park | Perth - Inner | $2,910,000 | 32.3% |
| Wilson | Perth - South East | $1,136,000 | 32.1% |
| Hilton | Perth - South West | $1,250,000 | 32.1% |
| North Beach | Perth - North West | $2,100,000 | 31.3% |
| Jandakot | Perth - South West | $1,485,000 | 30.3% |
“That's a sign we're moving into a more sustainable phase rather than falling off a cliff. The reality is buyers haven't disappeared, they've simply become more deliberate.
“Well-priced, quality homes continue to attract strong competition, while properties that miss the mark on price or presentation are taking longer to transact.”
Market drivers
On top of the interest rate hikes, other factors such as the federal government’s recent property tax changes, housing affordability pressures and a rise in the number of homes for sale are weighing on market conditions.
Investors have pulled back from the property market nationwide since the federal budget slashed negative gearing and capital gains tax (CGT) benefits in May.
John Percudani of Realmark says Perth remains one of Australia's most active markets. Picture: Supplied
Housing affordability is playing a role, with Perth’s rapid growth in home prices outpacing incomes over the past five years, leaving some first-home buyers behind.
There has also been a recent jump in homes for sale in the city, as homeowners look to capitalise on the soaring home price gains.
In Perth, new listings jumped 25% in June compared to a year ago, while the total number of listings – which captures older stock as well as new listings – was 2.5% higher, the latest PropTrack figures show.
Fastest growing suburbs in Perth - units
| Suburb | Location | Median sale price | Annual price change |
| Floreat | Perth - Inner | $1,452,500 | 61.4% |
| East Fremantle | Perth - South West | $905,000 | 55.3% |
| Applecross | Perth - South West | $1,375,000 | 48.6% |
| Nedlands | Perth - Inner | $1,200,000 | 46.3% |
| Shoalwater | Perth - South West | $574,000 | 45.1% |
| Highgate | Perth - Inner | $692,500 | 41.3% |
| Bayswater | Perth - North East | $625,000 | 38.9% |
| Yokine | Perth - North West | $712,500 | 34.8% |
| Crawley | Perth - Inner | $867,500 | 34.5% |
| Balcatta | Perth - North West | $790,000 | 33.9% |
Mr Percudani said listings were improving but supply remained tight, keeping Perth prices resilient even as growth normalised.
“Listings are gradually improving, but not enough to fundamentally shift the balance of the market,” he said.
“Perth is still operating with relatively constrained supply compared to historical norms, helping keep values resilient even as finds a more sustainable pace.”
He noted that price growth was becoming more selective rather than widespread due to the cooling conditions.
Are buyers better off?
The past few years have been a bonanza for homeowners thanks to soaring home values, but the fast-growing prices have proved tough at times for first-home buyers and even existing homeowners.
This three-bedroom house in Bicton sold for $1.8 million this month. Bicton had the fastest growing house prices in Perth for the year to June. Picture: realestate.com.au/sold
The pace of change has been so great that there have been reports of homeowners who have wanted to sell but have held off due to the uncertainty of being able to buy their next home.
But Mr Hughes said the slight cooling in the property market is giving home buyers some room to breathe.
"Buyer enquiry is still there, but people are more cautious than they have been,” Mr Hughes said.
Sean Hughes of Haiven Property says home buyers will be under less pressure in Perth. Picture: Supplied
“We’re also seeing a bit more stock coming on, which is healthy because it gives buyers some choice they haven’t had for a while.
“That hyper level of urgency and stress we saw previously has really come out of the market, which is a good thing because no one wants buyers under immense pressure to purchase."
Mr Percudani said buyers and sellers were adjusting to a different environment.
“Buyers have more confidence to ask questions and negotiate, while sellers are recognising that yesterday's price expectations aren't always today's market reality,” Mr Percudani said.
This two-bedroom apartment in East Fremantle sold for $700,000 this month. East Fremantle has had some of the fastest growing unit prices in Perth for the year to June. Picture: realestate.com.au/sold
“That's creating a healthier market dynamic. Confidence is increasingly being driven by fundamentals rather than emotion, with supply, affordability and population growth carrying more weight than short-term headlines.”
What’s next for Perth?
What comes next is uncertain given the interest rate outlook and other economic forces, but real estate agents are optimistic.
Mr Percudani said the city was well placed to remain a standout market, however the next phase was likely to be defined by greater discipline than momentum.
“Transaction activity has settled into a more sustainable rhythm, listings are gradually improving and buyers are becoming increasingly selective,” Mr Percudani said.
“Yet the market continues to benefit from the structural forces that have driven its resilience: strong population growth, relative affordability and a housing supply that remains well behind demand.”
Mr Hughes added that the city wasn’t building enough new homes to meet the levels of strong demand seen from buyers.
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He said the Perth property market was going to continue to settle to more balanced conditions, where buyer competition was less frantic and homes spent a little more time on market than previously.
“The market should not be like a desert where it’s 47 degrees every day,” he said.
“Homes selling within six days and having hordes of people turn up to inspections might be good for some, but it’s not a normal market, so you just have to understand that things are moving back towards a normal market.”
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