Perth Property Market Update: Undersupply Fuels Rapid Price Growth

Perth’s housing market entered 2026 with extraordinary momentum. After relatively modest growth in the first half of 2025, price growth accelerated sharply through the second half of the year, delivering annual growth of 16%, the strongest of any capital city.

From a historical perspective, growth at this pace is well above long-term averages and unlikely to be sustainable indefinitely. However, the pattern of price increases points to deep structural pressures rather than short-term sentiment shifts or interest rate “sugar hits.”

Price Surge As Momentum Builds

Perth’s price growth strengthened progressively throughout 2025, with the sharpest gains recorded between September and November. Even December posted a strong 2% monthly increase, equivalent to an annualised rate of 24%, and January 2026 followed with another 2% rise.

This sustained acceleration lifted Perth’s median house price to $940,000 by the end of 2025, and further gains in January pushed it to $958,000. If growth at this pace were to continue, prices could exceed $1 million within months, though rising interest rates are expected to slow momentum.

Despite this risk, urgency among buyers remains elevated, particularly as Perth continues to outperform all other capital cities.

A Market Driven by Structural Undersupply

Unlike other capitals, Perth’s housing boom does not appear to be closely linked to interest rate movements. Price growth remained strong regardless of the timing of rate cuts, suggesting that undersupply, not sentiment, is the dominant force shaping the market.

Perth remains the most undersupplied housing market in the country. Listings have fallen sharply over the past year, with active listings declining from around 5,000 in early 2025 to approximately 2,400 by January 2026.

As listings tightened, buyer competition intensified. By the end of 2025, roughly one in three homes listed each week was selling, a level consistent with extreme supply constraints and strong upward pressure on prices.

Supply Constraints Likely to Persist

Dwelling approvals increased in late 2023, but completions over the past 12–18 months have remained broadly flat. If the construction sector is already operating at capacity, higher approvals may simply extend build times rather than materially increase supply.

Until listings rise meaningfully or construction accelerates, supply constraints are expected to remain a key driver of Perth’s housing market.

First-Home Buyers Under Pressure

Affordability pressures are intensifying. First-home buyer participation in Western Australia has gradually declined over the past two and a half years, even as borrowing sizes have risen sharply.

Average first-home buyer loan sizes have increased by more than 30% since 2023, reflecting rapidly rising prices and heightened competition. While the expanded First Home Guarantee Scheme is likely to support continued demand, fewer first-home buyers are able to enter the market, and those who do are taking on significantly larger mortgages.

What’s Next for Perth Property?

Perth’s housing market enters 2026 running hot. Severe undersupply, record-low listings and strong buyer urgency continue to drive rapid price growth, even as interest rates rise again.

Whether this momentum moderates will depend on two critical forces: the trajectory of interest rates and Perth’s ability to lift housing supply. Until one of those constraints meaningfully eases, competition is likely to remain intense and prices elevated.

Perth remains Australia’s most supply-constrained housing market.

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Disclaimer: This blog provides general information only and does not take into account individual objectives or financial circumstances. Please consider professional advice before making investment decisions.