This article is from the Australian Property Journal archive
PERTH’S home prices are tipped to grow by up to 10% this year according to a leading property organisation, with the western capital roundly expected to again lead values growth nationally in 2025, despite a slowdown in growth.
Based on current conditions, REIWA is expecting between five and 10% growth in Perth. That will follow on from prices skyrocketing by 24.2% growth in 2024, with the median house price rising from $600,000 at the end of 2023 to $745,000 in December 2024.
The median unit price increased 21.4% in the same period, from $412,000 to $500,000.
REIWA CEO Cath Hart said there had been a lot of talk about falling prices and buyer’s markets on the east coast, but conditions in Perth still favoured sellers and further price growth.
“While the rate of price growth has slowed in the past couple of months, the underlying market fundamentals remain strong,” she said.
“This includes strong population growth, with WA recording 2.8 per cent growth in the year to June 2024, low unemployment and a strong economy.
“While some of the urgency seen in 2024 has eased slightly, demand for established housing remains high, with properties still selling quickly.”
She said rising prices means affordability is likely to become a greater focus for buyers in 2025 and demand will remain strong for affordable suburbs and properties, as well as for units, which are generally more affordable entry points to the market than houses.
Western Australia’s Cook government has just expanded a grant scheme that now allows first home buyers access to $2,000 for purchases of up to $500,000.
Hart said that while moderate growth was forecast for 2025, there were a couple of factors that could impact market activity in the first half of the year, including the state and federal elections and interest rates.
“We know market activity often slows in the lead up to elections as buyers and sellers wait to see the outcome. This is especially so when housing is one of the key policy areas – as will be the case in both elections,” she said.
“The ongoing debate over when interest rates will be cut is currently causing some hesitancy in the market. Should interest rates decline in the coming months we are likely to see market activity increase.”
Domain is forecasting Perth to again forecast lead national growth this year with an 8% to 10% increase, putting it close to a median house price of $1 million. It will be followed by Brisbane (up by 5% to 7%) and Adelaide (up 7% to 9%).
SQM Research’s latest Boom & Bust report’s 2025 base case scenario has Perth values rising by a much stronger 14% to 19%.
Perth’s current median house price is 36.7% higher than the previous peak of $545,000 set in 2014. The median unit price surpassed its previous peak of $450,000 set in 2014 in July and finished the year 11.1% higher than that figure.
Rental market eases
Supply and demand shifts allowed for the strained rental market to ease throughout 2024, with rent prices experiencing periods of stability as a result following several years of strong growth.
The vacancy rate rose from the record low of 0.4% recorded in March, settling at 1.9% at the end of the year.
Hart said this was a result of changes to supply and demand.
“On the demand side, people adjusted to rising rent prices and the difficulty finding a property by seeking cheaper and smaller rentals. We also saw an increase in the number of tenants per household. People also remained in or returned to the family home, or bought a home, to avoid the challenges of renting.
“We also saw new supply come to the market as a result of completed investor-owned new builds. In addition, some tenants finally had their new homes completed and moved out of their rental, which freed up some existing supply.”
The median dwelling rent hit a new high of $650 per week in April, and remained stable for the remainder of the year, finishing 8.3% higher than at the end of 2023.
House rents came in at a record $670 at the end of 2024, up 8.1% year-on-year, while units also reached a new high by the end of the year, with a 14.0% annual jump to $650.
Hart said more rent price growth was likely in 2025, but the growth rate was expected to be lower than 2024, as more investor-owned new builds currently under construction are completed and ease pressure.
“However, with eastern states investor activity declining, we are not expecting a surge in new supply towards the latter part of the year.”
The vacancy rate is likely to continue its upward trend and a more balanced market sometime in 2025.
Meanwhile, across regional Western Australia, median house sale price growth will vary across the regions, with the strongest growth likely to be in the southern centres.
“Bunbury was the top performer in 2025, with a 27.3% increase in its median house price, offering good employment opportunities, while improving medical facilities and schools have helped retain people who move there, making it far less transient,” Hart said.
