Perth braces for major property boom

A perfect storm of lower interest rates, housing incentives and a $12 billion defence investment is set to supercharge Perth's property market, with supply unlikely to keep up.

27 October 2025

Western Australia’s property market is gearing up for a new wave of growth, with experts expecting to see prices pushed even higher before the year’s end.

Fuelled by a combination of anticipated interest rate declines, federal housing incentives and a $12 billion injection in defence spending, WA’s economy is facing a perfect storm for further price growth.

After several years of steady growth and record-low housing supply, analysts believe these factors could tip Perth’s median price over the $1 million mark as we head into 2026.

Interest rate hopes reignite buyer confidence

Recent interest rate cuts from the Reserve Bank of Australia (RBA) have reinvigorated buyer confidence, increasing borrowing capacity for buyers and driving renewed demand.

The RBA’s last cut interest rates to 3.60 per cent was in August, with many analysts at the time predicting further interest rate cuts to take effect in November.

The majority of the big four banks have since changed their tune, however, with Westpac the only one still predicting a 25 basis point cut in November.

The remainder of the big four now foresee further rate cuts in early 2026 instead, taking the cash rate to 3.35 per cent if that eventuates.

While further cuts will ease pressure on mortgage holders, economists agree that the most likely outcome of a decrease in the cash rate will be a fresh wave of price growth, potentially pushing housing markets to new highs nationwide.

Deposit scheme opens new doors

At the same time, the federal government’s expanded Home Guarantee Scheme has made it easier for first home buyers to enter the market.

Under the new rules, which took effect on 1 October, eligible first home buyers can purchase a property with a deposit as little as 5 per cent.

The expanded scheme has also removed price caps and income caps, increasing accessibility to the scheme, as well as waiving lenders mortgage insurance.

In Perth, where the median house price remains below other major capital cities, this has opened the door to a flood of eager first home buyers who had been limited by price constraints.

This incentive has already fuelled competition, particularly in the entry level price point of the market that was already under pressure from low supply.

While the move aimed to help more Australians get onto the property ladder, experts warn it could add more pressure in an already undersupplied market.

Defence stimulus to power demand

To add to the mix, the Albanese government has recently pledged to pour $12 billion into a nuclear submarine and shipbuilding hub in Western Australia, as part of the AUKUS defence pact.

The investment would transform the Henderson shipyard into a defence facility, creating more than 10,000 local jobs and stimulating Western Australia’s economy.

The scale of this spending will carry significant long term benefits for Western Australia, boosting employment and driving demand for housing.

However, with a current housing market too unstable to support such an uptick in demand, this could spell trouble for affordability.

An influx of new workers will tighten the state’s already limited housing supply, driving prices up even more.

All eyes are now on the state government to see how it plans to prepare for this pressure on the market, with a focus now on creating new supply.

All-time highs on the horizon

As these conditions collide, WA’s property market appears to be on the brink of another significant growth phase.

Initiatives that reduce barriers for buyers to get into the market, paired with a $12 billion defence investment, are setting the stage for a surge in demand across the state.

With housing supply struggling to keep pace, the question is now whether the market can sustain further momentum.

Perth property prices

Source: Cotality

With housing affordability already constrained, any further movement could risk tipping the state into further crisis.

As we enter 2026, the coming year will be a true test of our state and federal government’s ability to manage demand while boosting new supply.

Article Q&A

What’s driving Perth’s next property price boom?

Falling interest rates, federal housing incentives and the $12 billion AUKUS defence investment are expected to drive demand and push prices even higher in Perth and across Western Australia.

How will Perth’s housing supply cope with rising demand?

Experts warn the state’s housing supply is already stretched, and an influx of workers linked to the defence stimulus could worsen affordability unless new housing is fast-tracked.

Could Perth’s median house price hit $1 million?

Analysts believe it’s possible by 2026, with ongoing price growth and renewed buyer confidence pushing Perth closer to the $1 million median mark for the first time.

Source: API Magazine