Perth property boom to power through 2026 before sharp slowdown looms

Strong price growth and tight supply are set to drive Perth’s housing market higher this year, but rising rates and affordability pressures could stall momentum in 2027.

Como, just south of the Perth CBD, has been identified as a potential target for first home buyers looking for good value units. (Image source: Ian Geraint Jones/Shutterstock)

Perth’s property juggernaut looks set to continue delivering strong capital growth this year but 2027 could paint a very different picture.

Perth is predicted to deliver the strongest gains through to the end of the year, according to ANZ’s latest economic report, with dwelling prices forecast to jump 12.3 per cent.

Applied to houses, Canstar analysis shows Perth’s current median price would rise by $51,569 to $1.11 million.

But for property owners and investors hoping to cash in on rising prices beyond 2026 could be in for a surprise.

While Perth, along with Brisbane, has so far defied the impact of rising interest rates, the weight of worsening affordability is likely to weigh more heavily next year.

In a wildly unpredictable world, forecasting is a dangerous game but ANZ has estimated Perth’s housing price growth will fall dramatically next year – down from 12,3 per cent this year to an anaemic 1.5 per cent in 2027.

The prediction of up to three more rate hikes in 2026 will likely deter some buyers and suppress demand in many previously hot property markets.

Julie Kelley, Global Sales and Marketing Manager at aussieproperty.com, said one of the key risks to watch is borrowing capacity.

“If interest rates rise to 8 per cent, we could see borrowing capacity for an average Perth household reduce by 10 to 15 per cent.

“In a market like Perth, where demand remains strong, this could price buyers out of the market where the median dwelling value is above $1 million.”

The scarcity of properties for sale in Perth has fuelled record rates of price growth but there are signs of sellers returning to the market.

The latest figures produced by REIWA reveal that over the past four weeks (ending 12 April) the number of properties listed for sale in Perth surged by 20 per cent to 3,669 properties. That compares to just 1,881 properties listed for sale in Perth at the end of 2025, which was a record low.

“Listings still remain constrained, and that is continuing to underpin price growth,” Ms Kelley said.

“Population growth and a lack of supply are the dominant forces shaping the Perth market right now.

“The real concern is the supply pipeline.

“If construction activity slows further, whether due to cost pressures, labour shortages or external factors like energy prices, it will only exacerbate the existing shortage.

“If population growth continues at its current pace, we could see even tighter conditions and further upward pressure on prices.”

New analysis from Cotality highlights the growing imbalance between population growth and housing supply as a key driver of recent price gains.

Cotality’s Head of Research, Gerard Burg, said the strongest increases in home values since 2020 have been concentrated in states where new housing has failed to keep pace with population growth, with Western Australia and Queensland standing out.

“In both WA and Queensland, the share of new dwelling completions has lagged well behind population growth, and that has coincided with home values more than doubling over that period,” Mr Burg said.

He noted that Queensland accounted for more than a quarter of Australia’s population growth between early 2020 and late 2025, yet delivered less than one-fifth of new housing supply.

“A similar pattern is evident in Western Australia, where population growth has significantly outpaced the delivery of new homes,” he said.

Borrower budgets shrinking

Rising rates have put a near-immediate handbrake on the maximum amount people can borrow from the bank, however, a lack of stock will keep prices charging north in Perth this year, according to ANZ economists. 

Canstar.com.au analysis shows that a single person earning the average full-time wage, as recorded by the ABS, could potentially borrow $24,800 less from the bank as a result of the February and March RBA hikes. 

However, if there are three more 0.25 cash rate hikes this year, as forecast by Westpac, this person’s buying budget could shrink by a total of $58,700 this year. 

Canstar.com.au data insights director, Sally Tindall, said, “It’s a tale of two property markets across Australia in a tug-of-war between how much the bank will lend, versus how desperately people need houses.”

“The Perth and Brisbane markets are hurtling towards prices that are fast becoming unaffordable for people looking for four walls and a patch of grass.

“The danger is, people will borrow to the limit, banking on prices continuing to climb.

“If circumstances change, whether that’s interest rates, job security or the economy, it could leave some households overexposed.”

House prices in Australia’s two largest capital cities, Sydney and Melbourne, are set for a very different outcome. Both have already posted drops this year and are set to continue to slide modestly through to the end of 2026.

Next year could be a different picture, when ANZ doesn’t envisage any capital city market outpacing inflation. But it’s Melbourne and Sydney it predicts will outpace the other cities by a slim margin.

Perth renters facing tough times

Perth continues to rank among the tightest rental markets in the country.

Vacancy rates tightened further to 0.5 per cent in mid-April, down from 0.6 per cent, leaving fewer than 1,000 properties available for rent, according to SQM Research released Tuesday (14 April).

Rental prices are still climbing, with combined rents rising 1.2 per cent over the month and 6.9 per cent over the past year, underscoring the ongoing shortage of available housing.

Western Australia is now leading the nation for rental growth, with tenants typically allocating around one-third of their pre-tax income to housing costs.

Figures from REIWA highlight just how competitive conditions have become. In March, rental properties were leased in a median of just 16 days, reflecting intense demand and limited new supply.

Over the past 12 months, rents have increased by 5.9 per cent for houses and 6.1 per cent for units, adding further pressure on households already contending with rising mortgage repayments and broader cost-of-living increases.

Article Q&A

Why is Perth’s property market performing so strongly?

Perth’s housing market is being driven by strong population growth, limited housing supply and relatively affordable entry prices compared to other capital cities, all of which are supporting demand and pushing prices higher.

Will Perth property prices continue to rise in 2027?

Forecasts suggest price growth could slow significantly in 2027 as higher interest rates and worsening affordability reduce borrowing capacity and dampen buyer demand.

How are interest rate rises affecting buyers?

Higher interest rates are reducing how much buyers can borrow, which can price some out of the market. Even if demand remains strong, lower borrowing capacity can limit price growth over time.

Are there still opportunities for first home buyers in Perth?

Yes. More affordable inner-city unit markets and areas with older housing stock may present opportunities, particularly if more investors choose to sell and listings increase.

Source: API Magazine