Perth has boasted the nation's most buoyant housing market over the past year. But there are early signs the Western Australian capital is coming off the boil.

Anyone riding the wave of Perth's scorching property market in recent times will tell you it's emotional. There's elation alongside struggle – and plenty of regret.

Perth has seen the country's strongest growth in the past year. Picture: realestate.com.au

---

First homebuyers Matt Karger and Amy Riebe are kicking themselves. After moving from Adelaide to Perth in 2021, they quickly found a unit to rent in North Perth, and have for the past year been trying to buy an apartment in their complex.

Now they worry they've missed the boat.

"A year and a half ago there was a property going for around $425,000 that we considered buying decided against it," Mr Karger said. "Whatever misgivings we had about paying that amount have now evaporated with the knowledge that prices have just gone up so much. We really regret not doing it."

Matt Karger and Amy Riebe feeling locked out of Perth's booming property market. Picture: Supplied

---

A friend of theirs in the complex paid $370,000 for her apartment four years ago, with similar apartments now selling for $600,000.

"It's an insane market," Mr Karger added. "For us, it feels like being in a casino, and knowing when to cash out is just a question of how much we lose by."

Playing catch-up

Across Perth, home prices have soared by an astounding 18.7% in the year to November, with the median value reaching $778,000. This increase is the steepest in the country, outpacing Adelaide (14.6% to $795,000) and Brisbane (12.6% to $868,000).

Annual price growth in the Western Australian capital significantly surpassed Sydney (5.8%), Darwin (2.3%), Hobart (1.3%), Canberra (1.0%) and Melbourne (-1.6%).

Senior PropTrack economist Eleanor Creagh said affordability compared to east coast capitals and a shortage of stock have been driving prices skywards in Perth for some time.

"Despite recent gains, housing values in Perth are still affordable compared to other capital cities," she said. "After a decade of underperformance relative to east coast capitals, there's an element of catch-up at play.

"Plus we're seeing incredibly tight supply. In some parts of Perth, total stock on market is around 50% below the prior five-year average."

Demographer Simon Kuestenmacher referred to Perth as a "victim of its own success".

"As more people moved to Perth during the pandemic, the city ran out of housing, driving up prices."

Prices in Perth have gone up faster than in any other capital, rising more than 18% in the past year. Picture: Getty

---

'Happily sprawling'

Perth's new residents, often families, are looking for spacious homes, said Mr Kuestenmacher.

"This is a young, active town with many people in their 30s and 40s in the highest spending phase of their life cycle."

Mr Kuestenmacher said while Adelaide is looking to grow primarily through infill development, Perth is spreading outwards, where there's space.

"This is tradie territory. Residents want large houses with double garages. Perth is happily sprawling and building new family-style suburbs," he said.

"As the years progress, millennials living in city apartments will start families, further increasing demand for suburban homes. Their boomer parents in middle suburbs aren’t downsizing, pushing them to the urban fringe."

Perth's property boom continued through 2024. Picture: Getty

---

Ms Creagh said homes in Perth's outer northwest saw growth close to 30% in the year to August, with the southeast and southwest suburbs experiencing about 25% growth.

"Almost all regions in Perth are recording incredible growth. The region that's underperforming is the inner region, which is the least affordable."

Perth-based buyer agent ​​Trevor Dunkley at Property Wizards said the outer suburbs have attracted the most investors due to their relative affordability.

"Joondalup in the north, Ellenbrook in the outer north east and Rockingham in the south have all seen some very good growth over the last year and good rental income," Mr Dunkley said.

Former Sydneysider Scott Moseley, his wife Corrine and their three children moved west in 2018 and bought a family home in Safety Bay near Rockingham.

"We bought it for $475,000, with similar houses in the area now selling for around $870,000," said Mr Moseley.

"We're been so happy with how the market has moved. If we tried to do the same thing now we know it'd be a lot harder. It was really good timing."

The Moseley family moved west from Sydney in 2018 and bought a family home in Safety Bay near Rockingham. Picture: Supplied

---

Room to grow?

Ms Creagh believes that while Perth's property prices will likely continue to rise, the rate of growth will moderate.

"Conditions in Perth remain pretty strong. We may not see the plus-23% growth that we're recording at the moment but Perth is still one of the most affordable capital cities in the country," she said.

"Relative to incomes, prices are still not as high as they are in Queensland, Victoria, South Australia and New South Wales. There's room for Perth to move further."

But agents say rising prices are starting to turn off investors, especially interstate investors, which are a sizable portion of the market.

Aman Singh at The Best Realty Group Armadale in Perth's outer southwest, where the median value for houses has shot up a staggering 42% in the past year, said enquiries from interstate investors though buyers agents have dipped in recent weeks.

"The market remains strong thanks to local buyers and investors enquiring directly, but two months ago, properties were selling within 24 to 48 hours. Now they're taking up to almost a week in some cases. And we're seeing a decline in interest in properties over $700,000," Mr Singh said.

"Buyers agents might be redirecting clients to more affordable areas like Melbourne."

Mr Dunkley also noticed a new "frustration" among investors.

"Some expect to buy the Taj Mahal for $600,000 and are forced to look towards the very outlying areas. The market has come off a bit."

Perth is one of the hottest metro market in Australia. Picture: Sharon Smith

---

The tightness in the rental market also appears to be easing slightly. After years of rental vacancy rates below 1%, Perth’s rate has begun to increase – albeit slightly – by 0.15% in the year to November, bringing it to 0.97%.

"Rental agents say it’s not as frenetic as it was a few months ago, possibly due to a slight increase in stock," Mr Dunkley said.

Because buying prices are now increasing faster than rents, rental yields for investors were also decreasing, he added.

Despite challenges, Mr Dunkley believes the shortage of stock coupled with rising migration will keep prices elevated for the next two to three years.

"It's a case of how quickly the building industry can start bringing new stock to market to reduce that pressure."

Trouble in the city

But it's not just the outer suburbs that will continue to see growth; Mr Kuestenmacher believes migration will continue to fuel price rises in the inner city, too.

"I am certain that on a national level we will continue to see an intake of 250,000 net new migrants per year, who will mainly settle in our capital cities," he said.

Mr Karger and Ms Riebe are grateful they haven't faced the rental hikes of their friends – some as high as $150 per week – as they continue on their mission to buy their first home.

But along with regret, they're also feeling despondent.

"We look at our financial plan and think, if we can just save X amount, that'll be the price point we'll be prepared to pay in a few months," Mr Karger said.

"But then you get there and you see the prices.

"And you go, 'Oh'."