As we approach the end of 2024, it’s an ideal time to reflect on the key trends that shaped Perth’s property market this year and forecast what might be in store for 2025. Perth’s housing market has seen its share of unique challenges and opportunities, from record-low vacancy rates and resilient demand to price increases. For prospective homebuyers, investors, and industry professionals, understanding these trends and their implications for 2025 can offer invaluable insights.

2024 Perth Property Market Recap

1. Strong Demand and Limited Supply

In 2024, Perth experienced a pronounced mismatch between housing demand and supply. Western Australia’s economic resilience—bolstered by a thriving mining sector, government infrastructure projects, and migration—drove significant demand in the housing market. Population growth increased faster than housing stock, leading to record-low vacancy rates and competitive market conditions, especially in highly desirable suburbs.

2. Rising House Prices and Rental Rates

The demand-supply gap translated into a surge in house prices across Perth. CoreLogic data shows that median house prices in Perth have climbed by around 6-8% since the beginning of 2024, with higher rates in certain areas. Rental markets also saw an upward trajectory, with a double-digit increase in median rental prices, making affordability a central concern for many renters. Vacancy rates dropped to below 1% in the Perth metro, with near-zero vacancy in high-demand locations like Scarborough, Fremantle, and Victoria Park.

3. Interest Rate Sensitivity

In 2024, the Reserve Bank of Australia kept interest rates stable, but earlier hikes from previous years still affected the borrowing capacities of buyers. With mortgage repayments remaining high, Perth homeowners opted to downsize or enter the rental market, while first-time buyers faced affordability challenges.

4. Rise in Unit Demand

While house prices rose sharply, buyers turned to units and townhouses as more affordable alternatives. This led to increased demand in Perth’s inner-city and suburban apartment markets, where prices remained relatively lower. The appeal of low-maintenance living and proximity to urban amenities further drove this trend, particularly among younger professionals and downsizers.

5. Development Constraints and Labor Shortages

Perth’s construction sector faced challenges, including labour shortages and high material costs, slowing down the rate of new developments. Government initiatives and grants aimed to alleviate the housing shortage, but logistical issues made the expansion of housing stock slower than expected.

Key Trends Shaping the Perth Property Market for 2025

Looking ahead, several key trends are expected to continue influencing the Perth property market:

1. Continued Population Growth and Demand Pressure

Western Australia’s economy is likely to stay strong, attracting both domestic and international migrants. This population growth will put continued pressure on Perth’s housing demand. Migration, especially from eastern states, will increase competition for property in high-demand areas. The challenge is still whether the market can address this demand through new housing supply or if prices will continue rising.

2. Gradual Cooling of Price Increases

While price growth was robust in 2024, the market is expected to see more gradual appreciation in 2025, potentially in the 4-6% range. Stabilising interest rates and the high base effect from the recent price surge may moderate gains. Suburbs that saw the highest growth in 2024 might see slower appreciation in 2025, as demand shifts toward more affordable areas or toward units and townhouses.

3. Persistent Rental Market Tightness

The rental market is expected to still be tight in 2025, especially in inner-city and high-demand suburbs. Vacancy rates are likely to stay low, with an anticipated 5-10% increase in rental prices. This pressure will likely affect affordability, making it challenging for lower-income renters and prompting some to consider relocations to outer suburbs.

4. Increased Interest in Affordable Suburbs

With house prices high across many central suburbs, buyers and renters may increasingly turn to affordable suburbs, which could appear as Perth’s next hotspots. Areas like Armadale, Midland, and Baldivis may see heightened activity as they offer relative affordability and proximity to transport links or employment hubs.

5. Continued Appeal of Units and Townhouses

The trend toward units and townhouses is likely to continue, especially as affordability becomes a more significant factor. In 2025, investors and young professionals may find value in inner-city apartments, while downsizers might continue to opt for townhouses with access to amenities and less maintenance.

Predictions and Opportunities in Perth’s 2025 Market

With these trends in mind, several predictions for 2025 could present opportunities and challenges in the Perth property market:

1. New Developments and Government Intervention

Government efforts to address housing supply and affordability are expected to continue into 2025. The Western Australian government has proposed policies aimed at accelerating construction timelines and providing incentives for developers to build affordable housing. This intervention could slowly increase supply, helping ease housing constraints over the next few years.

2. Technological Integration in Real Estate

The digital transformation of real estate is poised to advance in 2025. Virtual tours, AI-powered property matching, and online platforms for buying and renting homes will enhance the buying process. As more Australians, including those in Perth, turn to online tools, real estate agents and developers may increasingly use technology to market properties, simplify transactions, and improve customer service.

3. Potential Stabilisation of Interest Rates

The Reserve Bank’s monetary policies will continue to be a critical factor in the market’s behaviour. With a possible stabilisation of interest rates, there’s potential for renewed buyer confidence, particularly from first-home buyers who have been waiting for favourable conditions. A stable interest rate environment could lead to steadier market activity and price adjustments.

4. Focus on Sustainable and Energy-Efficient Homes

An increasing emphasis on sustainability is likely to emerge in 2025. With rising utility costs, demand for energy-efficient homes that reduce ongoing expenses could see growth. Properties with features like solar panels, energy-efficient appliances, and sustainable designs will likely become more attractive, especially among environmentally conscious buyers and those looking to reduce long-term costs.

In conclusion Perth’s property market in 2024 showed resilience amid high demand, limited supply, and rising prices. Looking forward, while market challenges are expected to persist, Perth’s growth prospects are still positive. The city’s economic strength, population growth, and emerging technology in real estate will continue to shape its property landscape. Whether you’re a buyer, renter, or investor, 2025 will bring opportunities to capitalise on evolving trends and navigate the unique dynamics of Perth’s property market.

Tips for Buyers and Investors

1. Consider Affordability Trends: Look beyond high-demand suburbs to find value in emerging areas.
2. Stay Informed on Government Incentives: Policies could provide grants or benefits for new homebuyers or sustainable properties.
3. Explore Long-Term Investments: Sustainable homes, units, and townhouses in affordable areas may yield significant long-term returns.
4. Monitor Interest Rates: Stabilising rates could open new buying opportunities.
5. Perth’s property market in 2025 is set to evolve, providing plenty of opportunities for those who are ready to navigate its unique challenges.