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Perth Property Market: Western Australia property prices continue to rise despite east coast slowdown
- 2 days ago
- 3 min read
As compounding stressors weigh on markets across Australia, one capital city is blasting ahead with house prices continuing to surge.
Perth’s housing market is continuing to defy expectations deep into 2026, with property values surging even as compounding external stressors weigh on markets.
New data from Cotality shows Perth dwelling values jumped 1.5 per cent in May, lifting the city’s median home value to about $1.05 million and making it the strongest-performing capital city market in the country.
A combined barrage of higher interest rates, cost-of-living pressures and new investor tax changes have moved against property prices this year as Australia’s broader housing market begins to slow.
For new buyers on the east coast, the figures are a sliver of hope after years of extreme acceleration. Combined capital city dwelling values slipped 0.1 per cent over the month, with Sydney and Melbourne continuing to weaken amid affordability pressures, higher borrowing costs and softer buyer demand.
But several areas in Western Australia continue to buck the trend. In regional areas outside Perth, dwelling values rising 1.9 per cent in May, more than triple the national regional growth rate.
Unit prices in regional WA recorded some of the strongest gains, climbing 3 per cent over the month.
The strength of Perth’s market is particularly intriguing given expectations that recent federal budget changes targeting property investors would cool demand.
Mortgage broker Loan Market Group reported investor lending through Perth brokers fell 22 per cent in the week after the Budget announcements compared with the previous four-month average.
Despite that, prices have continued climbing.
Cotality said demand-side pressures were building, including tax changes, higher interest rates and broader cost-of-living concerns. However, the firm noted housing supply remains severely constrained, with elevated construction costs and project feasibility challenges continuing to limit new stock.
“Even where approvals and commencements have risen, this upswing is yet to flow through to a material rise in completions,” the report said.
Population growth and tight rental markets are also continuing to support underlying housing demand, despite signs of investor activity easing.
Housing Minister Clare O’Neil said Treasury expected the Budget’s housing measures to have only a modest effect on prices, arguing the changes were designed primarily to improve affordability and help renters transition into home ownership.
Those warnings now sit alongside fresh evidence that a drop in investor lending following the Federal Budget has not yet translated into lower prices. It has reinforced concerns that chronic housing shortages, population growth and constrained construction activity remain the dominant forces driving prices in the capital higher by the week.
Perth’s runaway property market has been building for months, with multiple forecasts warning the city was increasingly diverging from the rest of the country.
Earlier this year, the Real Estate Institute of Western Australia predicted Perth house and unit prices could rise by as much as 20 per cent in 2026 if current trends continued. REIWA president Suzanne Brown said Perth was experiencing “strong demand” while new listings remained below long-term averages.
News.com.au previously reported Perth homeowners could effectively be “earning about $500 a day” through property value growth as prices surged “beyond expectations”, even as higher interest rates and economic uncertainty weighed on buyers.
The city’s affordability crisis has also become increasingly visible at ground level.
In a separate report on first-home buyers, Perth real estate agent Aman Singh described fierce competition and rapidly rising prices as the “new normal”, warning buyers many properties were selling tens of thousands of dollars above asking price.
“Put your best offer forward, there may not be a second opportunity,” Singh said.