The Perth property market has demonstrated exceptional strength throughout 2024, defying broader economic headwinds to deliver remarkable growth. As we look ahead to 2025, multiple factors suggest this momentum is set to continue, though the pace and dynamics of growth may shift as market conditions evolve.
Our analysis at Momentum Wealth points to solid growth in 2025, with residential property values forecast to increase by 9 to 11 per cent, building on the robust performance that saw house prices surge by 20 per cent in the 12 months to October 2024.
Market fundamentals driving growth
Perth’s property market dynamics continue to be influenced by a persistent imbalance between supply and demand. Property listings have remained consistently low throughout 2024, fluctuating between 3,000 and 5,000 properties – significantly below the 13,500 listings typically associated with a balanced market. This supply shortage has led to remarkably quick selling times, with properties typically selling in less than two weeks.
The rental market has experienced similar supply constraints, with available listings ranging between 1,650 and 2,600 properties throughout the year, well below the 6,000 listings required for a balanced rental market. This undersupply has contributed to considerable rental growth, with forecasts indicating further increases of 5 to 7 per cent in 2025.
Construction sector challenges
The construction industry continues to face significant headwinds, further contributing to supply constraints. While there were 23,303 dwellings under construction in the June quarter of 2024, only 3,957 were completed, as project timelines extended due to ongoing supply chain disruptions, labour shortages, and rising material costs.
The state government’s introduction of a $10,000 relocation bonus for construction workers aims to address these challenges, though this initiative may temporarily increase housing demand as these workers require accommodation themselves.
Population growth and affordability
Western Australia’s strong economic fundamentals and relatively affordable housing market continue to attract both interstate and international migrants. The state recorded the nation’s highest population growth rate at 3.1 per cent during the March 2024 quarter, with approximately 89,000 new residents arriving in the 12 months to March 2024. This influx created demand for around 35,150 houses, while only 16,200 new houses were added to the market during this period.
Perth’s relative affordability remains a significant drawcard, with local families typically allocating 39.5 per cent of their income to mortgage payments, compared to substantially higher proportions in other states (57.9 per cent in NSW, 46.8 per cent in Queensland, and 46 per cent in South Australia).
Market outlook and considerations
While the market shows strong growth potential, several factors warrant consideration. The cash rate remained steady at 4.35 per cent throughout 2024, though banks have begun lowering their rates in anticipation of potential decreases in early 2025.
This development, combined with Western Australia’s robust economic fundamentals and strong employment market, continues to offset challenges posed by inflation and cost-of-living pressures.
Government initiatives to boost housing supply are progressing, with efforts focused on attracting construction workers, streamlining planning processes, and increasing supply across all market segments. However, the full impact of these measures will take time to materialise as the construction sector works through its current challenges.
Heading into the New Year, Perth’s property market fundamentals remain strong, supported by sustained population growth, limited supply, and relative affordability.
However, as always, careful consideration of property selection remains crucial for investment success in the evolving market landscape.
Data sourced from REIWA, REIA, ABS & Momentum Wealth Research
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