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The real estate market in Perth: 2024 forecast

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As we step into the year 2024, the real estate landscape in Perth continues to evolve, presenting both challenges and opportunities for investors, homeowners, and industry stakeholders.

In this article, we will give you a clear picture of what's happening in Perth's real estate scene for the year ahead.

If you need a full and more detailed report, with fresh data and actionable advice, please note that you can get our property pack for Australia. This pack will also give you unlimited access to our team of experts, allowing you to ask them anything related to the housing market in Perth specifically.

How's the Australian economy doing?

Current state

Understanding the real estate market in Perth, Australia, requires an in-depth look at several aspects, including the country's economic stability, the influence of government policies, and local market trends.

Australia's economy is known for its resilience and stability, which is a critical factor influencing the real estate market.

Historically, the country has weathered global economic crises better than many of its peers, thanks in part to its robust banking system and diverse, resource-rich economy. This stability often translates into confidence in the real estate sector.

Focusing on the real estate market in general, Australia has seen substantial growth over the years. Property prices in major cities like Sydney and Melbourne have been particularly noteworthy, but Perth has also shown significant development. The city has benefited from the mining boom and its status as a hub for services and tourism.

The housing market in Perth has its unique characteristics. It went through a period of exceptional growth, especially during the mining boom.

However, like any market, it has faced fluctuations. In recent times, there's been a stabilizing trend, with moderate growth in housing prices, making it an attractive option for both local and international investors.

Government policies have played a substantial role in shaping the housing market. For instance, policies like the First Home Owner Grant have historically encouraged home ownership among Australians.

More recently, there have been regulatory changes aimed at cooling overheated markets, particularly in Sydney and Melbourne, which indirectly impact Perth's market by altering national investment patterns.

Notable events impacting the real estate market include the Global Financial Crisis of 2008, which led to tightened lending standards, and the aforementioned mining boom, which significantly increased demand for housing in Perth. These events have left lasting imprints on the market's dynamics.

Regarding regulatory changes, Australia has seen adjustments in areas like foreign investment rules and property taxes.

For instance, there have been changes in stamp duty for foreign buyers and restrictions on foreign investments to ensure that the housing market remains accessible to Australians. These changes can influence investor decisions, both locally and internationally.

From a local perspective, Perth is indeed an attractive area for real estate investment. The city offers a blend of urban and scenic living, which appeals to a diverse range of buyers.

Popular areas include coastal suburbs, which offer beachside living, and inner-city suburbs, known for their vibrant culture and proximity to amenities.

For foreign investors, specific incentives include the potential for capital growth and rental yields.

However, drawbacks include regulatory hurdles, such as approval requirements from the Foreign Investment Review Board and additional stamp duty charges.

In comparison to neighboring or similar places, real estate prices in Perth have been relatively more affordable, though this is changing as the market strengthens.

This affordability, combined with the lifestyle Perth offers, makes it an attractive alternative to more expensive Australian cities.

Lastly, the legal framework surrounding real estate investment in Australia is generally stable and transparent. This is a crucial factor for investors, as it reduces the risks associated with legal uncertainties.

Outlook and forecast

Perth's real estate market has unique characteristics that set it apart from other Australian cities.

Its economy and stability have traditionally been closely tied to the mining and resources sector, which has had a significant impact on property demand and prices.

This dependency on a single industry makes Perth's economy and real estate market somewhat different from cities with more diversified economies.

Forecasting Perth's economy and stability, it's essential to consider this reliance on the resources sector. Historically, when the mining sector has thrived, Perth has experienced economic booms, leading to increased demand for housing and higher property prices.

Conversely, downturns in this sector can lead to economic slowdowns. The forecast for Perth's economy, therefore, leans towards a cautious optimism, particularly if commodity prices remain strong and the mining sector continues to perform well.

This could mean a more positive outlook compared to other Australian regions less reliant on resources.

Regarding government policies, there aren't any specific anticipated changes in 2024 that have been publicly announced which would directly impact the real estate market in Perth.

However, it's always wise to stay informed about potential changes in taxation, housing regulations, or foreign investment rules, as these can influence market dynamics.

Several factors suggest improvements in Perth's real estate market. For one, there's ongoing investment in infrastructure, including public transport and urban redevelopment projects, which can make certain areas more attractive to live in and invest in.

Additionally, Perth's lifestyle appeal, with its beautiful beaches and outdoor lifestyle, continues to attract both local and international buyers, potentially driving demand in popular coastal and inner-city suburbs.

However, potential investors should be aware of specific risks. The most significant is the economic over-reliance on the mining sector, which can lead to volatility in the property market.

If global commodity prices were to fall or if there were a downturn in the mining sector, this could negatively impact the local economy and, by extension, the real estate market.

Furthermore, changes in global economic conditions, such as interest rate increases or economic downturns in key trading partner countries, could also impact the market.

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What about housing prices in Perth?

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Current state

In Perth, the real estate market has seen varied trends over the past few years, largely influenced by both local and global economic factors.

Historically, Perth's real estate prices have been sensitive to economic cycles, particularly those linked to the mining and resources sector, which is a major driver of the Western Australian economy.

During periods of economic booms, often fueled by high commodity prices and mining activity, Perth has experienced significant increases in real estate prices. This was notably evident during the mining boom in the early 2000s, where there was a sharp rise in property values.

Conversely, during economic downturns or crises, such as the Global Financial Crisis in 2008 and the end of the mining boom, there was a noticeable cooling in the market, with prices stabilizing or even declining.

Comparing current real estate prices with those a decade ago, there's been a journey of ups and downs. A decade ago, Perth was coming off the highs of the mining boom, and since then, prices have experienced periods of decline and moderate recovery.

Currently, the market is showing signs of stability with a positive outlook. Prices are either stabilizing or gradually rising in most areas, though the pace of growth is not as rapid as in some other Australian cities.

The types of properties experiencing the highest growth in real estate prices are primarily those in desirable locations, such as coastal suburbs and close to the CBD.

Properties in these areas are sought after due to their lifestyle appeal, proximity to amenities, and, in some cases, redevelopment and infrastructure improvements.

Additionally, family-sized homes in well-established suburbs are also seeing good growth, driven by demand for more spacious living environments, possibly influenced by changing lifestyle preferences post-pandemic.

The population dynamics in Perth have also influenced real estate trends. In recent years, there's been a steady growth in population, driven by both natural increase.

This population growth contributes to increased demand for housing, particularly in suburbs that offer a balance of lifestyle, affordability, and access to employment opportunities.

Specific factors driving these trends include Perth's lifestyle appeal, its relative affordability compared to other major Australian cities, and economic opportunities linked to the resources sector.

The city's livability, with its beautiful beaches, outdoor lifestyle, and growing cultural scene, makes it an attractive place to live and invest in real estate.

Outlook and forecast

In Perth, several economic and demographic factors are currently influencing real estate prices.

First, the city's economy, heavily reliant on the mining and resources sector, plays a significant role. When this sector performs well, it often leads to increased employment and higher incomes, which can boost demand for housing and, consequently, push up real estate prices.

Another factor is population growth. Perth has been experiencing steady population increases, partly due to migration from other parts of Australia and overseas.

This growth adds to the demand for housing, both for purchase and rental, which can drive up prices.

Infrastructure development is also key. New transport links, urban redevelopment projects, and public amenities can make certain areas more attractive, leading to increased property values in these localities.

For instance, areas benefiting from new or improved public transport connections may see a rise in property demand and prices.

Looking into the near future, specific factors could lead to an increase in housing prices in Perth. Continued investment in infrastructure, such as the ongoing development of the Metronet rail project, is likely to enhance the appeal of connected suburbs.

Also, any sustained growth in the resources sector would likely lead to economic prosperity, potentially increasing housing demand and prices.

However, these factors may not uniformly affect all cities and regions in the country. Other Australian cities have different economic drivers.

For instance, Sydney and Melbourne have more diversified economies and are less reliant on the resources sector, meaning their real estate markets are influenced by different factors.

On the contrary, there are specific trends or events that could lead to a decrease in housing prices in Perth. An economic downturn, particularly in the mining and resources sector, would likely have a negative impact on property values.

Also, any increase in interest rates could make mortgages more expensive, potentially cooling the housing market.

Another factor could be an oversupply of housing. If new housing developments outpace the growth in demand, this could lead to a surplus of properties on the market, putting downward pressure on prices.

These potential decreases may not be mirrored across all Australian cities and regions. Each area has its unique economic and demographic characteristics.

For instance, cities like Sydney, which face issues of housing affordability and limited supply, might not experience the same degree of price decrease as Perth in the event of an economic downturn.

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How's the demand for the real estate market in Perth?

Current state

In Perth, the current demand for residential real estate exhibits certain distinct trends, reflecting broader economic and demographic shifts.

There was a healthy demand for housing, influenced by factors like population growth, economic conditions, and interest rates.

The balance between buyers and sellers can fluctuate, but there has been a trend where demand, especially in certain suburbs and property types, outpaces supply. This situation often leads to competitive markets, where properties, particularly those in desirable locations or of high quality, are in high demand.

The supply of new housing is a critical factor. There's ongoing development, but in some areas, it struggles to keep up with the growing demand, partly driven by population increases.

This mismatch can lead to upward pressure on prices, especially in popular suburbs or for certain types of properties.

Speaking of property types, buyers in Perth tend to look for homes that offer a blend of lifestyle and convenience. This includes properties near the coast, offering beachside living, and those close to the CBD or well-connected by public transport.

There's also a demand for family-sized homes in established suburbs, reflecting a desire for space and community.

Interest rates for mortgages play a crucial role in shaping buyer demand. Lower interest rates make borrowing cheaper, thus increasing buying power and stimulating demand for real estate.

Conversely, if interest rates rise, it could reduce buying power and cool the market. The exact current rates and their fluctuations would require up-to-date financial data, but generally, even small changes in interest rates can significantly impact the real estate market.

Government policies and regulations also have a bearing on the real estate market. Changes in tax policies, such as adjustments to stamp duty or property taxes, can influence buyer and seller behavior.

Subsidies or grants for first-time homebuyers, if present, can stimulate demand by making it easier for new buyers to enter the market.

Zoning laws, which dictate land use, can impact where and what type of housing can be developed, thereby affecting supply.

Any recent changes in these areas can have a direct impact on the local real estate market, though specific details of such changes would need to be sourced from current local government announcements or policy updates.

Outlook and forecast

Demographic shifts, such as an aging population and urbanization, are significantly influencing the real estate market in Perth.

An aging population often leads to increased demand for smaller, more manageable properties, like apartments or townhouses, especially in areas with easy access to amenities and healthcare services.

This shift can also create a demand for retirement villages or communities designed for older adults.

Urbanization, another key trend, is drawing more people towards the city center and urban areas. This leads to higher demand for properties in these areas, particularly apartments and townhomes that cater to an urban lifestyle.

Young professionals and smaller households often prefer these types of properties for their proximity to work, entertainment, and public transport.

Current trends in household formation also play a role. There's a noticeable shift towards smaller household sizes, partly due to demographic changes like delayed marriages and lower birth rates.

This trend influences the demand for smaller properties, including one- or two-bedroom apartments.

Conversely, there's also a demand for larger homes in suburban areas, driven by families seeking more space, especially in the wake of lifestyle changes prompted by remote work and a greater emphasis on home life post-pandemic.

Regarding real estate as an investment in Perth, there's a growing interest in properties that offer good rental yields and potential for capital appreciation.

Investors often target properties in areas with strong rental demand, such as near universities or central business districts. There's also interest in buying properties in developing suburbs, where there's potential for growth in property values.

Cultural trends and shifts are influencing the housing market as well. For instance, there's a growing awareness and preference for sustainable living, leading to increased demand for eco-friendly homes or properties with green features like solar panels, energy-efficient designs, and sustainable materials.

Younger buyers, in particular, are often attracted to properties that align with their environmental values.

The role of property buying as an investment versus for living purposes varies. While many people buy homes to live in, there's a significant segment of the market engaged in property investment.

This includes local investors looking to rent out properties and capitalize on rental income, as well as those seeking long-term capital gains.

Foreign investment plays a notable role in Perth's real estate market. Foreign investors often target specific types of properties, such as new developments or high-end real estate. This demand can drive up prices in certain market segments.

However, there are regulations and restrictions on foreign buyers, including additional taxes and limitations on buying established properties, which can moderate their impact on the market.

Lastly, niche markets in Perth, like luxury properties or eco-friendly homes, are experiencing their unique trends. The luxury market, for example, attracts a specific buyer group interested in premium locations, high-end finishes, and exclusive amenities.

The eco-friendly housing market is growing too, driven by environmental concerns and a desire for energy-efficient living.

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How's the rental market in Perth?

Current state

The current demand for rental properties in Perth reflects a blend of economic and demographic factors, coupled with the city's unique lifestyle attributes.

Understanding the nuances of this demand requires looking at the types of properties in demand, tenant preferences, and the demographics of the renters.

Firstly, there's a varied demand for different types of properties. Apartments, particularly those in or near the city center, are highly sought after by young professionals and students who value proximity to work, educational institutions, and urban amenities.

These properties often offer convenience and a lower maintenance lifestyle, which is attractive to this demographic.

Single-family homes, on the other hand, are more popular in suburban areas. These are typically favored by families who seek more space, both indoor and outdoor, and a quieter, community-oriented environment. These areas often provide better access to schools, parks, and family amenities.

Shared accommodations are popular among students and young professionals, especially in areas close to universities and major employment hubs. This preference is driven by affordability and the social aspect of living with peers.

When it comes to features sought after by tenants, location is a key factor. Properties close to public transport, shopping centers, and other amenities are in high demand.

Size and layout of the property also matter, with a preference for spacious and functional living spaces. Additional amenities like air conditioning, a garden or balcony, and modern fittings can significantly increase a property's appeal.

Tenant preferences vary between urban, suburban, and rural areas. In urban areas, tenants often prioritize proximity to amenities and employment opportunities, along with the lifestyle that city living offers.

In contrast, tenants in suburban areas might place more importance on property size, outdoor space, and community feel, suitable for family living.

Rural areas might attract those looking for more space, peace, and a connection with nature, although these areas tend to have a smaller rental market compared to urban and suburban regions.

The demographic characteristics of tenants vary across regions. Urban areas, especially those near universities and central business districts, tend to have a higher concentration of students and young professionals.

These groups often have distinct rental needs, prioritizing location and ease of access over property size.

Suburban areas are more likely to attract families, valuing space, safety, and community amenities.

Retirees might be drawn to specific areas that offer lifestyle amenities suitable for their needs, such as low-maintenance properties, accessibility features, and proximity to healthcare facilities.

Income levels and economic factors significantly influence the type of properties tenants can afford. Higher-income tenants might opt for larger properties or those with more amenities in desirable locations.

Conversely, those with lower incomes may prioritize affordability, leading to compromises on size, location, or amenities.

Certain regions in Perth have a high concentration of specific tenant groups. For instance, areas like Nedlands and Crawley, close to the University of Western Australia, have a high concentration of students.

Suburbs like Cottesloe and Claremont attract professionals and families due to their blend of lifestyle and convenience. Regions farther from the city center might attract families looking for more affordable rental options.

Outlook and forecast

The rental market in Perth is shaped by a combination of factors including economic trends, lifestyle changes, demographic shifts, technological advancements, and evolving attitudes towards sustainability.

Economic trends, especially those related to the job market, are a primary influencer. The strength of the local economy, driven largely by sectors like mining, healthcare, and education, impacts people's ability to rent and what they can afford.

When the economy is strong, there's often an increased demand for rental properties as people move to the area for work.

Lifestyle and work patterns, particularly the rise of remote work, are reshaping rental preferences. With more people working from home, there's a growing demand for rental properties with dedicated office spaces or at least an area that can be converted into a workspace.

This trend might lead to an increased demand for larger rental properties, even in suburban areas, as renters seek additional space to accommodate a home office.

Demographic changes are also impacting the rental market. Perth is experiencing a diversification in its population, with different age groups and family compositions looking for rental accommodations.

For example, an aging population may lead to higher demand for smaller, more accessible rental properties, while younger renters might prioritize locations with vibrant social scenes and proximity to urban amenities.

Emerging urban areas are becoming new hotspots for rental properties in Perth. Areas undergoing revitalization or those near new infrastructure projects, like improved public transport, are particularly attractive.

These areas often offer a combination of lifestyle amenities and relatively affordable rental options compared to established urban centers.

Technological advancements and innovations are significantly influencing the rental market. The rise of online rental platforms has made it easier for people to find and lease properties, which increases market efficiency.

Smart home technology, such as automated lighting, heating, and security systems, is also becoming more sought after by renters, leading to a preference for modern, tech-equipped properties.

Sustainability and green living trends are increasingly influencing the rental market. Renters are showing a preference for energy-efficient homes with features like solar panels, water-saving devices, and sustainable building materials.

Properties that offer these features are becoming more attractive to environmentally-conscious renters, possibly commanding higher rental prices.

The rental market forecast varies across different regions of Australia. In cities like Sydney and Melbourne, where property prices are high, the demand for rental properties remains strong.

In contrast, more affordable cities or those with slower economic growth might not experience the same level of rental demand.

The long-term outlook for the rental market in Perth is shaped by all these factors. As the city continues to grow and evolve, with ongoing economic development, demographic shifts, and a growing emphasis on sustainability, the rental market is likely to remain robust.

However, it will also need to adapt to changing renter preferences, such as the need for more space due to remote work and a stronger focus on technology and sustainability.

Finally, niche markets in Perth, like luxury properties and eco-friendly homes, are experiencing unique trends. The luxury rental market is driven by high-income earners who seek premium amenities and locations.

Eco-friendly homes are increasingly in demand due to a rising awareness of environmental issues, leading to a market for rentals that offer sustainable living options.

These niche markets cater to specific segments of the population and are likely to grow as consumer preferences continue to evolve.

Make sure you understand the real estate market in Perth

Don't rush into buying the wrong property in Australia. Sit, relax and read our guide to avoid costly mistakes and make the best investment possible.

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This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.