Why is Perth’s housing market lagging?

For all intents and purposes, Perth Property should be experiencing a mega boom.

Mortgage demand in Perth is through the roof. New mortgage commitments were up a whopping 106% in trend terms in the year to April, with mortgage demand typically leading dwelling value growth:

Perth mortgage growth

Unprecedented mortgage boom, but dwelling values lagging.

The latest market indicators from the Real Estate Institute of Western Australia (REIWA) shows that for sales listings across Perth were tracking near a 10 year low in March, with only 8,265 properties listed on reiwa.com. The median time taken to sell a property had also cratered to just 16 days in March 2021, down from 59 days a year earlier:

Perth listings and selling days

Perth property listings and selling days have plummeted, indicating a very tight property market.

Perth’s rental market is also incredibly tight. The rental vacancy rate has fallen below 1% and rents are rising sharply, according to the REIWA:

Perth rental and vacancy rate

Perth’s rental vacancy rate has plummeted and rents are surging, suggesting a very tight market.

CoreLogic also reported double-digit rental growth for Perth houses and units in the year to May 2021:

Perth houses and units recorded double-digit rental growth in the year to May 2021, according to CoreLogic.

Accordingly, rental yields across Perth are the juiciest of the five major capitals:

Gross rental yields

Perth rental yields are better than every other major capital.

Perth’s economy is also riding high on the unprecedented iron ore boom.

Western Australia’s unemployment rate is the lowest in the nation at just 4.7% – well below the national average (5.1%):

Unemployment rates

WA unemployment the lowest in the nation.

Western Australia’s final demand growth was also the strongest of all states in the year to March at 3.8% – well above national final demand growth of 1.9%:

State final demand

WA economic growth strong.

Finally, Perth’s relative valuation compared to the other capital cities is the best on records dating back to the early 1970s, thanks to 20%-plus price falls in the years leading up to COVID (also reflected in Perth’s higher rental yields above):

Perth property values

Perth property is good value.

Thus, based on the broad macro-level data, Perth’s property price growth should be outperforming the other capitals.

Strangely, this is not the case with Perth recording the weakest price growth out of the five major capitals this month:

CoreLogic June movements

Perth property growth softer in June.

And by far the weakest growth over the quarter:

CoreLogic quarterly growth

Perth’s value growth lagging.

While Perth’s property market is by no means ‘weak’ – it is still growing at a good clip – it is strange that it is lagging so far behind the other mainland capitals. Maybe it is just a statistical glitch that will be remedied over time.

I am interested in input from Perth readers. Any ideas what is going on?

Unconventional Economist


  1. The prestige end of town is definitely not lagging. Golden Triangle suburbs (Cottesloe, Claremont, Dalkeith, City Beach, Peppy Grove etc) are up 15-25%.

    • Yep, and you can add the inner north (leederville, mount hawthorn, north perth) to that list. Seems like the older, more desireable parts are doing very well with muted growth elsewhere.

      It does seem to have passed a peak though, you don’t hear the stories of a dozen offers being put on a place at the first home open any more that you were mid-late last year, maybe most of the demand was dragged out a bit earlier than elsewhere?

    • GeordieMEMBER

      I concur with you and Simon.

      From what I can tell there is very little in terms of real growth, i.e. to wages and new work, only rewards for those with capital behind them. Wealth begets wealth. People are buying what they can and we know renting is currently less affordable than buying.

      95% LVR mortgage? Not a problem! Here, have a house. No wuccas!

      Shitty estates are being rolled out across farmland and the same boundary-hugging low quality homes are being knocked up all over.

      Take this lot for example: https://www.allhomes.com.au/new-homes/midvale-wa-6056/

      “Generous” 350 – 420 m^2 blocks! What’s not to love?!?

      In mining there isn’t much enthusiasm to get new projects off the ground. Companies are reluctant to loosen the purse strings and spend on expansions and exploration beyond what they need to do to keep their balance sheets and reserves in line with shareholder expectations. While raising money as a junior and IPOs are doing reasonably well, metal price forecasts are conservative which means any marginal project that’s been in the wings for years will remain there indefinitely.

      I can’t see this changing, and if (or when) then IO price comes off the boil, the regression back to recession is going to be slow, tedious, and people will be very glad we aren’t seeing broad 3-5% house price growth per month.

      And Twiggy save us if there is much of a lift in mortgage rates!

      • If a 350 sqm block is “generous”, what is a small block? In Canberra I think tiny 600 sqm blocks are being called “generous”, so 350 m is definitely on the “tiny, miserly, povvo, cramped, miserable, uncomfortable rip-off sh1thole where nobody would ever want to live” side of things.

  2. Anders Andersen

    Live in a riverside sub (Canning R) in a block of 4 villas. One behind me is up for sale and listed at 499k, last sold Mar 2015 for 555k and has been on the market for close to 10 wks with no interest according to the owner. Even had a mid week home open at 6.30pm with no one attending! Another one sold in 2017 for a loss of 115K, not including a small reno.

    I’ve come across a lot of people who are still under water from up to 10 yrs ago, media are pushing the “the market is hot” but can’t help but feel people aren’t swallowing that. Have also read of two high end sales, one that was a penthouse at the Raffles Hotel complex that lost 1.3m over I think 14 yrs and one in the western subs for around the same loss over 10yrs. I’m surprised the listings are low as I see quite a few signs up but no real evidence of fast sales.

    Can’t help but feel the interest is limited, as Mathews states, to the higher end suburbs and family homes. Think the investment side of things is dead.

    • That’s very surprising with interest rates at 2% if not some fixed rates in the 1s

  3. The fed broke it. Now, they own it.

    Negative equity scarring takes a decade or more to heal. Those still underwater can’t refinance to a cheaper loan. The Scarborough house I bought in July last year sold new in 2009 for $832K, resold in 2014 for $762K and I purchased for $760K with the previous owner spending more than $70K on improvements. That is typical of most houses in Perth over the past decade.

    • It’ll be much much worse this decade in Melb and Syd and I’d pretty much say the whole east coast
      It’ll be a decade of negative equity. THE FED, no one on the east coast can see what’s ahead,
      People in perth understand and friends I know that have lived in UK & USA understand
      It’s an experience that not many have had on the east coast
      Everyone over here still thinks property just goes up for ever & they even think this time when interest rates rise, prices in Sydney & Mel will rise too..

      The falls on the east coast will be historic,it’ll be a major shock over here when

      1 interest rates rise (RBA said they won’t for 4 years, which is funny because the market determines interest rates)
      2 when prices fall

      I had a friend in UK, in GFC said there were riots out the front of banks

      There will be massive protests which could lead to violence once people over here realise the lie they’ve been fed

      In GFC in AUST banks locked customers in at 8% when rates dropped to 4 or 5% and people were throwing things at the CBA branch 13 years ago

      It won’t be water & flower bombs this time

      • Fishing72MEMBER

        Agree. I know plenty of people who paid close to a million dollars for homes in the Pilbara at the peak of the boom, which subsequently went down to 25 percent of their price. Also plenty of crew around the rest of WA who watched their house prices stagnate at best. They’ve been there, done that.

        Now I’m on the upper mid north of NSW in a town which barely registered any real estate price increase in the past couple of decades prior to the last year. This town seemed completely exempt from the boom. Since then it’s virtually doubled in price around here. Those who’ve relocated from the capital cities believe that this is a normalisation of prices and is now set in stone, despite there being zero increase in amenities, infrastructure or availability of services. It seems exactly like the WA boom to me- rapid rise predicated on a Ponzi mentality without any real increase in fundamental value. Particularly when fundamental value increase is primarily driven by scarcity. Like the Pilbara, there is plenty of available land, the scarcity being driven by council decree.

        • Fishing

          It will just reverse down , at some point the market just runs out of buyers …. no different to any markets I’ve traded in

          It’ll reverse prices will fall almost everywhere but good places in demand supply etc will be better than others

          It’s just a stampede of FOMO, it doesn’t take much to turn down, I’d say Sept Oct you’ll see price falls

          People think prices plateau to a new higher level they don’t

          And water will find its level in each different property segment location etc

          This has all been manufactured by central bank liquidity fake unsustainable interest rates

          It’ll be very hard for them to print more once prices fall because it’s causing inflation and they know it, once inflation gets out it very hard to put back in because the longer they leave it, the higher it gets and the harder they need to tighten

          I understand there is the transitory v non transitory, my personal view we are a few months away from it being obvious to everyone inc RBA inflation is a problem

          Let’s see in SEPT around.. but think interest rates will rise out of cycle as bond yields rise in H2

          The move down now in bond yields is just a counter trend correction before higher maybe 3.% on the 10 year bond in September October

          Home loan rates will be 4% in October around, putting aside my world wide financial crisis

          You’ll see interest rates rise before the crisis

          You just have to be careful and not borrow too much

        • Display NameMEMBER

          My older son is doing a masters in finance and one of his recent lecturers makes comments about the economy that I have often made. Not sustainable, endless QE will not end well etc etc. Any one under 50 really has not seen a recession or house prices go down significantly (on the east coast, and I don’t call 10% significant). I am not sure when the wheels will fall off, perhaps we will go down the negative cash rate rabbit hole from which *no-one* has articulated a sensible path back.

          I dont believe the current state is the new normal. When 15+% of the Russell 3000 are zombie companies, QE is the solution to everything, risk is no longer priced correctly. Unintended consequences are likely to pull this mess apart. Just a matter of when. My son is gradually cottoning on. He does due diligence on large industrial real estate deals. Prices are going up and yields coming down. Some companies are picking up deals just for cashflow. There is a point where this no longer works….

  4. Chayan GunendranMEMBER

    Agree with all above. Lack of confidence after previous downturn coupled with uncertainty for Iron Ore pricing (ie: heaps of people expect the “bottom to fall out” from current price-boom in commodities).

    Also, possibly a lack of foreign buyers who didn’t understand the commodities driven nature of the economy & used to drive-prices higher in the past.

    • C'est de la folieMEMBER

      That would be the open encouragement to stalking, harassing and general psychopathic behaviour we all know is implicit in the way our elites wants us to behave

      • That’s next but I tried to refrain from saying it

        Just put a sign up out the front…. willing to consider selling for BJs… is that against the law ?

        I’ll wait until next year when sellers will have to offer the sane to buyers and it will happen . You wait

        Mark in your diary June 20 2022 .and let’s revisit

        I’d say this time next year there will be rarely any auctions, auction market will be virtually finished and stamp duty will be gone for a OO land tax

        Private sale…. and sellers will offer buyers extras thrown in.. maybe the car too ….. and maybe what you say above

        You wait

  5. There is a lot of infill occuring in the northern suburbs of perth that is agressively being pushed by the councils. So in my area ive seem many regular sized blocks sold and knocked down several units put up. As an example i saw one block sold for 650K and the builder has put up 3 x mini houses for 540k each. Two sold before construction even started.
    Could it be possible that the knocking down and building of new houses is affecting the stats of how house price rises are collated. You had a house that sold at x$ replaced by 3 houses 1/3 the size but only slightly cheaper. The builder makes out like bandits but it wouldnt be resgistered as house price increases.

    • The builder has sold off plan but he won’t be able to build for the price he thinks
      Material prices are much higher and shortages
      All these builders will get seriously burnt

    • Great point. The old shrinkflation strategy. In the Innaloo area I can count off the top of my head at least 5 single house properties knocked down to build 8 apartment blocks. Don’t know who the the hell they’re selling to at 400k a pop for a 2bd 2bt. Would understand if there was big immigration……but there isn’t. The the thing I noticed is on a sqm basis the new apartments are all around the $4000 mark where a house is at the $2500 mark. Is all this explained by building depreciation? Seems crazy the premium people are willing to pay for new.

  6. https://www.domain.com.au/news/here-are-all-the-ways-to-convince-someone-to-sell-their-house-1064692/amp/

    I’m not sure what age the readers are, but in the article I posted above and again here. This is exactly what happened in 2007

    I know because I was one of the ones who sold and bought……..it was right before the GFC

    I sold in middle park a single fronted home ……I had queues to get into my home.

    I bought in 1998, and it sat on the market for months absolutely no buyers

    My first home I bought a little single fronted home in hawthorn in 1994……and sold in 1998….at the sale auction in hawthorn 1998, no one even turned up at the auction. it was embarrassing

    You’ll see these days again……if you’ve been around you know these things happen in cycles

    When you desperately need to sell and no buyers it’s terrible, Perth probably understand

    No one in Melb understands

    My close friend was selling his apartment in cremorne, right on the water…..it was a Art Deco you walked down stairs, quite large 2 bedroom big balcony …think looked into a little bay so direct on the water

    It was for sale for $780k, couldn’t get one buyer for a long time ……2003 I think thereabouts

  7. Fishing72MEMBER

    Agree with all of the above. I also think that the debt saturation of Sandgropers is higher. Virtually everyone I knew whilst living in WA for 25 years was gouging themselves on mortgage and personal debt, to a degree that I’ve not witnessed anywhere else except amongst the “savvy investor” types. It seems that almost everyone was a savvy investor in WA during the boom. Their is a residual hangover from this debt saturation which prevents the willingness to jump in even deeper after experiencing the negative equity of the last few years.

    This is exacerbated by the belief that the interstate migration to WA has been cut off at the knees. There’s unprecedented domestic tourism and travel to WA from the other states but it is limited to swimming with Whale sharks and taking selfie’s at wineries and Coral Bay. No one is moving there now, particularly because they never know when they’ll be prevented by border closures from seeing their interstate relatives. As much as Vicco, WA needs the international immigration Ponzi scheme to recommence in order to turbo charge the housing market.

    Properties still seem to be moving in certain locations though. Down Ocean Beach , Denmark way they do t seem to remain on market for too long at all. There seems to be substantial increases in prices too.

    • @ bnich
      Good call on the snap back yesterdAy. Looks like it’s choppy ahead before we go over the fall.

      • No don’t believe there is a fall, think we’ve bottomed now for higher… I said on weekend that 7460 might be the bottom in the AUD.. let’s see
        FED really didn’t do anything, it was just a panic
        Think equities commodities etc just keep going higher

        My guess is everyone will think like you and sell into each rally waiting for the crash

        Shorts will just keep getting stopped (trying to pick the top, fuels more rises) and also many have jumped out are forced to chase market higher
        This can really cause pretty fast rises

        My feeling many of the big Wall Street trading desks are short… lots of hedge funds short too.. sentiment has been pretty bearish since FED meeting which really didn’t say much at all
        I definitely could be wrong but I said at Easter we were going vertical into a blow off … think I was too early …

        Think we are really about to get going

        Think we are close to going vertical st speeds unimaginable

        Let’s see, it’s crazy out there

        Don’t think any water fall ahead ..

        As you said choppy … and everyone is nervous

        I think, we are going to see rises that will be historical

        We all need to be careful here… looks like it’s about to go straight down or straight up

        I’m leaning towards up

        Dow Futures were down 250 this time yesterday up over 600

        That’s a 800-900 point reversal in 24 hours

        Don’t think we’ve seen a points move like that in several months

        Think we are heading into those moves again

        Pretty significant

        ** really do think we will see $300 iron ore and maybe higher

        I don’t want to say yet but if we do see $300 think we may see $400 to $500… that’s just a guess at this stage- bit extreme let’s sit on that one for now

        • The Grey Rider

          @Bcnich…when do you think the vertical move in markets ends?…Q3 or 4 this year?

  8. SpannersMEMBER

    The lead up to 2007 was exponential property growth. Coinciding with this (~2003-2008) was rapid growth in iron ore output. During the lead up to 2007 we brought a block of land for $93k and sold it 18 mths later for $193k. Then came 2008 with savage property price declines particularly in places like Mandurah. I think the lessons of 2008 and again 2015 have created this mindset whereby employment and property growth are subject to commodity cycles and commodity cycles can turn quickly. As a result we are really cautious.

    I still feel the shivers down my spine thinking about 2008 when the mine manager called us all into the workshop of a large iron ore mine and told us they would do there best to keep as many jobs as they could and that everyone one was to take 2 weeks annual leave emmediately, barring a skeleton crew. Keen to see your analysis MB.

  9. I’m in Landsdale NOR, seen a few houses listed and under offer in record time, not normally that fast, hardly a statistical worthy observation maybe. Also, for the jobs side, been some more activity in the engineering construction side, with FMG hiring for their Green Hydrogen, over 300ppl in 8mons. But it still seems a bit cautious to me, it’s not like companies are going into a bidding war for workers and offering much more in return, maybe that is reflected in the slow price growth as workers are cautious too of committing to a loan and then being out of work. My 2c worth.

  10. I hate to say it but syd, mel and bris are now part of the global blue chip cities to park your foreign cash. Perth is not.

  11. I grew up in WA, lived there for 40 years until leaving three years ago. During the mining boom everyone was a property speculator. The FIFO guys earning $150k+ who would normally be earning $40k as a labourer, leveraged themselves into multiple investment properties. One person I know bought three properties in Karratha and Onslow for a total of $1.5m, borrowed against “equity mate” in the family home. By 2016-17 they were all sold for a $900k loss, and they’re now bankrupt and renting.

    Another acquaintance leveraged into a $5.6m portfolio of 14 properties at the peak of the market, with a $4.6m mortgage. He’s now significantly underwater on 12 of them, probably -20%. The two properties that do have equity (one of which is his home) have been on the market at a ~15% loss just to clear the mortgages, but no bites for more than six months.

    My gut feeling is that there are a lot of people who are underwater and simply can’t sell. Throw in stamp duty, fees and reno costs, and there’s also a mental barrier when selling at the price you bought at is still a significant loss.

    Overall, everyone in WA has a mate who’s been burned, so you have people who are unable to sell combined with potential investors who are seeing their friends drowning in negative equity.

    • To explain the growth at the top end of town, a lot of those folks maintained their incomes throughout, unlike the FIFO set. I spent ten years working in engineering in the medical industry, and a lot of the medical specialists live in Mosman, Dalkeith, Peppy, Cottesloe. They will seize on the opportunity to upgrade if they perceive that the market is at a low, and the banks will write a blank cheque to a couple of medical specialists earning $1m a year.

      A lot of the wheatbelt old money farmers maintain properties in the Golden Triangle – somewhere to stay when they visit the city, and somewhere for their kids to live when they’re at uni. Cottesloe is a hot spot for that, and Como / South Perth for the less wealthy farmers. My ex (circa 2003) is from a farming family. Her dad bought her and her two siblings a $500k house each in Cottesloe when they turned 21. Nice work if you can get it.

  12. Diogenes the CynicMEMBER

    The first lockdown last year saw about 5000 FIFOs move from east coast to Perth. Many of them bought creating a noticeable market effect. Then we had a goodly amount of expats returning to escape COVID overseas – this was evident in desirable innner city and the triangle suburbs as some were cashed up. I sold a second hand fridge to one such family. Jobs are generally good, but there are some spots of weakness in oil and gas Chevron laid off a lot of locals last year and the project work for oil and gas guys has slowed. The inner city and triangle are up 15-20% based on preCovid numbers. The outer burbs have wrestling with the effect of new housing which is cheaper than than not quite as new housing. The build material shortages will probably save them. The key is that the effects of the sudden FIFO wave and expats back to Perth are probably finished so population growth is flattening and if there is a slowdown in projects then Perth will plateau again.

    • BubbleyMEMBER

      Those are some very good points.

      I’d forgotten about the FIFO’s relocating to WA so they could continue to work.

  13. pfh007.comMEMBER

    “..Why is Perth’s housing market lagging?..”

    Probably because people in Perth know very well from recent experience that residential vacancy rates of 5-6% are powerful in driving down rents and prices.

    They are probably less convinced that property must always go up.

    It would not take much in the way of sensible policies for property to lose its mojo.

    Remove the capital gains tax for new construction and let the industry build baby build as the speculators go wild and vacancy rates across the nation reach 4-5% and then hold them there. If the speculators run out of gas get the government building housing again and selling it off to first home buyers with no reserve.

    It is always possible that Albo will grow a brain and grasp this policy with two hands.

    More likely Barnaby will grab it and Albo will oppose it for the sake of it.

    • Strange EconomicsMEMBER

      Even the liberals havent thought of the benefits to the housing market of completely removing CGT.
      The 50% discount to CGT was what turned property into a no brainer – Costellos gift to speculators and bomb to housing affordability.
      So still to come in housing
      – Remove Irresponsible lending laws (as people are not getting into the Perth like debt quick enough)
      – Completely remove CGT
      – Super into FHBs – gotta get this going so starter homes go up to a million
      – Allow tax deductions for owner occupiers (to counter the above speculators)

  14. Its exactly as said already- FIFO’s and expats relocating here has more or less been done now. That wave of buying coupled with a bit of FOMO from locals caused a very hot 3-6 month period. Its now normalised I would suggest.
    Perth is also very much 2 separate markets in the high demand western suburbs and the rest.
    I live in Darlington in the hills and needed a re-val done as I was refinancing to a lower rate- the valuation came in way above expectations and was based off the trend at the time. I reckon if getting it done now wouldn’t be so optimistic.

  15. I am in SW WA and at an age that I now qualify for Pfizer. People of my age experienced the big 2000’s boom with many using this increased equity to leverage into additional properties. As said in other comments, we all know someone that came unstuck. There is no rush from people of my age to go back into the market (other than owning their PPR).
    Plus we all know it is only a matter of time before the leaner states (Hi Victoria, Tasmania, South Australia) come hunting our GST and unsold state assets….

  16. Agree with other comments that Perth goes into delirium when the boom is on – then people get burnt in real estate, and other stuff like tax-minimising almond trees. In the last few years people I know have turned to buying gold, and renovating their own home, rather than move up to a more expensive house.

  17. BubbleyMEMBER

    Gotta say… Darwin has gone vertical for no reason.


    We have a lot of covid refugee’s but now the vaccine is available, I don’t know if they will stay. It might change when the build up arrives but right now, this little city has gone completely nuts.

  18. innocent bystander

    Perth Hills:
    desirable family homes, or almost anything actually, selling fast and are up 15%-20%
    been like the last 9 months.
    hasn’t slowed much, if at all.

  19. Much supply. Limited demand. If you view a house as a functional item rather than as an investment or lifestyle, you can house yourself very cheaply in Perth. There are houses around for less than 200k. Not nice suburbs, but nobody has to compete hard if they don’t want to. Many don’t.