Perth property prices tipped to rise by nation-leading percentage in 2025

Property prices in Perth are tipped to rise between 14 and 19 per cent while Sydney and Melbourne are forecast to fall by up to 5 per cent in 2025, according to new research.

The average capital-city property price across Australia is predicted to rise by 1 to 4 per cent, SQM Research’s Housing Boom and Bust Report 2025, published on Monday, forecast.

SQM Research founder Louis Christopher said he was “bullish” on the Perth housing market last year, forecasting it to rise between 5 and 9 per cent in 2024.

“As it turns out, we still weren’t bullish enough, with Perth housing prices going to finish 2024 off at nearly up 25 per cent,” he said.

“A combination of solid employment growth, juicy GST tax receipts, strong population growth and ongoing under-building all contributed to the Perth housing boom in 2024.”

Christopher said Perth’s house prices were nowhere near the limits of prices to incomes seen back in 2013, however he identified key risks including a sustained fall in the iron ore price, further interest rate rises and a rise in unemployment.

“If these risks behave themselves in 2025 it’s going to be yet another big year for Perth housing prices,” he said.

“While now somewhat overvalued, the market could easily keep running up before it is too much of a stretch.”

Christopher added low stock implied more price rises were to come in this current boom.

“When I look at dwelling commencements, WA is currently building at half the rate it did in 2015,” he said.

“There is no building surplus coming for 2025, with WA set to build just 16,800 dwellings in 2025 with the state expected to expand by at least 90,000 people next year.”

Perth’s building industry is unable to keep up with demand.Credit: Ross Swanborough

Strategic Property Group managing director Trent Fleskens said property prices would continue to rise until the state bridged the gap between building new homes and our booming population.

“WA households on average hold two people per dwelling. Last year 98,000 people entered the state. Therefore, we would need around 49,000 new homes to accommodate just these new entrants. We built 17,000 new houses last year and that was at our labour capacity.”

SQM Research has forecast the Reserve Bank to cut the cash rate by between 0.25 percentage points and 0.5 percentage points by the middle of the year, which would immediately stimulate homebuyer demand across the country.

Premier Roger Cook said WA remained an attractive place for people to move to.

“They’re coming for the jobs, they’re coming for the lifestyle,” he said.

“That puts pressure on our housing industry, it puts pressure on our housing market, it puts pressure on our rental market and that’s the reason why you’ve seen us put so many policies in place to make sure we give everyone an opportunity to put a roof over their head.”

Perth’s property market outperformed the rest of Australia in September, according to CoreLogic, with a median house price up 24.1 per cent for the year to $797,184 – surpassing Melbourne’s $777,390.

The vacancy rate remains at 1.2 per cent, 4.6 percentage points below the pre-COVID average of 5.8 per cent, highlighting ongoing rental shortages across the city.

Homes are sold on average in 12 days, much faster than the national average of 33 days.