2025 Perth property forecast: Top five forecasters predict prices will grow by an average of 8 per cent

Property prices will grow an average 8 per cent in 2025, according to five top forecasters, with one foreshadowing the median house value will be close to $1 million by the end of next year. The forecasters have rejected recent claims that Perth property has hit a wall, saying the rally is far from over despite the growth rate slowing by half. It follows a 20 per cent increase in Perth property values in 2024, making it one of the most prosperous years on record for the Perth housing market. Domain chief economist Nicola Powell said the seller’s market will continue in 2025, with house prices set to rise 8 to 10 per to hit $966,000 to $984,000 by the end of next year. Units are forecast to grow by the same proportion to hit $504,000 to $513,000. “Perth is expected to be the nation’s stand-out city in 2025, but we are expecting much slower growth compared to 2024,” Dr Powell said. Property expert Damian Collins, who presides over a $1 billion portfolio through his investment companies, expects a 9 to 11 per cent increase in 2025. Mr Collins said the market was still trying to catch up to massive migration growth in recent years, which had put fresh pressure on Perth’s existing housing shortage. “We’ve seen approximately 89,000 new residents arrive in the 12 months to March 2024, creating demand for around 35,150 houses,” Mr Collins said. “However, only 16,200 new houses were added to the market during this period leaving us with a substantial shortfall of nearly 19,000 dwellings.” But Mr Collins — who relies on a different median index to the one used by Domain — expects Perth will cross the $1 million median house-price threshold at a later date, between 2027 and 2029. Mr Collins believes Perth houses are slightly undervalued at present and will settle into the right price in late 2025. But property expert Gavin Hegney believes Perth houses are fair value already, having recently surpassed Adelaide to resume its traditional position as fourth on the national tally board. Nonetheless, he expects house prices will overshoot fair value — as the market tends to do at the end of a boom — to grow a further 8 per cent over 2025. “We will start the year strong as a seller’s market but end the year weak, as a buyer’s market,” he said. However, he said apartments are currently underpriced, selling about 10 per cent below replacement cost. Price growth is needed in this sector before developers agree to supply more apartments. Mr Hegney expects that in 2026, market prices will likely stagnate — at best. While WA’s strong economic fundamentals will likely continue for years, he claims a shift in sentiment is steadily removing urgency from the market. “The emotional peak was three to six months ago,” he said. However, even with diminishing urgency, he said the market was far from being in balance. Listing periods are about half that of a normal market, at 13 days. There are only 5600 listings, which is less than half the 12,000 to 13,000 supply required for a balanced market. The rental vacancy rate is 0.5 per cent, according to SQM, or 1.2 per cent according to Corelogic, which is below the 2.5 to 3 per cent vacancy of a balanced market. Recent buyers Sian and Ross, who asked for their last name to be withheld, said it was clearly a seller’s market. They missed out on multiple houses over 12 months before securing a four-bedroom home. Ray White real estate agent Beba Ramic said while there had been a slight slow-down in the western suburbs, demand for family homes remained very strong. She said most family homes worth $2 million in the western suburbs usually sold on the first weekend. “It has slowed a little but there will always be people who need to upsize or downsize,” she said. Mr Collins, who runs Momentum Wealth, believes the rental market is also poised for continued growth of 5 to 7 per cent in 2025. Despite a slight rise in rental listings compared to 2023, rental availability in 2024 was between 1650 and 2600 properties, well below the 6000 required for a balanced market. Shelter WA said the forecast indicated a need for urgent rental reform. “Rents have outpaced wages growth and CPI by a factor of five in WA, and we’ve slipped to the least affordable city to rent in Australia in four years,” Shelter WA chair Kieran Wong said. Real estate consultancy Hotspotting is less optimistic about the Perth market, claiming east coast investors had turned their attention away from WA and towards under-valued Melbourne. Hotspotting founder Terry Ryder said a recent ‘sentiment index’ listed Perth as the fourth best place to buy in Australia. “There is mounting evidence that the Perth market has passed its peak and will not be the national leader on price growth in 2025,” he said. Nonetheless, he expects Perth houses will grow 5 to 10 per cent next year and units by 8 to 10 per cent. He expects much of the housing attention will pivot to the unit market, in line with a national trend. Modelling by REIWA forecasts a 5 and 10 per cent increase in house prices next year. Chief executive Cath Hart said the State and Federal elections and interest rates changes, will affect activity in the first of the year. “We know market activity often slows in the lead up to elections as buyers and sellers wait to see the outcome,” she said. “This is especially so when housing is one of the key policy areas — as will be the case in both elections. “The ongoing debate over when interest rates will be cut is also causing some hesitancy in the market. Should interest rates decline we are likely to see market activity increase. “While the urgency seen for most of 2024 is easing slightly, 2025 is likely to remain a seller’s market.”