What's Really Happening in Perth — And What Should You Do About It?

In my last post, I wrote about the Perth market shifting from frenzy to something closer to normal. Since then, a few more weeks of data have come in, and I've had a lot of conversations with homeowners and buyers who are genuinely unsure what to make of it all.

The most common questions I'm hearing are: Is Perth going to follow Sydney and Melbourne down? Should I sell now before it gets worse? Is now actually a good time to buy? And what about all that stuff in the news around negative gearing and tax changes?

These are fair questions. Let me try to answer them honestly, using the most current data available.

Where the market sits right now

The week ending 5 July saw 719 sales transactions in Perth — up 12.5 per cent on the previous week, with land sales surging. That's a decent rebound from the quieter mid-June period and suggests buyers haven't disappeared, they've just become more selective.

But the bigger picture on supply is undeniable. Active listings in Perth crossed 6,000 for the first time since April 2023 at the end of June, sitting at 6,184 as of early July. That's 68 per cent higher than a year ago. For context, we spent most of 2024 and early 2025 operating with 3,000–4,000 listings — conditions so tight that almost any property sold quickly regardless of how it was presented.

Prices are still rising, but at a slower pace. The median Perth house price reached $930,000 in June — up 1.1 per cent for the month and 16.3 per cent year-on-year. Units hit $670,000, up 1.5 per cent for June and 21.8 per cent annually. Those are not the numbers of a market in distress.

What has changed is the dynamic between buyers and sellers. Three in 10 houses in June sold below their listing price. At the peak earlier this year, that figure was one in 10. Of those who did discount, the average reduction was 7.5 per cent. The median time to sell has stretched from under two weeks in February to 18 days in June for both houses and units.

Again — 18 days is not a crisis. It's just a market where buyers have time to think.

Is Perth about to follow Sydney and Melbourne?

This is probably the question I get most, and my honest answer is: the structural conditions that drove Perth's growth are fundamentally different from what's happening in the southern capitals right now.

Sydney and Melbourne saw years of rapid price growth off much higher bases, in oversupplied apartment markets, in cities with significantly softer economic outlooks. Sydney values are now 2.1 per cent below their November 2025 peak. Melbourne is 3.2 per cent below its March 2022 high, and barely grew over the past year.

Perth grew nearly 26 per cent in value over the past 12 months according to Cotality, compared to 0.5 per cent for Melbourne. Perth entered this period of higher rates from a much stronger demand position, with a genuine structural undersupply of housing, an economy backed by the resources sector, and population growth of 2.2 per cent in the year to December 2025 — the strongest of any state or territory.

The softening we're seeing in Perth is interest-rate driven and sentiment driven — it's not a reflection of weak fundamentals. Sydney's softening reflects both. That's a meaningful difference.

Will Perth prices fall? A period of flat or mildly negative monthly growth is possible if rates stay high and sentiment remains cautious. But a structural downturn of the kind east coast markets have experienced would require Perth's economy to weaken, population growth to reverse, or supply to dramatically increase. None of those are on the immediate horizon.

Something investors should know (and homeowners too)

I recently came across a detailed piece of research from Cotality that I think has real relevance for anyone thinking about property in Perth right now — buyers, sellers, and long-term holders alike.

The research looked at roughly 2,300 areas across sixteen years and found something consistent: areas with a higher share of owner-occupiers have generally delivered stronger long-term capital growth than areas dominated by investors and renters — particularly in the unit market.

Between 2010 and 2026, units in owner-occupier-dominated areas grew 99 per cent in value. Units in investor-heavy areas grew 65 per cent — a 34 percentage-point gap. On a $436,000 unit purchased at the 2010 national median, that difference is worth around $148,000.

Why does this happen? Three reasons stand out. First, owner-occupiers buy for lifestyle, not yield, so they're less reactive to price signals and more likely to hold — which creates stability. Second, owner-occupier areas tend to have the things that underpin long-term demand: good schools, walkable amenities, transport access, and a strong pool of dual-income families. People pay a premium to be in these areas because they use that value every day. Third, the unit supply problem: developers build where investors buy, so investor-heavy unit markets tend to see new supply arrive exactly when demand softens, capping growth.

For houses, the effect is less pronounced — ownership mix matters less as a predictor when supply is constrained and the fundamentals are strong.

What does this mean for suburbs like Rossmoyne, Shelley, and Riverton? These are precisely the kinds of areas the research describes as owner-occupier driven. School zone premiums are real here. Families buy to stay. The demand base is less speculative, and therefore more durable. That's one of the reasons I feel confident recommending this corridor to buyers looking for long-term value — the ownership composition works in their favour.

For anyone looking at units specifically: the research suggests being thoughtful about which market you're buying into. A unit in a high-rental, investor-heavy area may offer a yield today but carries more capital growth risk over the long run, particularly as Federal Budget changes to negative gearing reduce investor appetite for established properties.

What the Federal Budget changes actually mean

There's been a lot of noise around this, so let me cut through it simply.

From 1 July 2027, new purchasers of established investment properties will no longer be eligible for negative gearing. Properties already owned before that date are grandfathered — existing investors keep their current tax treatment. New builds retain full negative gearing incentives.

The short-term impact on Perth has been a drop in investor enquiry, which REIWA members have been reporting consistently since the Budget. That reduction in demand has contributed to the softening of the market in May and June. First home buyers have also pulled back, partly due to concern about media headlines and uncertainty around further rate rises.

The REIWA President's comment on first home buyers is worth noting here: if you're planning to live in a home for five or more years, the current environment is not a reason to wait. In fact, the softening we're seeing has created conditions buyers haven't had access to for a couple of years — more properties to choose from, more negotiating room, and more time to make considered decisions.

What does this mean for sellers? The pool of investors looking to buy established homes in the second half of 2026 will be smaller. That isn't catastrophic, because owner-occupier demand in suburbs like ours remains real. But it does reinforce why price accuracy and presentation matter so much right now. The buyers who are active are doing their research and they have alternatives.

Planning reforms: a long-term signal

Something that didn't get much attention amid all the budget noise was the State Government's announcement of significant planning code reforms, effective around mid-2027.

The headline change is that the minimum lot size to subdivide in R20-zoned areas will be reduced from 900sqm to 700sqm. This opens up subdivision potential to a large number of established Perth homes that previously sat just below the threshold. Alongside this, many simple residential works — renovations, single house builds, patios, carports — will no longer require planning approval, reducing red tape and build timelines.

In practical terms, this is unlikely to flood the market with new supply quickly. The State Government estimates it will take 10–15 years for most homeowners to take advantage of the changes. But the policy intent is clear: the government recognises Perth needs more housing in established areas, and it's removing barriers to deliver it.

For owners of 700sqm+ blocks in well-located inner and middle-ring suburbs, this is a material change worth understanding. For buyers, it's a signal that the supply pipeline in these areas will gradually improve over the coming years — but not overnight.

So what should you actually do?

That depends on your situation, but here's my honest read.

If you're a homeowner thinking about selling: the window of effortless, price-exceeds-expectations sales has narrowed. The market still rewards well-prepared, well-priced properties in good locations — but it no longer rewards those that aren't. Now is the time to have a frank conversation about what your property is worth in today's market, not what your neighbour got six months ago. Getting this right from day one matters more than it did.

If you're a buyer: you have more choice and more negotiating power than at any point in the last two years. Prices are still near record highs, so this isn't a bargain market. But if you're planning to hold for five or more years in a suburb with strong owner-occupier fundamentals — school zones, lifestyle amenity, community infrastructure — the long-run case for Perth property hasn't changed. Trying to time the exact bottom is usually a losing game. Buying well, in the right location, at a fair price, is not.

If you're an investor: the landscape has genuinely changed. Yield pressure is real, negative gearing on established property is going away for new purchasers, and the areas that have historically delivered the strongest capital growth are the owner-occupier-dominated suburbs where competition from other investors is lowest. If you're sitting on established investment property, the grandfathering of your current tax treatment means there's no immediate reason to panic — but it is worth assessing whether your property's location works in your favour over the long term.

The Perth market has more data points this week than it did last month, and a clearer picture is forming. The easy, low-effort sale environment is behind us. What comes next is a market that rewards good decision-making — on both sides of the transaction.

If you'd like to understand how any of this applies to your specific situation, I'm always available for a no-obligation conversation. That's genuinely what I'm here for.