Perth home values have recorded their steepest decline over a comparable period in four decades, with dwelling prices falling 8.9 per cent below the record high reached in April, new data from Cotality shows.
The pace of decline in Perth is the fastest since at least the early 1980s, with only Sydney among capital cities posting a steeper drop, according to Cotality's figures.
The downturn reflects growing pressure on demand, said Gerard Burg, head of research at Cotality. He pointed to factors including affordability constraints, higher interest rates, cost-of-living pressures, particularly energy prices, weak consumer confidence, and changes to investor policies in the federal budget.
The number of houses sold in Perth fell 21.4 per cent over the 12 months to October, the biggest national drop. Houses are now spending three times longer on the market than three months ago, sitting at an average of 28 days.
Burg said the longer downturn in Sydney and Melbourne had allowed time for an adjustment on the supply side, with fewer homes being listed. “This process has happened more slowly in markets like Brisbane and Perth, meaning that we've seen a large increase in the stock of available homes to purchase,” he said.
Total listings of properties for sale in Perth were 8 per cent above the five-year average in the four weeks ending November 8, compared with about 55 per cent below average at the end of January.
Burg described the current market as a buyers' market, “only because so many potential buyers have been pushed to the sidelines”. He said demand-side pressures meant the remaining buyers had more choice, more time to consider and more time to negotiate with vendors, putting downward pressure on values.
For most homeowners, the sizeable gains of the past five years offered “a considerable buffer” against a large downturn, Burg said. But those who bought close to the peak, particularly through the 5 per cent deposit scheme, faced greater risk of negative equity.
“We expect the downturn will continue in coming months and into 2027, albeit the pace of the decline is likely to slow,” he said. “The market is unlikely to turn around until buyers have enough confidence and financial capacity to return en masse, which may require the RBA to commence a rate cutting cycle. At this point in time, the earliest that appears possible is the second half of 2027.”
Nationally, Australia's combined capital city home values fell for the seventh consecutive month in October, taking cumulative losses to 8.1 per cent, 0.1 percentage point shy of the largest peak-to-trough decline seen in the past four decades.
“This is the fastest decline on record, and we would expect next month it will be the largest overall,” Burg said. He noted Perth's largest overall decline was 15.3 per cent from June 2014 through July 2019, meaning the current downturn still has some distance to go.
Analysis
Why This Matters
- Perth's property downturn is the fastest in 40 years, signalling a broad weakening in one of Australia's most resilient mid-sized capital markets.
- Higher interest rates, cost-of-living pressures, and weak confidence have pushed many buyers to the sidelines, creating a buyers' market with limited demand.
- The downturn may deepen into 2027, with a potential shift only if the Reserve Bank begins cutting rates, likely no earlier than the second half of that year.
Background
Perth's property market enjoyed a strong run over the past five years, with values rising significantly. The current decline marks a sharp reversal, driven by a combination of macroeconomic pressures and policy changes. The data comes from Cotality, a property analytics firm, and covers the metropolitan area.
Key Perspectives
Gerard Burg (Cotality head of research): says the downturn is driven by affordability constraints, higher rates, cost-of-living pressures, weak confidence, and federal budget investor policy changes. He expects the decline to continue into 2027 but at a slower pace, with a turnaround unlikely until the RBA cuts rates.
What to Watch
- Whether the pace of decline slows in coming months as Burg predicts.
- The timing and size of any RBA rate cuts, which Burg flags as the earliest possible trigger for a market recovery.
- The level of listings: a further increase could accelerate price falls, while a drop might stabilise the market.
Checked
12 claims in this story checked against 1 source: 12 supported.
Show each claim
- SupportedPerth property values have posted their fastest decline in 40 years.Sydney Morning Herald - Latest News: “new figures revealing it to be the fastest decline in property prices over the past four decades.”
- SupportedPerth dwelling values are 8.9 per cent below the record high reached in April.Sydney Morning Herald - Latest News: “dwelling values across the metropolitan area are now 8.9 per cent below the record high in April”
- SupportedBurg said the supply adjustment happened more slowly in Brisbane and Perth, increasing the stock of homes available to buy.Sydney Morning Herald - Latest News: ““This process has happened more slowly in markets like Brisbane and Perth, meaning that we’ve seen a large increase in the stock of available homes to purchase.””
- SupportedBurg described Perth as a buyers’ market “only because so many potential buyers have been pushed to the sidelines”.Sydney Morning Herald - Latest News: “Burg said this meant it was now a buyers’ market – but “only because so many potential buyers have been pushed to the sidelines”.”
- SupportedBurg said gains over the past five years provided most homeowners with “a considerable buffer”.Sydney Morning Herald - Latest News: “the sizeable increase in home values over the past five years provided a “considerable buffer” to withstand a large downturn.”
- SupportedBurg said the downturn would continue in coming months and into 2027, though its pace was likely to slow.Sydney Morning Herald - Latest News: ““We expect the downturn will continue in coming months and into 2027, albeit the pace of the decline is likely to slow,” Burg said.”
- SupportedBurg said the market was unlikely to turn until buyers had enough confidence and financial capacity to return, and that the earliest this appeared possible was the second half of 2027.Sydney Morning Herald - Latest News: ““The market is unlikely to turn around until buyers have enough confidence and financial capacity to return en masse, which may require the RBA to commence a rate cutting cycle. “At this point in time, the earliest that appears possible is the second half of 2027.””
- SupportedBurg called the national decline “the fastest decline on record” and expected it to be the largest overall the following month.Sydney Morning Herald - Latest News: ““This is the fastest decline on record, and we would expect next month it will be the largest overall,” Burg said.”
- SupportedOnly Sydney among capital cities recorded a steeper decline than Perth.Sydney Morning Herald - Latest News: “The only capital city to record a steeper decline was Sydney.”
- SupportedPerth house sales fell 21.4 per cent over the 12 months to October, the biggest drop nationally.Sydney Morning Herald - Latest News: “The number of houses sold in Perth also declined by 21.4 per cent, the biggest drop nationally, over the 12 months to October.”
- SupportedPerth houses spent three times longer on the market than three months earlier, averaging 28 days.Sydney Morning Herald - Latest News: “Perth houses spent three times longer on the market when compared to just three months ago, sitting at 28 days on average.”
- SupportedCombined capital-city home values fell for a seventh consecutive month in October, with cumulative losses of 8.1 per cent.Sydney Morning Herald - Latest News: “home values across Australia’s combined capital cities fell for the seventh consecutive month in October, taking cumulative losses to 8.1 per cent.”