Perth Property Investment Research

1. Current Property Market Trends

Perth's property market is characterized by robust growth and strong demand, particularly in the rental sector.

Median Prices:

Overall Dwelling Value: $940,635 (December).
Median House Price: $703,000 (as of 2025).
Median Unit Price: $478,000 (as of 2025).
Specific Property Types: Two-bedroom duplexes saw a 22.3% increase to $615,000, and two-bedroom houses increased 21.2% to $665,000.

Capital Growth:

Monthly Growth: Dwelling values climbed +1.9% in October and 1.9% in December. Home values surged 2.4% in November, adding approximately $5,000 per week to the median dwelling value. Perth's median house sale price increased by 1.0% in February (Q1 2025).
Annual Growth: Housing values lifted 15.9% over the year ending December. Median house prices increased by 8.6% Year-over-Year (YoY) (as of 2025), while median unit prices increased by 9.1% YoY (as of 2025).

Rental Yields:

Average Gross Rental Yield (Houses): 5.2% (as of 2025).
Median Rental Yield (Overall Perth): 3.94%.
Growth in Rental Yield: Perth's rental yield grew by 4.3% (Q1 2025).

Vacancy Rates:

Rental Vacancy Rate: 0.9% (as of 2025), indicating an extremely tight rental market.

Rental Prices:

Median House Rent: $710 per week.
Perth is noted as Australia's 'second most expensive city' for rentals due to soaring prices.
Demand for rental properties remains strong, supporting steady rent growth.
Top Suburb for Unit Rental Price Growth: Swanbourne, with a median rent of $952 per week.

2. Specific Perth Suburbs or Regions with High Potential

The research highlights specific property types with significant price increases, indicating potential for strong returns:

Two-bedroom duplexes
Two-bedroom houses

For unit rentals, Swanbourne is identified as a top suburb for price growth.

3. Key Drivers Influencing the Perth Property Market

Strong Demand: High rental demand is a primary driver, contributing to steady rent growth and maintaining an advantageous position for investors over tenants.
Low Stock Levels: A persistent lack of available properties is a significant factor contributing to price increases.
"Fear of Missing Out" (FOMO): Buyer sentiment, particularly FOMO, has contributed to significant price surges.

4. Potential Risks and Opportunities

Opportunities:

Strong Rent Growth: The tight rental market and high demand offer continued opportunities for strong rental income.
Specific Property Type Returns: Investing in two-bedroom duplexes and two-bedroom houses has shown significant price increases, indicating good capital growth potential.

Risks:

The provided data does not explicitly detail specific risks beyond the potential for uneven growth in the future. However, rapidly increasing prices and FOMO could indicate a market susceptible to corrections if underlying fundamentals shift, such as changes in interest rates or a significant increase in housing supply.

5. Comparative Analysis of Perth's Property Market

Perth's property market is experiencing robust growth, with housing values lifting 15.9% over the year ending December. This strong performance, coupled with a tight rental market (0.9% vacancy rate) and significant rental price increases, positions Perth as a high-growth market compared to other major Australian cities. The Cotality Home Value Index reported an 8.6% surge in 2025 for the national median dwelling value, indicating Perth's performance is notably strong within the national context.

6. Identification of Emerging Investment Hotspots and Undervalued Areas

While the provided data points to specific property types (two-bedroom duplexes, two-bedroom houses) and a suburb for unit rentals (Swanbourne) showing strong performance, it does not explicitly identify broader "emerging investment hotspots" or "undervalued areas" based on a comprehensive comparative analysis of multiple suburbs.

7. Assessment of Affordability Across Different Market Segments

The report highlights that Perth's median dwelling value reached $940,635 and median house price was $703,000 (as of 2025). With rental prices soaring to $710 per week, Perth has been dubbed Australia's 'second most expensive city' for rentals. This suggests that while there is strong growth, affordability, particularly for renters, is becoming a significant concern. The rapid price increases also indicate that entry points for new investors might be becoming less affordable compared to previous years.

8. Forecasts for Both Capital Growth and Rental Yield

Capital Growth: The market experienced significant growth in 2025, with an 8.6% surge in the Cotality Home Value Index for the year.
Rental Yield: The average gross rental yield for houses is 5.2% (as of 2025), and Perth's rental yield grew by 4.3% in Q1 2025.
Outlook for 2026: Investors are advised to anticipate uneven growth in 2026.

Conclusion

The Perth property market presents a compelling case for investors, characterized by robust capital growth and strong rental yields, largely fueled by persistent demand and critically low housing supply. While specific two-bedroom property types and certain unit rental markets show exceptional returns, the rapid price increases and high rental costs highlight growing affordability challenges. The market's strong performance in 2025, driven by FOMO and limited listings, sets a high bar, with a forecast for uneven growth in 2026 suggesting a need for strategic and informed investment decisions.

Perth Property Investment Research