Recent data from the Australian Bureau of Statistics (ABS) found that the number of new investor loan commitments in Western Australia fell by 4.3% between the December 2024 and March 2025 quarters.
While this was largely in line with the national trend (a decline of 3.7%), it does suggest a cooling in investor activity.
Why investor activity is slowing
Perth and WA have experienced a steep rise in property values over the last few years. According to Cotality’s latest home value index, prices in Perth have risen 80.0% from May 2020 to May 2025, the largest rise of all the capitals. This has pushed the median dwelling value to over $800,000.
While these gains reflect a strong market, some investors may now be pausing due to fears of a potential plateau or correction. Perth has historically been known as a boom-and-bust property market, largely tied to the fortunes of the mining sector.
During previous downturns, sharp price declines occurred. For example, during the 2008 Global Financial Crisis, Perth’s median house price fell from $553,000 to $495,000. Then again after the mining boom ended in 2014, prices steadily declined over five years from $616,000 to $521,000, according to Domain data.
These historic cycles may have made some investors cautious about entering at what appears to be the top of the market.
However, there’s growing evidence that Perth’s market is no longer as vulnerable to these sharp cycles. Experts note that WA’s economy is now more diversified, with growing sectors in tourism, education and services reducing the state’s heavy reliance on mining. This shift suggests that the current growth may be more sustainable than in past booms.
That said, some investors, particularly those from interstate, may be turning their attention to cities like Melbourne, where the property cycle is less advanced. Melbourne’s market has only grown 12.8% over the same five-year period according to Cotality, keeping entry prices relatively lower.
Why investors should stay in Perth
However, despite this recent slowdown, there are compelling reasons why investors should maintain their interest in Perth’s property market.
Population growth in WA remains strong. The state continues to experience significant migration, with the latest ABS results showing an annual growth rate of 2.5% in September 2024.
This sustained influx of residents fuels demand for housing, both for owner-occupiers and renters, creating upward pressure on property values and rental yields. According to the Real Estate Institute of Western Australia (REIWA), Perth property prices are projected to increase by up to 10% in 2025. Similarly, SQM Research forecasts a rise of 15-20% over the same period.
The economy of WA is also providing solid support for the property market. Over the year to March 2025, WA’s economy grew 3.0%, according to the ABS. WA continues to have the fastest pace of economic growth of all states.
WA has also topped the leaderboard on CommSec’s State of the States report for the last three quarters, reflecting strong performance across key indicators like retail spending, population growth and business investment.
This consistent economic growth adds further confidence for investors, particularly in a market where this momentum is underpinned by a diverse range of economic contributors, and no longer reliant on mining alone.
The rental market in Perth remains tight. While Perth’s rental vacancy rate has shown a slight increase between May 2024 and 2025, from 0.6% to 0.7% according to SQM Research, it is still one of the tightest in the country.
REIWA considers a vacancy rate of between 2.5-3.5% a balanced market. As the graph shows, Perth’s vacancy rate has not been within that band since 2019.
This persistent tightness in the rental market will likely mean continued strong rental yields for investors and reduced vacancy periods, making Perth an attractive proposition for those looking for reliable income streams from their investments.
Additionally, Victoria’s land tax for property investors and additional taxes on landholdings introduced in 2024 continue to put added financial and tax compliance strain on investors.
It’s also important to highlight the comparative advantages Perth offers regarding upfront costs. Stamp duty in Victoria is considerably higher at around 6.5% versus 5.15% in WA, according to PWC. On a median-priced dwelling, that equates to nearly $10,000 less in stamp duty when buying in WA.
This, combined with the state’s strong economy and population, means long-term capital growth opportunities still exist in Perth. Perth’s relative affordability compared to other capitals positions it well for sustained appreciation over the longer term.
Ready to invest with confidence in WA’s competitive market? Don’t let uncertainty slow you down. As an expert Perth buyer’s agent, Resolve Property Solutions can help. To discuss your options, book a free discovery call with a Resolve Buyers Agent.
