Perth’s Housing Market Surge: Insights from KPMG’s Residential Property Outlook
According to KPMG’s latest Residential Property Outlook, the Australian housing market is experiencing a remarkable shift, particularly in Perth, where house prices are projected to rise by nearly 13% within the next year. This prediction significantly outstrips earlier forecasts and positions Perth as the frontrunner in the national housing market.
Broader Market Trends
Brisbane and Darwin are also slated to witness double-digit growth in house prices, while Adelaide is expected to see increases of over 8%. KPMG’s chief economist, Dr. Brendan Rynne, has noted that the surprise strength of the housing market, especially in the latter part of the previous year, stands in stark contrast to persistent affordability challenges that many buyers face.
Dr. Rynne remarked that the anticipated moderation in home price growth didn’t materialize, as the market experienced a notable acceleration in the months leading to 2025. This surge in prices is particularly evident in cities that were already experiencing heightened demand, such as Perth and Brisbane. A contributing factor to this growth has been the implementation of an expanded five percent deposit scheme, which has made homeownership more accessible for many buyers.
Resilience in Entry-Level Market Demand
The entry-level market appears to be particularly robust, with first-time homebuyers exhibiting a remarkable appetite for homes at the more affordable end of the spectrum. Despite ongoing supply constraints, competition in this segment remains fierce. Dr. Rynne highlighted that, even amid significant shortages in housing construction, buyers in rapidly growing cities continue to show a willingness to pay premium prices—an indication that demand still outstrips supply in these markets.
Recent data on pricing patterns has indicated that buyer sentiment has not wavered significantly, despite concerns regarding potential interest rate hikes. National house prices have continued to rise, with housing and unit values showing an upward trajectory through January. Ray White Group’s chief economist, Nerida Conisbee, confirmed that the market remains resilient even amidst changing expectations about interest rates.
Ongoing Growth Amidst Changing Rate Expectations
In January, national house prices reached $973,000, while unit prices climbed to $746,000. One noteworthy observation is that higher expectations around interest rates have not yet been reflected in the market pricing. The growth in property prices has been widespread this summer, signaling that buyers are still operating under the assumption that borrowing costs will remain stable—a stark contrast to the previous year when anticipated rate cuts had a tangible effect on buyer behavior before any rate changes occurred.
The growth trajectories outlined by KPMG remain consistent, with cities like Perth and Darwin showing annual price growth nearing 20%. Brisbane, too, is marked by strong momentum, chiefly due to tight supply conditions. Conisbee pointed out that in these bustling markets, demand continues to absorb the limited stock available.
Even within the traditionally slower-growing markets of Sydney, Melbourne, and Canberra, prices have demonstrated mild increases, with no significant declines noticeable on the horizon. Furthermore, unit prices are expected to follow suit, with a projected increase of around 7.1% in national apartment values by 2026.
Affordability and Future Projections
As affordability concerns persist, there is an anticipated shift in demand towards higher-density housing, particularly in capital cities. Detached homes are increasingly becoming less accessible to many buyers, compounding the shift in preferences towards multi-unit dwellings.
Rental prices are also expected to see a rise, with an average increase of around 3.5% anticipated through 2026 and 2027. This forecast underscores an ongoing trend where population growth outpaces housing delivery, ensuring continued pressure on rental prices and availability.
While both Dr. Rynne and Conisbee acknowledge that a potential increase in interest rates may temper market activity, they assert that this will likely lead to slower growth rather than outright price declines. The current market remains characterized by a scarcity of available homes, and new construction is failing to meet the existing demand.
In conclusion, the Australian housing market, led by Perth’s dramatic price growth, remains resilient despite economic uncertainties. The dynamics between supply and demand continue to favor price appreciation—a trend that looks set to persist as new developments struggle to keep pace with rising demand.
