Latest / The Follio Property Podcast / Perth Property Market Update | August 2025 (Data & Insights)

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Perth Property Market Update | August 2025 (Data & Insights) · The Follio Property Podcast

• 0:08
  It's a big moment, Rhys. In the studio, 1st of September, the Perth property market has fallen below 3,000 listings for the first time ever. 2,981 listings we recorded the last week of August and that's coming down every single week throughout the month of August.
• 0:25
  It's massive. This, with the first home buyer scheme, is going to put huge tailwinds behind the Perth market for the remaining of this year and certainly for the first quarter of next year. I'm almost frightened to think the inflationary event that will occur in terms of house price movement over the next six months on the back of that supply. In terms of growth for the month, we had over 1% growth across both houses and units. So houses had a 1% growth, which is the first time in a couple of months.
• 0:54
  How do you see that affecting the property prices moving into next month?
• 0:58
  We're just seeing momentum in the market now. Low stock, and when we go through the data, the Perth snapshot, you look at the three key ticket items. Affordability, still will surprise people. Massive affordability, and we'll go through the affordability index in a moment. Demand is through the roof, and we're seeing that in transaction volumes. So we're seeing close to 1,000 sales per week, so that's instant demand. And supply, as we've just discussed, is the lowest it's ever been. So in terms of those three key pillars,
• 1:26
  This shows me that the market's going to see, I believe, close to double-digit growth for the remainder of the year. Yeah. So let's just do a bit of a breakdown in the listings. We said the huge number that it's below 3,000 for the first time, but let's just give some context of where we've come from. Yeah. So balanced market for Perth typically sits at 14,000 to 15,000 properties on the market listings. Yeah.
• 1:46
  We saw this decline significantly from 2019 to 2023, got down to 7,000. We dipped down to 3,400 properties, as you can see, in the early parts of 2024 and again January this year. We saw the market start to ease when listings got around to 5,500 to 6,000 in the mid part of 2025. Yeah.
• 2:11
  And now, for the first time ever, as we've discussed, we're below 3,000 listings. So you can see here, it just shows the significance that has on the market. What's the correlation between the significant drop in, say, the last...
• 2:24
  you know, six months here. Is it interest rates or why are we seeing the severe drop in listings here in Perth? Yeah, everything has a cause and effect. And what we're seeing in terms of low listings is a lack of supply created 12 or 18 months ago. And, you know, COVID had a huge impact on that. Builders failing in terms of going bankrupt, et cetera. We just haven't had enough supply, you know, development approvals, building permits, those sorts of things.
• 2:50
  in the last 12 to 18 months, and now we're seeing the impacts of that now. We're also seeing high demand, and that supply that is available is getting absorbed. What about the sales element to that as well? So we've got the, obviously spoken about the listings at an all-time low. How does that affect the sales here in Perth?
• 3:07
  And that's why we, everyone sort of reports quite heavily, you'll see on Instagram, 30, 40 agents will post the listing data every Monday morning because it is significant, but what's more important to us is the ratio of sales to listings. So as you can see here, the graph that I've got in front of you.
• 3:24
  We see pretty well since March, we've seen consistently above 25% sales to listings ratio. What does that mean? 25% of the total market is being sold on a weekly basis, which is significant. Typically, Perth tracks at about 12% to 13%. Anything above 20% is a very high demand market.
• 3:47
  And now we're seeing consistently in the last two to three weeks above 30%. We know we're very much seeing that instant demand in the market. Lachlan, we saw inflation actually tick up last month. How do you see that impacting the property market for the remainder of the year? We've seen economists come out there and say there's only a 30% chance there's going to be a rate drop the next cash rate announcement, potentially only one left in the year now. How do you see that affecting the property market?
• 4:14
  I think it just demonstrates how fickle inflation is. You know, you tweak one thing and we see a rise or a fall effect. So yes, that would demonstrate that we may not see a rate cut in September. I think that's somewhat irrelevant now with the first home buyer scheme. I think that has more of a significant event anyway. I think the futures are still factoring in a rate cut this year. Based on that data, solely that data, would indicate that we'll probably see a pause for the remainder of the year.
• 4:43
  But we'll wait and see how the inflation data tracks out in September. We mentioned earlier, although Perth has historically low listings, affordability still is quite reasonable when you compare it to other capital cities. Let's talk about the affordability index, which is the... Average wage, household wage consumed by the average household mortgage. Correct. So essentially, it's...
• 5:07
  what families are having to invest into their mortgage on a weekly basis. Let's talk through the graph you got there. So it shows obviously history of the affordability index in Perth versus the medium house price. Yep. So the line graph here, the black line is the affordability index historically for the last 20 years. Bar graph is median house prices. So no surprise, we've seen a run since 2020 in terms of house price growth.
• 5:33
  But when we look at the bar graph, what we track is the runway. And the runway tells us where the market has been, where it's going based on historical affordability ceilings. In Perth, historically, when I zoom in here, it's got close to 50% in terms of household mortgages. In terms of household affordability, 50% of the average wage.
• 5:55
  was going to their mortgage. And that was back in the previous boom period, they called it in 26, 27, 28, got close to 50%, which is significant. So where we are today at 34% shows there is runway left in the market based on the historical ceiling. So that's really important. As you can see in the last three months, we've seen the affordability actually improve, yet we've seen,
• 6:21
  a continual rise in house prices. So people are like, why is this? Well, cash rates come down significantly. We've seen a 50 basis point cut in more recent months. Therefore, the average wage required to service the average mortgage is less.
• 6:37
  Let's look at Perth versus, Perth we said is the most affordable capital city. Let's look at the least affordable capital city, Sydney, and see how they compare. Yeah, it's good to always compare, and Sydney's sort of a benchmark, right, of, I guess, our top performing market. Sydney, it shows the level of unaffordability at the moment's at 56%.
• 6:57
  So historically, Sydney is capped out, if we look at the long-term average, has capped out at 52. So we are well above now its historical ceiling in terms of affordability. And that's why I struggle to foresee growth in the Sydney market, although there's some tailwinds now with the first-time buyer scheme, which will...
• 7:18
  you know, really push the bottom level of the market. But in terms of household income being able to service its debt, when you look at it, 50% of that market, 56% of your household wage is required to service your mortgage. It makes it very difficult. So to give you context there, when people argue Perth's unaffordable, well, in comparison to Sydney, it's still extremely affordable.
• 7:39
  Let's look at different asset types as well. So we mentioned obviously units have gone on a bit of a run and this month particularly went up 1%. How does it compare from an affordability standpoint? Are units still affordable in Perth? So here we can see, Rhys, Perth units affordability versus Perth houses.
• 7:58
  units here in the orange is showing a lot of value and this is why I think this segment of the market will outperform really all segments of the markets in Australia over the next 12 months affordability for units in Perth only at 24% so still extremely affordable even in comparison to houses which still remain affordable the ceiling for units in Perth tapped out in 20 2008 at 43%
• 8:23
  So you're looking at that. What does that mean? Well, if you took away wage growth, you took away interest rates, so we assume interest rates stay where they are, we assume wages stay where they are, and there's an argument that suggests that incomes are going to rise and rates are going to come off, but let's just say they stay where they are. Units would have to double in price to get to their historical ceiling. So that's significant.
• 8:49
  Lachlan, let's talk about the property cycle and where we see Perth on that cycle. The PropStack property cycle is where
• 8:58
  we see each market, where the data is seen each market in its respective property cycle. So as you can see here with Perth, currently mid-cycle from the opportunity phase to growth phase. So clearly it's not at the bottom of the cycle at this point in time. It's now on a five year run, but certainly far from the top in terms of where the data or the runway is suggesting what legs it has in the market. We still believe, and PropStack data firmly believes, that it's still a long way from the top.