Perth’s record property run might be starting to slow down, with the cheaper suburbs that have been fuelling much of the growth starting to stretch local buyers. This shift is drawing the attention of many looking to navigate this challenging market, and Perth buyers agents are increasingly in demand as locals seek expert advice to find affordable options.
Perth prices have risen rapidly over the past 12 months, with areas like Kwinana, Mandurah, Armadale, and Gosnells seeing sharp increases in home prices. This surge in demand has placed significant pressure on affordability, pushing these areas into territory that many buyers, especially first-home purchasers, may find difficult to access.
Data from CoreLogic shows that housing prices in these lower-end markets in Perth have increased as much as 37% over the past year, leading to a rapid decline in affordability. This is a significant shift for a city once known for its relative affordability compared to other Australian capitals. Now, however, the affordability in some of these areas is deteriorating at a faster rate than many might have anticipated.
The price of entry is climbing
Historically, these pockets have been viewed as entry-level markets, offering a starting point for many buyers. But that is quickly changing. Kwinana, for example, has seen its average house price skyrocket by 37.2% in the last year alone, bringing the median price to $616,193. For buyers in Kwinana, this means they now need to save for more than eight years just to secure a deposit. A Perth buyers advocate can help navigate these increasing costs and offer strategic advice on how to enter such competitive markets. Once they’ve managed to save, the pressure doesn’t stop there, as servicing the mortgage now requires 39.4% of the median household income, up from 28.7% last year.
Similar trends are being seen across other affordable districts. Mandurah, a popular area for first-home buyers, has experienced a 25.7% increase in house prices over the past year, bringing the average home price to $678,284. The time required to save for a deposit has stretched to 12 years and two months, up by more than two years compared to the previous year. Once a deposit is secured, 57.9% of the median household income must be allocated to servicing the mortgage—a substantial increase from the 46% required just a year ago.
Buyers in Armadale and Gosnells feeling the pinch
Armadale and Gosnells are also feeling the impact. In Armadale, house prices rose by 36.1%, bringing the median price to $678,708. The result is that home buyers now have to save for more than two additional years to secure a deposit and will need to dedicate 42% of their household income to mortgage repayments, up from 30.8% last year. Meanwhile, in Gosnells, house prices jumped by 34.1%, leading to similar affordability pressures, with buyers needing 45.5% of their household income to meet mortgage repayments, a steep rise from the 33.8% required last year.
These figures paint a concerning picture for first-home buyers and lower-income households who were relying on these areas as affordable entry points into the housing market. The gentrification of these suburbs has led to heightened demand, not just from locals but from a broader spectrum of buyers, driving prices even higher.
Some relief in premium markets
Interestingly, while Perth’s lower-end markets are feeling the heat, some premium markets in other Australian cities, such as Melbourne, are seeing improvements in affordability. This contrasting trend highlights the pressures facing Perth, where the supply-demand imbalance in more affordable areas has intensified significantly. This dynamic shift means that buyers agents are not just relevant in Perth but may soon be critical for investors and homeowners looking for opportunities elsewhere.
Notably, interest rate cuts—while offering short-term relief to existing homeowners—are unlikely to improve affordability over the long term. Lower interest rates often allow buyers to borrow more, which, in turn, pushes up prices, leading to a renewed deterioration in affordability. This has been the trend in Australia for decades and is unlikely to change unless there is a fundamental shift in the supply-demand dynamic.
With Perth prices now looking expensive for local buyers, that means attention from Perth buyers agents and interstate investors could also start to change. It could well be that investors will now be looking elsewhere to try and find the next location that is more affordable relative to incomes, and that could mean more interest headed back to places like Melbourne.
