Perth’s property prices have surged past the million-dollar mark, underscoring the relentless pace of growth in Australia’s housing market.
But amid a worsening housing shortage, the rise also erodes one of the last affordable entry points for aspiring homeowners and investors, many of whom had turned to cheaper states in pursuit of homeownership.
With Perth no longer a bargain, attention is turning to where the next property hotspot will emerge.
"We're seeing a lot more investors buying in Victoria," Aaron Bell, Sydney-based broker at Home Loan Village, told Australian Broker. "Melbourne in particular is relatively cheap, compared to its size and industry. At the moment, that market is so depressed compared to everywhere else in Australia that it's probably a good time to get in there. Because all we need is change in [local] government and a few successive years of more stimulation and that state will come back and boom again. It can't not. It's a powerhouse state. It's a big state, great economy. But we have seen it soften a lot in the last couple of years, compared with the rest of the market."
According to Cotality's Home Value Index for 2025, the median house price in Melbourne was just over $827,000, compared with more than $940,000 in Perth. That's a 4.8% annual increase in Melbourne's property market, compared with a 15.9% increase in Perth, signaling that Victoria's capital city is still growing — just nowhere as fast as Perth.
"There are reasons why Melbourne's property prices have risen less than anywhere else, except maybe Hobart," said Tasmania-based economist Saul Eslake. "The Victorian government has put additional taxes on property investors, like stamp duty and land tax. Property owners usually view that as a bad thing, because it is deterring investments. But still, fewer people are buying investment properties in Victoria. That's a good thing from the standpoint of first-time homebuyers, because prices are getting relatively cheaper.
"That's not to say that Melbourne house prices are going to take off," Eslake cautioned. "But for all the talk of Victoria's economic and financial woes — and there's plenty of that — Victoria's population has continued to grow at a faster rate than New South Wales."
From June 2024 to June 2025, NSW population grew 1.2%, while Victoria grew 1.8%, according to the Australian Bureau of Statistics (ABS). Meanwhile, Western Australia's population grew the fastest, at 2.2%.
"In Perth, you get a lot of people who are arriving from overseas and the Eastern states in the hopes of jobs, e.g., in mining and Aukus, the naval hub in commuting distance to Perth, both which pay well," Eslake explained. "Then there's the so-called critical minerals that Western Australia happens to have quite a lot of, like lithium and vanadium and things like that. So there are things happening in WA that are creating jobs, and that's pulling people in from overseas and from the eastern states, and those folks need to live somewhere. And investors know that. So they buy up properties with the idea of renting them out. And that's probably gonna continue for a while, although maybe not as fast.
"The fact that housing has become so expensive in Perth is itself a deterrent to people moving to Perth," the economist said. "Perth is no longer cheap, in the same way that Brisbane isn't cheap anymore."
Meanwhile, pockets of affordability in Melbourne may offer a lifeline for homebuyers — and brokers — running out of options.
In the 12 months leading up to June, Victoria was at the forefront of the first-time homebuyer market, accounting for 39% of all first-home buyer applications by loan value, according to data from aggregator giant Loan Market Group (LMG).
Perth, by contrast, is heading in the opposite direction. According to one data set — Domain’s December Quarter House Price Report — the Western Australian capital city passed the million-dollar mark with median house prices jumping 9.9% quarterly, to $1,087,762 in the December quarter.
But brokers on the ground and working with clients in the area, say the stats are real.
"First-time homebuyers trying to get a home in Perth below the $850,00 mark is just about impossible," said Claire Viskovich, founder, director and finance broker at Perth-based Beez Neez Finance.
"I can't see it slowing down at all, to be honest," she added. "Ever since COVID-19, Perth's just been crazy. People can work from home, work Australia-wide, work worldwide. And apparently, Perth is still cheaper than other states."
Bell agreed, but with one caveat: he predicted the intense demand in Perth's market will likely soften in the next six to 12 months.
"We're definitely seeing demand in Perth," he said. "Most of my clients, if they're buying in the Perth market, they're investors, because most of them are situated in Sydney. That's probably what's keying up demand at the moment.
"But I think that's starting to shift," Bell continued. "We're seeing less investors buying in the Perth market. Those investors are now looking towards Victoria and Tasmania."
