Perth's property prices continue to rise with no end in sight, making it increasingly difficult for borrowers to get into the market.
"The market here is really strong; there's more demand than there is supply," Helen Avis, director and finance broker at Perth-based Specialist Mortgage, told Australian Broker.
Avis pointed out that two-bedroom units that used to be valued at around $600,000 are now asking for approximately $800,000.
"And that's in a year," she said. "I have a client who is settling on a property next week, and even since they bought it, it's gone up in value."
The surge is evident nationwide, where house values have gone up 7.5% in the 12 months leading up to November, according to Cotality's latest Home Value Index (HVI), or up 1% in November, month-over-month. That's on top of 1.1% growth in October.
But Perth is leading the pack, with 2.4% growth in November, and 7.4% growth in the last quarter. The 2.4% increase equals an additional $21,000 on the median home value, or an additional $5,000 a week in mortgage payments.
In the year leading up to November, house prices in Darwin rose the most, up 17%. But Perth and Brisbane have also had double-digit growth, up 13.1% and 12.8%, respectively.
Increasing inflationary pressures and concerns over possible interest-rate hikes are contributing to the noise. But increased investor appetite seems to be driving the growth spurt.
"The value of new loan approvals for investors in any given month has shot higher, as of late," Sally Auld, chief economist at National Australia Bank (NAB), said during a recent webinar. "When we look at the actual numbers, what we find is that the value of actual lending to investors has jumped by almost 20% in the last three months, the three months to September. If you times that by four, you get a very big number. And a number that is probably not where the Reserve Bank [of Australia] (RBA) and bank regulators would actually like that to be."
Belinda Allen, head of Australian economics at Commonwealth Bank (CBA), agreed.
"Strong investor demand and limited supply have been key drivers of the outperformance," the economist wrote in a note. "The market has proved to be much more momentum and sentiment driven than expected."
In Western Australia's capital city, Avis estimated that the mortgage market is made up of roughly 50% investors and 50% owner-occupiers.
"But there's definitely a lot of investors wanting to buy that two-bedroom villa in Perth, for example," she said.
Last month, the Australian Prudential Regulation Authority (APRA), concerned over the recent surge in investor activity, announced new lending limits for high debt-to-income (DTI) mortgage lending. Starting 1 February 2026, loans are limited where debt is six times higher than the borrower's income.
But Avis said the new rules likely won't help.
"You don't pass servicing if your DTI is more than six," she said. "So I don't think it will have any impact whatsoever."
While the house prices are rising around the country, Australia's two largest cities — Sydney and Melbourne — only had modest growth in November, up 0.5% and 0.3%, respectively.
"It was again a tale of two speeds across Australia in November," said Allen. "The mid-tier capitals of Perth, Adelaide and Darwin recorded very strong gains in November. In contrast Sydney and Melbourne recorded more modest growth rates and have underperformed this upswing."
And Avis expects Victoria to deliver the next big upswing.
"The next market that's going to boom is going to be Melbourne," she said. "Sydney and Brisbane are solid markets that are going to continue to be strong. And Adelaide as well. You know, that market is growing just as nuts.
"The sooner you can get into the market the better, because I can't see prices coming down," Avis continued. "It might not continue to go up as much as it has. But it's not going to come down either."
