Perth’s property market has delivered double-digit annual growth since 2022, outperforming all other capital cities. But as with every real estate boom, the question arises: when will it end?
“Since 2022, Perth’s house market has grown strongly, with impressive double-digit growth each year, making it the top performer among eight capital cities,” said Grace Nguyen (pictured), research analyst at InvestorKit.
Perth’s last boom ended in 2014, followed by a five-year downturn—reminding investors that even the strongest markets eventually cool. Forecasting the end of a boom isn’t easy, but recognising key indicators can offer a valuable edge.
InvestorKit identified four key indicators that suggest the property market may be transitioning out of its boom phase:
This shows how long a property remains listed before it sells.
This measures the price reduction from the original asking price to final sale price.
Together, these reflect market supply and demand.
A key rental market indicator.
Historical market data from Sydney, Hobart, and Perth illustrates how key indicators signalled the end of each city’s property boom.
In each case, metrics like rising days on market (DOM), climbing vacancy rates, increasing vendor discounts, and widening gaps between sales and listings pointed to weakening demand ahead of price slowdowns.
Sydney’s housing boom ran from 2014 to 2016 with 13% annual growth. But signs of cooling emerged by late 2016.
“By 2016, some market indicators began to shift. DOM started to rise, and vacancy rates also climbed,” Nguyen said. “In early 2017, vendor discounts surged, while the gap between sales volumes and for-sale listings widened because demand declined faster than supply.”
Hobart mirrored Sydney’s cycle, with early indicators flashing red before prices declined in 2023.
“DOM started rising in late 2021, while vendor discounts had already increased by mid-2021,” Nguyen said. “From early 2022, the gap between sales volumes and for-sale listings widened as demand dropped while supply rose. Around the same time, vacancy rates began climbing.”
Perth’s prior boom shows a clear pattern of weakening pressure ahead of a downturn.
“In early 2013, vacancy rates began to rise strongly,” Nguyen said. “In mid-2013, the gap between sales volumes and for-sale listings started to widen due to falling demand outpacing supply.
“In late 2013, vendor discounts began trending upward. DOM stopped declining in early 2014 and went up sharply from mid-year.”
Although each city experienced boom-and-bust cycles at different times, the warning signs were strikingly consistent. When DOM, vendor discounts, for-sale inventory vs. sales volume, and vacancy rates all rise together for a sustained period, it typically signals that a boom is fading.
“Not just in Perth, but in any market, when you see DOM, vendor discounts, the gap between the number of sales and for-sale listings, and vacancy rates all rise together over an extended period, it could be a strong sign that a property boom is coming to an end,” Nguyen said.
Read the InvestorKit article here. For a deeper dive, listen to InvestorKit’s podcast episode: "When This Happens, Perth is OVER! What to Keep Your Eyes On", featuring lead research analyst Junge Ma.
