19 Jul Perth Surpasses Melbourne in Property Values for the First Time in a Decade: What It Means for Investors
Perth Tops Melbourne in Property Prices: A Shift for Investors
In a significant shift in Australia’s real estate landscape, Perth has officially overtaken Melbourne in median home values for the first time in more than ten years. This development not only reflects the momentum building in the Western Australian capital but also signals a changing dynamic in how investors, developers, and buyers are assessing opportunities across the country.
According to CoreLogic’s latest Home Value Index, Perth’s median dwelling value reached $687,004 in June 2025, edging past Melbourne’s median of $686,993. While the difference may appear marginal, the broader implications for national property investment strategy are far more substantial.
This milestone marks a turning point in Australia’s property cycle, reinforcing Perth’s growing appeal amid affordability constraints, interstate migration, and a shift in demand toward high-growth, lower-barrier markets. For property stakeholders, understanding what’s driving this trend and how it may evolve is critical.
What’s Behind Perth’s Rise?
Perth’s recent performance has been driven by a convergence of economic and demographic factors that continue to support a robust property market.
1. Sustained Population Growth
Perth is experiencing a surge in interstate and international migration, supported by Western Australia’s booming resources sector, lifestyle appeal, and comparative affordability. The latest ABS data shows WA leading the country in net migration, with many arrivals drawn to Perth’s employment opportunities and lower housing costs.
This influx is placing considerable pressure on housing supply, particularly in the rental market, driving vacancy rates to record lows and accelerating demand for both rental and owner-occupied dwellings.
2. Chronic Undersupply of Housing
WA’s construction industry has been grappling with material shortages, labour constraints, and cost escalations for several years. As a result, new housing supply has not kept pace with demand, placing upward pressure on home values. Despite government incentives and planning reforms, the lag in completions is likely to persist in the near term, creating further urgency in the market.
3. Affordability Advantage
Unlike the east coast capitals, Perth’s property prices remained relatively subdued for much of the past decade following the end of the mining boom. This left ample room for growth. Even after its recent surge, Perth remains one of the most affordable capital cities when compared on a price-to-income ratio, helping to attract value-conscious buyers and investors.
Melbourne’s Market Stabilises
By contrast, Melbourne’s median dwelling value has remained relatively flat, as high interest rates, elevated construction costs, and a more cautious lending environment weigh on the market.
While Melbourne continues to record strong population growth, especially from overseas migration, its high cost of entry, rental market volatility, and developer hesitancy in launching large-scale projects have tempered short-term momentum. Regulatory and planning constraints have also slowed infill development, limiting supply elasticity and dampening investor enthusiasm.
As a result, Melbourne’s stagnation—combined with Perth’s consistent upward trajectory—has created a unique crossover point not seen in over a decade.
Rental Market Dynamics: A Key Driver
Perth’s rental market is among the tightest in the nation, with vacancy rates sitting below 1% and median weekly rents continuing to rise. Gross rental yields across the city are averaging around 5.5%–6%, significantly outperforming yields in Sydney and Melbourne.
This rental resilience has been a major factor in attracting investor interest from both domestic and international buyers, particularly those seeking positively geared opportunities or stronger cashflow in a high-interest-rate environment.
Suburbs such as Baldivis, Armadale, and Butler continue to perform well due to their affordability, infrastructure access, and appeal to renters priced out of the inner city.
What Does This Shift Mean for Investors?
The fact that Perth has overtaken Melbourne in home values is more than a market headline—it reflects a deeper realignment of investment priorities across Australia. The implications for investors and developers are wide-reaching:
1. Geographic Diversification Is Back in Focus
Investors are increasingly looking beyond traditional capital city markets to identify better returns and lower entry points. Perth’s performance illustrates the value of geographic diversification—particularly when cyclical timing, affordability, and supply constraints converge in a single market.
2. Value-Growth Alignment
Unlike some premium markets where value growth is driven largely by speculation or status-driven demand, Perth’s upswing is being supported by fundamentals: employment, migration, supply shortages, and infrastructure investment. This alignment provides a more stable foundation for long-term investment planning.
3. Shift in Buyer Sentiment
Investor and first-home buyer sentiment is shifting toward “value cities” offering better affordability and lifestyle balance. As Perth continues to outperform, other mid-sized capitals such as Adelaide and Hobart may also receive more attention as investors search for the next comparable opportunity.
Outlook for the Perth Market
Looking ahead, several factors suggest Perth’s momentum is likely to continue into the medium term:
- Pipeline Constraints: Ongoing labour shortages and delays in construction mean new housing supply will remain tight.
- Infrastructure Investment: WA’s state government is investing heavily in transport, healthcare, and energy infrastructure, which supports long-term urban growth.
- Relative Affordability: Even as prices rise, Perth’s housing remains accessible compared to east coast markets, sustaining demand from a wide buyer pool.
However, rising prices may eventually test affordability thresholds and dampen some of the city’s investor appeal. In the meantime, suburbs offering strong connectivity, rental performance, and value uplift will continue to lead the pack.
Opportunities for Strategic Investment
As property market dynamics shift, Perth presents an opportunity for strategic investors willing to adapt to changing conditions. Key strategies include:
- Targeting High-Yield Suburbs: Focus on areas with strong rental demand, infrastructure access, and room for capital growth.
- Development-Ready Sites: With tight housing supply, well-located sites suitable for townhouses or medium-density development may be increasingly valuable.
- Build-to-Rent Potential: Perth’s rental crisis opens the door for institutional investors to explore build-to-rent models and long-term leasehold returns.
Investors assessing Perth should keep a close watch on government planning updates, zoning changes, and infrastructure rollouts, as these will continue to shape market viability and performance.
Final Thoughts
Perth’s rise above Melbourne in home values represents a pivotal moment in Australia’s property investment landscape. While symbolic, the shift signals a broader trend toward decentralised investment and a recalibration of growth markets across the country.
For investors and developers, the key lies in identifying markets where affordability, demand, and supply fundamentals align. Perth currently ticks all three boxes—and its performance over the coming years will be closely watched by those seeking to rebalance portfolios and explore alternative growth corridors.
As Australia’s property market evolves in response to demographic, economic, and planning forces, flexibility and a data-driven approach will be critical to navigating the next investment cycle. Get in touch with us for tailored insights, data-led strategies, and access to high-performing property markets across Western Australia.