According to Australia’s Consumer Price Index (CPI), rents and owner-occupier housing expenses are the leading causes of recent inflation readings, and Perth is particularly hard hit.  

Key statistics

• This quarter, the Consumer Price Index (CPI) increased by 0.7%.
• The CPI increased 2.1% in the 12 months leading up to the June 2025 quarter.
• Housing (+1.2%), food and non-alcoholic beverages (+1.0%), and health (+1.5%) saw the most significant price increases this quarter.
• Transport offset the increase to some extent (-0.7%).

Housing price inputs (such as rents and components of new home buying) have been one of the major drivers of headline changes in the CPI during 2024–mid-2025, and monthly indicators indicate that housing inflation has increased significantly year over year.  

However, according to REIWA data, Perth’s real estate market remains tight, characterised by low vacancy rates, rising median prices, and a robust rental market in many regions. A two-sided pressure results from the combined effect:

1. Buyers

• Stronger competition for stock, higher purchase prices in some areas of Perth, and the possibility that cost pressures and rent caused by the CPI could affect household budgets and borrowing capacity are all challenges for buyers.  
• However, the mechanics of affordability may become more complex as dropping interest rates (current RBA reduction in 2025) may enhance servicing capacity and rekindle buyer desire.

2. Sellers

• Limited supply, growing medians, and more robust leasing markets that boost investor confidence, as well as possible yield compression, are often advantageous to sellers.  
• However, sellers need to be aware of local microtrends: suburbs with fresh inventory or declining days-on-market can experience increased competition.

Why CPI housing pressure matters to property markets (and Perth)

1. The CPI is a measure of household inflation in the economy. Rents and the cost of new homes purchased by owner-occupiers (imputed owner-occupier housing costs) are two significant items in the CPI’s housing category.

2. Local market conditions influence both:

• Changes in house prices
• The availability of rental stock
• New building costs

3. Not only can changes in these factors impact household budgets, but they also have an impact on :

• Consumer attitude
• Mortgage serviceability
• The appeal of real estate as a shelter or investment asset  

4. Because housing-related CPI can affect monetary policy and, consequently, borrowing prices, the Reserve Bank and financial markets keep a careful eye on it.

5. In contrast to other capitals, Perth’s local housing market tightness—which includes vacancy rates, time to sell, and local price movements—has a unique impact on the city’s CPI.  

6. Perth’s CPI and housing indicators have occasionally surpassed those of several other capitals, according to the ABS and local data sources. This is indicative of supply and demand imbalances in the area, as well as the economic drivers of Western Australia.

All groups CPI, Australia, quarterly and annual movement (%)

The ABS declared on July 23 that the October 2025 reference month would be used for the first publication of the full Monthly CPI on Wednesday, November 26, 2025.  The monthly CPI will replace the quarterly CPI as Australia’s leading indicator of headline inflation with this publication.

Weighted average of eight capital cities

The lowest level of trimmed mean inflation since December 2021:

• By mitigating the impact of erratic or transient price fluctuations that may affect the CPI, the Trimmed mean offers an insight into underlying inflation.  
• The reduced mean annual inflation decreased from 2.9% in the March quarter to 2.7% in the June quarter.  
• The annual CPI inflation rate decreased from 2.4% in the March quarter to 2.1% in the June quarter.

Snapshot: What the data says (latest ABS + REIWA signals)

1. ABS – national and Perth signals (summary):

• According to the ABS June-quarter 2025 CPI, housing increased by 1.2 per cent during that quarter, whereas the headline CPI for the June quarter was 2.1% year over year.  
• The monthly measure also emphasises how housing has a significant role in changes in the annual CPI.
• Rents and owner-occupier new home purchases continue to be significant contributors, according to monthly ABS statistics.  
• Housing was identified as significantly contributing to annual movement in July 2025 by the monthly CPI indicator (housing + 3.6% contribution in the monthly indicator context).
• According to local Perth CPI measurements (ABS or economy.id breakdowns), the city’s CPI increased by about 2.7% in the year ending June 2025, reflecting local inflation pressures that are generally consistent with national trends but that are impacted by housing.

2. REIWA – Perth market signals (summary):

• Median prices and sales information: The Perth metro sections of REIWA provide the most recent median prices for homes and apartments, as well as tracking by suburb and land size.
• In many areas of Perth, these medians have been rising through 2024 and 2025.  
• The primary source for market metrics specific to WA is REIWA data, which is updated monthly.
• In comparison to a “balanced” rental market, Perth’s rental vacancy rate increased to about 2.2% in August 2025 after being lower in previous months.  
• With minor monthly variations, REIWA reported a 2.5% vacancy in March 2025 and a 2.2% vacancy in August 2025.  
• A lower vacancy rate encourages rental growth, which raises the housing CPI.
• Demand from the resource sector, interstate migration, and limited supply in coveted neighbourhoods are some of the distinctive factors driving Perth’s real estate market, which has led to times when it has outperformed other capitals.  
• Perth has historically had low vacancies, strong demand pockets, and quicker selling times, as noted by media coverage and CoreLogic/industry opinion.

All groups CPI and Trimmed mean, Australia, annual movement (%)

The lowest annual inflation rate for services since June 2022

• Rent and insurance price increases slowed, bringing annual services inflation down from 3.7% in the March quarter to 3.3% in the June quarter.
• The June quarter’s annual goods inflation rate was 1.1%, which was marginally lower than the March quarter’s 1.3% rate.
• The primary cause of the annual goods inflation slowdown was the decline in car gasoline prices, which are now 10.0% less than they were a year ago.
• Additionally, from 1.4% in the March quarter to 0.7% in the June quarter, annual inflation for new homes decreased.

How rising housing costs show up for Perth buyers

1. Direct financial impacts

• Buyers require larger mortgages or deposits when median prices rise.  
• A greater principal borrowed can result in greater monthly repayments even when interest rates decline.
• A helpful indicator of expected purchase prices by suburb is the REIWA median.
• Rent and household expense increases led by the CPI lower discretionary income, narrowing the gap between income and the necessary mortgage serviceability.
• Higher living expenses can therefore reduce the maximum borrowing capacity for the same income because lenders take them into account when determining serviceability.
• The mounting pressure on living expenses is highlighted by the ABS monthly CPI indicator, which in July showed housing +3.6% Y/Y.

2. Affordability & timing trade-offs

• Affordability may still deteriorate if home prices continue to grow (or climb more quickly than interest rates decline) notwithstanding indications that the RBA would drop rates in 2025, supporting lower monthly repayments.
• Polls by analysts and the media have projected minor price increases through late 2025.  
• Buyers have to balance price momentum with interest-rate forecasts.

3. Rental market spillovers — for prospective investors and owner-occupiers who rent first

• More substantial rental returns may be available to investors in certain Perth areas if rents continue to climb (bolstered by low vacancy rates); nevertheless, prospects for capital growth differ by region.
• Rent payments may be higher for prospective owner-occupiers who initially rent, making it more challenging to save for a deposit.
• Reading REIWA’s vacancy and rent trend pages is crucial.

4. Practical buyer checklist

• Perform a stress test on repayments under the assumptions of a higher home price and a 1-2 per cent increase in living expenses.
• Focus your search on value-rich areas where supply is arriving or days-on-market are rising—metrics at the REIWA suburb level aid in locating these.
• Examine fixed versus variable mortgage arrangements in light of regional conditions and RBA recommendations.
• If you’re renting right now, monitor the median rental growth and local vacancy rates (REIWA) to estimate your rent trajectory.

How rising housing costs affect Perth sellers

1. Pricing power and seller confidence

• Sellers have more power to set and meet aspirational prices when there is less inventory and greater buyer demand, particularly when interest rates are easing.
• REIWA medians and lower days-to-sell in numerous suburbs support this.

2. Timing and conditional offers

• Sellers must exercise caution when handling offers because, despite their allure, conditional or finance-approval offers contain settlement risk.
• Tenants may have to deal with increased rents due to higher CPI housing components; if a buyer is a landlord-dependent investment, the state of the rental market affects their bids.
• Sellers should request solid pre-approval documentation.

3. Marketing opportunity: emphasise cost-of-living upside for owner-occupiers

• In a rising-rent climate, sellers (and agents) might create messaging that emphasises the cost-benefit of ownership vs continuing to rent, such as locking in fixed mortgage payments versus continuous rent rises.
• For first-time homebuyers and downsizers worried about rising living expenses, this is compelling.
• Campaign materials should make use of local rental growth and vacancy statistics.

4. Practical seller checklist

• Make sure that energy efficiency, insulation, and appliances are recorded (energy expenses are part of living-cost conversations).
• Neighbourhood median prices, rental comparables, and vacancy trends justify pricing. Make use of REIWA charts.
• Reduce conditionality by negotiating settlement terms that include shorter finance clauses and more substantial deposits.
• A seller can show prospective buyers expected energy and running cost reductions by considering staging or small capital expenditures that lower future household running costs (applicable in a CPI-aware market).

CPI Goods and Services components, annual movement (%)

For the majority of service categories, annual inflation is decreasing.

• For the majority of categories, annual services inflation has been declining in recent quarters.  
• Over the last four quarters, rent price increases have been steadily decreasing.  
• Insurance price hikes have also significantly reduced, going from 14% last year to less than 4% in the 12 months leading up to the June 2025 quarter.

Investor implications: yield, vacancy, and total return

1. Yield vs capital growth

• Gross yields may contract as median prices rise if rents don’t increase in parallel.  
• Rental strength is evident in several Perth suburbs, according to REIWA’s rental median data and vacancy measures; however, yield results vary by location.  
• Investors should factor in upkeep, rates, and possible vacancy periods when modelling gross and net yields.

2. Vacancy risk

• Rental pricing power is supported, and vacancy risk is decreased by historically low vacancies (sometimes less than 2%).
• For highly geared investors, however, even minor fluctuations in vacancy (such as seasonal or supply-driven) can have a significant impact on cash flows.
• To keep an eye on microtrends, use REIWA rolling vacancy metrics.

3. Capital growth expectations in a CPI-aware environment

• Price increases may continue as consumers seek lower-cost borrowing if CPI-linked cost pressures continue and interest rates decline.
• Perth is frequently one of the better performers when local fundamentals (population, employment, mining cycles) line up, according to analysts who have forecast modest national price increases through 2025.
• However, long-term capital returns are still influenced by location.

Selected services annual movements (%)

Main contributors to change (CPI groups): Weighted average of eight capital cities, quarterly movement (%)

Capital cities comparison (All groups CPI ): All groups CPI, quarterly movement (%)

All groups CPI, index numbers and percentage changes

Capital city highlights:

All eight capital cities saw increases at the All groups level, with Canberra seeing a 0.3% increase and Perth seeing a 1.9% increase.

1. Sydney (+0.6%)

• Vacation travel and lodging abroad (+4.3%).
• Hospital and medical services (up 2.4%).
• Purchase of a new home by an owner-occupier (+0.9%).
• Rents (up 0.9%).
• Petrol for cars (-4.1%).
• Sydney saw a 1.9% yearly increase.

2. Melbourne (+0.4%)

• Vacation travel and lodging abroad (+4.6%).
• Hospital and medical services (plus 2.0%).
• Vegetables (up 4.8%).
• Rents (+1.0%).
• Domestic vacation travel and lodging (-5.8%).
• Melbourne saw a 2.0% yearly increase.

3. Brisbane (+0.8%)

• Electricity +20.7%.
• Vacation travel and lodging abroad (+6.1%).
• Hospital and medical services (plus 2.0%).
• Rents (+1.3%).
• Petrol for cars (-7.0%).
• Brisbane saw a 2.5% yearly increase.

4. Adelaide (+0.8%)

• Hospital and medical services (up 3.4%).
• Vacation travel and lodging abroad (+4.2%).
• Participation in sports (+9.6%).
• Furnishings (+6.5%).
• Rents (+1.3%).
• Domestic vacation travel and lodging (-4.0%).
• Adelaide saw a 1.8% yearly increase.

5. Perth (+1.9%)

• Due to the exhaustion of both the Commonwealth and State government refunds, electricity increased by 116.8%.
• Hospital and medical services (+2.5%).
• Travel and lodging abroad for vacations (+4.7%).
• Automobile maintenance and repair (+3.8%).
• Rents are up 1.6%.
• Petrol for cars (-3.3%).
• Perth saw a 2.7% yearly increase.

6. Hobart (+0.5%)

• Purchase of a new home by an owner-occupier (+2.8%).
• Hospital and medical services (plus 2.3%).
• Travel and lodging abroad for vacations (+4.9%).
• Juices, soft drinks, and water (+6.3%) as a result of the container deposit program’s implementation.
• Electricity -16.7%.
• Hobart saw a 1.7% yearly increase.

7. Darwin (+0.8%)

• Vacation travel and lodging abroad (+5.8%).
• Tobacco (plus 2.7%).
• Vegetables (plus 4.7%).
• Automobile accessories and spare parts (+2.8%).
• Wine (-3.5%).
• Darwin noted a 1.6% yearly increase.

8. Canberra (+0.3%)

• Travel and lodging abroad for vacations (+4.0%).
• Hospital and health care services (+1.8%).
• Vegetables (4.6%).
• Purchase of a new home by an owner-occupier (+0.8%).
• Petrol for cars (-7.5%).
• Canberra saw a 1.6% yearly increase.

Case studies / example scenarios (illustrative)

1. Scenario A: First-time homebuyer, Perth metro, $80,000 per year

• The buyer will require a 10–20% larger deposit than they did a year ago due to the rising median prices in the target suburbs.  
• We advise a pre-approval stress test that uses greater living expenses and a 0.5–1% higher mortgage cushion because rising rents and CPI raise living expenses.  
• To build numbers, use REIWA suburb medians for the specific suburb.

2. Scenario B: An investor purchases a three-bedroom flat in inner Perth.

• Tenant demand is supported by rising rents and a vacancy rate of about 2.2%, but yield compression may occur if the purchase price takes into account recent capital growth.  
• In contrast to a situation where rents remain flat, the model yields a rent increase of under 3–5%; make careful to account for a 6- to 12-week vacancy contingency.

Data appendix (key cited figures & sources)

• ABS Consumer Price Index, Australia — June quarter 2025: CPI rose 0.7% that quarter; Housing +1.2% was a key contributor; headline CPI 2.1% year-on-year.
• ABS Monthly CPI indicator, July 2025: Annual movements include Housing (+3.6%) as a major contributor to the 12-month change.
• Perth CPI: Perth CPI up ~2.7% year to June 2025 (All groups).
• REIWA Perth market: REIWA Perth metro median pages and market updates (monthly updated medians and rental graphs).
• REIWA vacancy: Perth vacancy ~2.2% in August 2025 (2.4% July 2025; 1.4% Aug 2024 for comparison); earlier in 2025, the March vacancy was 2.5%.
• Analyst commentary/forecasts: Reuters poll and media summaries point to projected modest national price rises tied to interest rate cuts in 2025; Perth often features as a stronger-performing capital in such forecasts.

Conclusion

Perth’s housing sector significantly influences the CPI story, and current ABS indicators, combined with REIWA market statistics, reveal a market where housing expenses, including rentals and purchase pressures, actively influence household finances and real estate decisions.  

Even though interest rate changes offer offsets, rising prices and increased CPI-driven living expenses make it harder for buyers to finance. Strong demand and limited supply create a favourable selling environment for sellers. Still, to maximise results, contract terms must be carefully managed and data must support prices. Low vacancies encourage rentals for investors, but yield compression is a crucial risk to account for.

To convert macro signals into hyper-local recommendations, Bargoti Real Estate uses ABS to explain the CPI/household cost aspect and REIWA to illustrate supply and rental dynamics at the suburb level. These two tools are then combined to create tangible stress tests and marketing packages for clients.  

A rigorous, data-driven approach will keep clients informed and in a position to act, whether that means making cautious investments, selling with confidence, or buying selectively, given the market’s indications of further movement in 2025.

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