According to the most recent PropTrack Home Price Index (May 2025), Perth’s real estate market has achieved a significant milestone, with the median home value in the city surpassing that of Melbourne for the first time in ten years.

The change is indicative of the recovery in Western Australia’s housing market since 2022, which a special confluence of supply restrictions, investor demand, population growth, and affordability has supported.

Executive summary (read this first)

• According to PropTrack’s 2025 Home Price Index, Perth has surpassed Melbourne in median home values for the first time in about a decade. PropTrack recorded Perth at $ 787,000 in May 2025, compared to $ 782,000 for Melbourne, surpassing the threshold that many believed would be years away.
• Several rate decreases by the RBA in 2025 (in February, May, and August) have increased borrowing capacity and bolstered widespread price increases across capitals, with Western Australia seeing some of the most significant growth tailwinds.
• Vendor conditions are stable because rental markets are consistently undersupplied, and listings remain scarce.  
• In mid-to-late August 2025, rental postings in Perth were close to the low 2,200s.
• Although there are still timing lags, WA demand is supported by the strength of the labour force and population, as well as rising national approvals for higher-density construction.

After a protracted period of slower development, Melbourne continued to rebound with the most significant monthly increase (+0.79%) in May 2025. Values are still 2.85% below the top of 2022, though.

For the first time in ten years, Perth’s median home value of $787,000 has surpassed Melbourne’s at $782,000, despite Melbourne leading monthly advances.  This illustrates Melbourne’s weakness in comparison to Perth, which has consistently outperformed it in recent years.

Five years ago, the median price of homes in Perth was approximately 40% lower than that of homes in Melbourne, indicating that the city’s property values were significantly lower than those in Melbourne.

The moment Perth passed Melbourne — and why it matters

Finally, after lagging by about ten years, the median home value in Perth has surpassed that of Melbourne. The May 2025 report from PropTrack highlighted Melbourne’s slower post-pandemic recovery and Perth’s multi-year outperformance, putting the two cities at $787,000 and $782,000, respectively.

The relevance is twofold:

• For many years, Perth was portrayed as the “affordable outlier” among large cities. A prolonged structural re-rating of WA housing is indicated by Crossing Melbourne, which punctuates that story.
• At a time when supply is limited and rental returns are still appealing by capital-city standards, headlines stating that “Perth surpasses Melbourne” attract new interest from interstate and investors.

What changed in 2024–2025? The macro mechanics

• Rate cuts and the demand impulse
• Momentum broadened — but WA stayed near the front

1. The cash rate was initially dropped by the RBA on February 18, 2025, to 4.10%. In May and August, it was further lowered by 0.25 percentage points to 3.85% and 3.60%, respectively.

2. As financing circumstances improved, price growth spread throughout capitals, and even a slight relaxation increases borrowing capacity and improves buyer enthusiasm.

3. Through mid-2025, Cotality/CoreLogic showed consecutive monthly growth, with increases reported in all capital cities in July.

4. Due to constrained supply and strong demand fundamentals, Perth managed to stay among the pacesetters even as national medians hit new highs.

Supply is the story: why tight listings keep Perth sellers in control.

• The scarcity of listings has marked the Perth cycle. According to REIWA’s weekly snapshots until August 2025, there are between 2,200 and 2,300 rental listings, along with a thriving sales market.
• This type of setting is characterised by high-priced houses selling quickly and vendor discounts being reduced.
• Industry associations indicate a spike in apartment approvals year-over-year, while dwelling approvals at the national level rebounded in mid-2025 (June approvals up 11.9% m/m; apartments up 33.1%).
• That’s good, but the pipeline to keys takes time, and population growth and lean stock continue to influence Perth’s near-term conditions.
• In July 2025, the national vacancy rate in Australia dropped to 1.2%, with Perth having one of the most competitive markets.
• As renting becomes more difficult, tight rental markets continue to drive purchasers into the owner-occupier market, maintaining competitive gross returns (Perth, ~4.2% on latest estimates).
• This is important for sellers, as upgraders are more inclined to buy family homes rather than take advantage of a harsh rental market, and investor participation increases where yields are favourable.

1. According to the relative AVM value estimate comparison graphic, Perth properties consistently sold for significantly less than those in Melbourne between 2016 and 2020.

2. However, since the middle of 2022, Perth has experienced consistently high home price rises, and it has been the country’s strongest market for price growth.

3. As a result, the city has experienced a sharp increase in value, with the median property value currently surpassing that of Melbourne.

Why Melbourne lagged — and what that means next

Although Melbourne’s recovery curve has become flatter, its fundamentals remain intact. There were several contributing factors:

• Higher state taxes and vacancy-to-rent dynamics, which had previously provided lower yields than Perth, caused investor hesitation.
• Delayed post-pandemic recovery in inner-city investor stocks and flats compared to Brisbane, Perth, and Adelaide.
• When opinion shifts, Melbourne can pick up speed swiftly. Two thousand twenty-six forecasts already indicate higher Melbourne increases, particularly in units. However, that is looking ahead; Perth is in the present.

Where we are now: the metrics you can’t ignore

• Perth > Melbourne median confirmed by PropTrack (May 2025).
• National prices at records; broad-based monthly gains through winter 2025 (Cotality/CoreLogic; PropTrack July).
• Tight rental market: National vacancy 1.2% (SQM, July); Perth remains one of the hardest places to rent, with rental listings hovering around ~2,200.
• Approvals are improving (esp. apartments), but delivery lags.
• Monetary policy tailwind: Three rate cuts in 2025 so far (Feb, May, Aug).

Sub-market anatomy: how the Perth surge spreads

According to recent roundups, Greater Perth has seen widespread improvements, with both lifestyle nodes and well-established family areas surpassing national averages. Mundaring, Melville, and South Perth—which are representative of the “leafy family,” “riverside prestige,” and “inner-ring downsizer” pulses—are a few places mentioned for their robust yearly growth.

What we see on the ground at Bargoti:

• Upgraded spaces near existing retail, high-performing schools, and rail precincts are sought after by family buyers.
• Professionals with good lock-and-leave profiles who prioritise the ease of commuting to key hubs (Kwinana, Henderson, Welshpool, and Perth Airport) are FIFO and resource-adjacent.
• Downsizers are looking for upscale townhomes or flats with walking amenities in activity centres like Subiaco, South Perth, Joondalup, and Victoria Park.

From underdog to out-performer

• Both structural and cyclical factors have contributed to Perth’s dramatic increase in value.
• After a prolonged period of muted price rise during the mining investment collapse and the ensuing market stagnation, the city started this upswing from a low base.
• This relative affordability became a significant draw, notably as East Coast real estate values rose during the pandemic and interest rates increased in 2022, which limited borrowing options and raised mortgage servicing expenses.
• One of the primary motivators has been affordability. As remote work trends and shifting lifestyle choices promoted relocation, Perth’s lower starting point and superior value for money appealed to both homebuyers and investors.
• Since then, rapid increases in rental prices, limited vacancies, and high returns have strengthened this value offer and drawn in a flurry of investor activity.

Strategy playbook — tailored by buyer/seller type

1. Owner-occupiers (first-home and upgraders)

• Lock your finance early
• Prioritise liveability over “perfection
• Hunt the “apartment gap”

Every RBA action resets competition and borrowing power. Before the subsequent listing cycle, preapproval is essential.

Structurals (bones, block, and direction) are more critical in lean stock markets than finishes that can be updated.

Houses have surpassed units nationwide. Shorter settlement times and value can be obtained from a few Perth unit stocks with solid fundamentals.

2. Investors

• Chase durable rental demand
• Yield + uplift
• Risk-manage delivery timelines

The suburbs with low rental listings and short lease terms are your best bet. REIWA’s weekly trackers provide the finest real-time pulse.

Prioritise assets with value-added features (small renovations, parking/storage additions, strata upgrades), as some estimates place yields for Perth homes at approximately 4.2%.

Eventually, supply will increase. To capitalise on the undersupply while it lasts, focus on established or nearly complete stock.

3. Downsizers and lifestyle buyers

• A-grade amenities win
• Consider off-market pathways

Give priority to accessibility, walkability, lifts, and strata health. In competitive marketplaces, the best complexes close to rivers, the seashore, and activity hubs are the first to relocate.

Pre-market prospects are frequently brought to light by Bargoti’s buyer network, which is crucial as open-home crowds increase.

Pricing, offers and negotiation in a market that favours sellers

Vendors hold the cards due to the low rental vacancy rates and limited listings. Expect:

• Reduced days on market and tighter discounts on strategically placed, move-in-ready inventory.
• Opportunities with multiple offers in family-friendly suburbs near convenient transportation.
• When buyers are pre-approved and agents are trained to provide realistic guidance, auction clearing resilience is achieved.

Risks to watch (and why we’re not complacent)

• Interest-rate path
• Catch-up on supply
• Rebound risk in Melbourne

Although the RBA has loosened its stance, its own communications still rely on data. The easing path may delay and limit price increases if inflation picks up speed again or if there are global shocks.

The pipeline for permits is getting better, especially for apartments. In inner-urban markets, pressure may initially decrease at the margin if delivery speeds up in 2026–2027.

Forecasts suggest Melbourne may re-accelerate into 2026 — not a Perth negative, but it may reclaim a premium on certain stock types, re-shaping interstate capital flows.

The Developer Lens: What the Pipeline Says About 2026–2027

1. Strong national policy support, including expedited approval procedures and a focus on modular building, is influencing the development of Australia’s housing pipeline for 2026–2027.  

2. Even though these steps should eventually increase the supply of housing, real-world obstacles, including a shortage of workers and rising building costs, are likely to slow down delivery.  

3. As a result, the actual delivery curve may extend farther, even though the data may indicate an increase in approvals. Because flats use land more efficiently and can be built more quickly than detached homes, developers and regulators anticipate that apartments will dominate the next phase of supply increase.  

4. Activity-centred zones that councils prioritise are likely to experience uplift sooner, which will accelerate density around important urban junctions.

In Perth, inner-urban markets will be where this dynamic is most noticeable.

5. As new apartment buildings go online, it is anticipated that supply pressures in suburbs like South Perth, Victoria Park, Subiaco, and Scarborough will be alleviated sooner rather than later.  

6. However, because the supply of detached housing takes longer to materialise, the outer suburban house and land markets will continue to experience tight conditions in the short to medium term.

What this means for your Perth strategy in the next 6–12 months

1. If you intend to sell and you own

• The market you are in is tilted towards sellers.  
• As rates are dropping and rental shortages persist, consider introducing measures to address the depth of demand.
• Bargoti will adjust your advertising timeframe based on local listing flows, rate meeting dates, and school periods.

2. If you’re an investor or an OO buying

• The combination of speed and devotion wins.  
• Know your walk-away price, lock down financing, and be prepared with terms that will satisfy the vendor.
• Pay attention to A-grade resources (schooling, transportation, block, and orientation). A-grade performs better both up and down in each cycle.

3. If you’re creating something

• Keep a careful eye on input prices and deadlines; budget for contingencies.
• Target areas where infrastructure improvements and flat approvals converge:
• Future supply
• Future liquidity
• Amenity

FAQs we’re getting at open homes

1. “Has Perth already peaked now that it’s above Melbourne?”

Not by default. The cross-over reflects fundamentals — tight supply, resilient demand, competitive yields, and rate-cut support. As long as listings remain lean and population supports household formation, momentum can persist, albeit with normal month-to-month variability.

2. “Should I wait for more stock to hit?”

Approvals are being lifted, but delivery lags remain. If you find the right asset at the right price, time in the market typically beats trying to pick the perfect quarter.

3. “Will Melbourne re-take the lead?”

It might in some segments or timeframes — consensus points to a stronger Melbourne in 2026 — but that doesn’t negate Perth’s re-rating. Both can rise; cycles are not zero-sum.

How Bargoti Real Estate gives you an edge (Perth-specific)

• Live pricing intelligence: To establish reasonable benchmarks and negotiation bands, we use street-level comparables, REIWA weeklies, and PropTrack/Cotality/CoreLogic macro series.
• Pre-market and off-market access to lower bidding-war risk and increase your chances of getting a “first bite” are known as private-preview pipelines.
• Offer engineering: To win cleanly, we maximise terms, not just price, including settlement flexibility, financing terms, and inclusions.
• Investor briefs include maintenance capital expenditure underwriting specific to your portfolio, yield mapping, and rental-days analysis.

Bottom line for WA homeowners and investors

Perth surpassing Melbourne is the result of long-term structural factors that coincide with rate relief in 2025; it is not a one-day story. Perth is expected to continue leading into late 2025, driven by limited supply, more competitive rental rates, and an expanding buyer base.

The following 3-6 months are crucial if you want to reweight your portfolio towards WA, buy before the next leg of supply arrives, or sell into strength. Bargoti Real Estate can create a customised, property-by-property and suburb-by-suburb plan that suits your timeframe and risk tolerance.

Sources (key references)

• PropTrack Home Price Index (May–July 2025): Perth’s median surpasses Melbourne; latest national and city-level movements.
• Cotality/CoreLogic: National pace of growth in mid-2025; July gains across capitals; commentary on rate-cut support.
• REIWA: Live Perth market data (prices, listings, rentals) and weekly snapshots.
• SQM Research: National vacancy rate 1.2% (July 2025).
• ABS: Population and labour force releases; building approvals.
• Real Estate Australia: Policy & market context, National approvals trend and housing initiatives.

Closing — from the Bargoti Real Estate Team

If you’re considering selling in Perth, we’ll show you exactly how today’s conditions translate into days on market, expected buyer depth, and net proceeds for your address — before you commit to a campaign.

If you’re buying or investing, we’ll help you act earlier with more certainty: shortlist A-grade assets, secure finance, and negotiate terms that win without overpaying. Let’s map your next move in Perth’s new era.

DISCLAIMER – The information and opinion provided is for guidance and general informational purposes only. The sole intention is to provide general understanding of the subject matter so the readers can assess whether they need more detailed information. The information provided on this website should not be regarded as a financial, business, legal or real estate advice and it is strongly recommended that the readers should seek their own independent financial, business, legal or real estate advice. While every effort has been made to ensure that the information and the material is correct and up to date at the date of publication. However, we do not guarantee or warrant the accuracy or completeness of the information provided as the factors like changes in circumstances after the time of publication, may impact such accuracy or completeness. Bargoti real estate will not accept responsibility or liability for any reliance on the blog information, including but not limited to, the accuracy, currency or completeness of any information or links.