Perth Property is Caught in a Tug of War and Here's Who's Winning

The Perth property market is caught in a tug of war right now. Rising interest rates and Federal Budget changes to negative gearing and the CGT discount are pulling hard on one side. WA's robust economy and strong population growth are pulling just as hard on the other.

So which force will win out – and what does it mean for property investors in Perth?

East and West: Two very different stories

The east coast property markets have pulled back. With rising interest rates and slowing economies weighing on demand, commentators are now predicting property prices in Sydney and Melbourne to fall in the short term. Many argue the Federal Budget was the final straw.

Perth is telling a different story though.

Despite some metrics softening, demand continues to outweigh supply on all key measures. 

The number of properties listed for sale has jumped to just over 5,000 but this remains well below the roughly 12,000 listings that would represent a balanced market.

Selling times have also increased since the start of the year, with the median time to sell a house rising from nine to 14 days, and units from eight to 13 days. These numbers are moving in one direction – but they remain a fraction of the pre-COVID median of around 50 days.

The rental market tells a similar story. Perth's vacancy rate remains below REIWA's balanced market range of 2.5-3.5%, and rental prices have held firm, with unit rents ticking slightly higher since the start of 2026.

"Some of those key metrics are easing but many are coming from an extremely low base," Rent Choice General Manager Clare Christiansen said.

"Right now, demand is still outpacing supply, and that's ultimately what drives prices."

Price for your suburb

Amid a backdrop of rising interest rates, some investors with variable rate mortgages are looking to adjust rents to help offset these additional costs. 

While rental supply in some suburbs remains tight, which can justify price increases, the market does push back in suburbs where rental supply is more readily available.

We're seeing this play out in our own rent roll. 

For example, in one northern coastal suburb, rents for a 4-bedroom, 2-bathroom home are up $40 to $50 per week compared to 6 months ago. In a southern coastal suburb, the same period has seen rents soften by $30 to $40.

Pricing a rental property correctly for its specific location has never been more important.

What the budget changes mean for investors

Most investors are across the headline changes to negative gearing and capital gains tax announced in the 2026–27 Federal Budget. What is less widely understood is that these changes do not apply to new builds.

Investors purchasing a qualifying new build will continue to have full access to negative gearing, and retain the choice between the existing 50 per cent CGT discount or the new indexation arrangements when they sell.

With tax concessions still available on new builds, we anticipate stronger investor interest in house-and-land packages.

For investors considering this path, it's worth understanding the suburb-level rental dynamics carefully. House-and-land packages are often located on Perth's urban fringe, where new supply can be added relatively easily. 

As additional stock comes online, it can weigh on both the rental yields and capital growth of neighbouring properties, compared to inner-ring locations where supply is more constrained.

Looking ahead for the Perth Property market

Despite rising interest rates and changes to tax settings, the Perth property market continues to be underpinned by fundamentals the eastern capitals don't currently share, including a strong resources-driven economy, population growth that continues to run ahead of housing supply, and a rental market still in landlord territory.

The tug of war is real. But based on the current evidence, WA's underlying strengths are holding their ground.

For investors, the key is to stay informed, differentiate the east-coast-centric headlines from what's happening in WA, price your property accurately for its location, and seek advice before making any decisions about your portfolio.