Perth’s past two decades of property price movements offer investment lessons

he Perth property market has undergone significant fluctuations over the past 20 years, reflecting broader economic conditions, shifts in population, and the volatile nature of Australia’s mining boom and bust cycles.

For property investors, understanding these trends and the drivers behind them is critical to making informed decisions.

Over the past 20 years, Australia’s capital cities have experienced varied property growth trends, with some cities seeing far higher returns than others.

Hobart has been the standout performer, with its median house price increasing by a staggering 5.9 times since 2002, from $123,300 to $727,000​, and regional Tasmania has been similarly outstanding.

Adelaide also saw strong growth, with prices increasing 4.1 times, from $166,000 to $680,000​.

Canberra’s property prices grew by 4.08 times, from $245,000 to $999,000​.

Sydney and Melbourne had significant price increases, with Sydney seeing its median house price more than triple, from $365,000 to $1.27 million​. Melbourne’s prices also more than tripled, from $241,000 to $842,000​.

Brisbane’s median house price quadrupled, from $185,000 to $750,000​.

Perth and Darwin had more moderate growth, with Perth’s prices rising 3.05 times (from $190,000 to $580,000) and Darwin’s 3.16 times (from $190,000 to $600,000)​.

From 2004 to 2024, Perth’s property market experienced cycles of rapid growth, stagnation, and decline. Looking at the cycles, lets break down the cycles that have dominated the Perth market for the past two decades.

1. 2004-2007: The Mining Boom
   • Growth period: During this time, Perth’s median house price surged due to the mining boom. Fuelled by a strong demand for resources, an influx of interstate and overseas workers drove housing demand.
   • Key suburbs for growth: Mining-affiliated suburbs such as Baldivis, Ellenbrook, and suburbs in the Pilbara region (e.g., Karratha and Port Hedland) saw unprecedented price hikes, with many investors buying there with a speculative view on future growth.
   • Median house price: The median house price in Perth rose from around $200,000 in 2004 to nearly $500,000 by 2007.

1. 2008-2012: The Global Financial Crisis (GFC) and aftermath
   • Retraction period: The GFC in 2008 triggered a cooling of Perth’s market, with declines in housing demand. Median house prices stagnated and, in some areas, declined.
   • Biggest declines: Mining towns like Karratha and Port Hedland saw the steepest drops, with some properties losing up to 40 per cent of their value as resource projects slowed. Within Perth, outer suburbs like Mandurah experienced significant declines due to overdevelopment and reduced demand, burning many investors and leaving them with little equity or gains.

1. 2013-2014: Recovery phase
   • A period of stability: As the global economy stabilised, Perth’s housing market briefly recovered. Median prices rose, though not to the levels seen during the mining boom. Inner-city and established suburbs like Subiaco, Mount Lawley, and Leederville became prime targets for buyers.

1. 2015-2020: Post-boom decline
   • Retraction period: The end of the mining construction phase caused significant job losses, leading to population stagnation and oversupply in the housing market. Between 2015 and 2017, the median house price dropped from $560,000 to $480,000.
   • Biggest declines: Outer suburbs, particularly those with new developments like Ellenbrook and Byford, were hit hard due to oversupply. Coastal suburbs like Mandurah also saw prolonged price declines.

1. 2020-2024: The COVID-19 effect and recovery
   • Growth period: The pandemic initially caused uncertainty, but government incentives, low interest rates, and the shift to remote work spurred housing demand. Perth experienced price growth, particularly in lifestyle suburbs such as Fremantle and Cottesloe, and areas with large blocks of land suitable for families.
   • Current trends: By 2024, Perth’s median house price is approximately $585,000. Growth has been supported by strong interstate migration, affordability compared to eastern capitals, and robust local demand.

Some suburbs had more notable declines than others and while many are tied in to mining, that hasn’t been the only driver of downward pressure on the Perth market.

Mandurah: A popular coastal suburb that saw its median price drop significantly during the post-mining boom years due to an oversupply of housing and reduced demand.

Karratha and Port Hedland: Resource-dependent towns experienced extreme volatility. Median house prices, which soared during the boom, plummeted as projects wound down.

Ellenbrook: This outer suburb faced challenges of oversupply and declining buyer interest during the 2015-2020 period, leading to notable value drops. However, with the train line extension to the area, this is set to boost demand and support more sustained price growth.

Looking ahead, the Perth market offers a clear lesson for investors, such as the critical nature of timing and location. Established inner-city suburbs have shown resilience over time, while outer and resource-dependent regions remain high-risk, high-reward areas.

Understanding the broader economic context and closely monitoring supply and demand dynamics can help mitigate risks, as well as the infrastructure that will support sustained demand to outer metro areas.

While regional areas have boomed in Western Australia throughout 2024, buyers should be very cautious that they aren’t purchasing in locations that are being propped up by interstate investors.

This is a phenomenon known as a two-tier market, which inevitably will retract when demand softens.

There is a real risk in the coming years that the regional areas of WA could be the next version of past ‘mining boom and bust’ if the supply and demand is imbalanced and the sustainability of key fundamentals is lacking.