If the pace of growth from the previous quarter continues, Perth's house prices are expected to rise by 12% by the end of this year. Meanwhile, the rental market is also challenged, with significant increases in rental rates due to a severe shortage of rental properties.

Market analysis reveals that the total number of houses for sale is currently at a historic low, as is the total number of houses for rent. Limited new supply channels have restricted the growth in new housing supply, exacerbating the existing housing shortage.

Perth has the highest number of inquiries per rental property across all markets, indicating a significant imbalance between rental demand and the shortage of rental properties.

Nationally, the number of inquiries per property for sale increased by 14.1% year-on-year but remained below the record high at the end of 2021. In comparison, Perth saw a 93.9% year-on-year increase in inquiries, setting a new historical high.

The decrease in newly listed properties and the faster sales time have led to a decrease in the total number of houses for sale, with Perth experiencing a 25.7% decrease in the number of houses for sale in September compared to the same period last year. This intense competition may be one of the reasons why Perth has overtaken Adelaide as the strongest capital city market in terms of price growth over the past year, as buyers compete for limited options.

Under strong buyer demand, limited supply has led to a seller's market, driving Perth's house prices above all other capital cities.

Another driving factor is population growth in Western Australia, especially in the rental market. Over the 12 months ending in March 2023, the population in Western Australia grew by 2.8%, the fastest among all states and territories.

Population growth has also fueled the demand for property, especially considering the challenging situation in the rental market, which may prompt some individuals to make property purchases earlier.

Additionally, the Western Australian government is actively positioning the state as a destination for skilled regional migration (491 visas) and has successfully lobbied for the entire state to be declared a designated area. Perth is thus the only capital city to receive this recognition, which will attract more local, international, and interstate buyers.

Apart from supply and demand factors, the economic performance of Western Australia has also played a role in driving the growth of the real estate market. Driven by robust export demand, Western Australia's economy grew faster than any other state over the past year, with final demand growing by 2.8% in the 12 months ending in March.

Additionally, low unemployment rates and high labor participation may also be driving forces behind the continued growth of the Perth real estate market.