As we look to 2025, the Perth property market offers a dynamic landscape of opportunities and potential challenges. Firstly, take what we are saying below with a pinch of salt, as all of our key market drivers are still at historically strong or low levels. However, trends are emerging. To be ready for any potential obstacles and position yourself for success, here’s an overview of emerging key trends which may shape the market:

1. Adjusting to a Slower Pace

The average days on market for properties in Perth have increased from 9 days in September 2024 to 13 by December 2024. While lower price brackets are still hot for the most part, homes in higher price brackets, are taking longer to sell. Sellers should be prepared for this shift and adjust their strategies and expectations accordingly.

2. The Importance of Presentation

With buyers becoming more discerning and having more time to compare properties, the presentation of your home will be more critical than last year. Sellers should consult an agent experienced in home improvement and presentation to identify areas for potential enhancement. Investment in styling, high-quality marketing, and well-planned strategies remain pivotal to achieving a more successful sale.

3. Market Growth Expected Early in the Year

While property prices are still predicted to climb by approx. 8-10% in 2025, the monthly growth rate is expected be more modest than last year, and we forecast that most of the growth will come in the first 6 months. Sellers looking to capitalise on the current market may want to consider listing their property earlier in the year.

4. Stock Levels and Buyer Behaviour

Putting aside the seasonal Dec/Jan drop in stock levels, we believe properties for sale will follow the increasing trend seen between Jul-Nov 2024. This anticipated increase may lead to heightened competition among sellers as the year progresses. Additionally, the increasing volume of subject-to-sale offers may impact negotiation dynamics and settlement timelines. However, for now it is still a sellers’ market. Stay flexible and well-informed.

5. Interest Rate Cuts on the Horizon

Economist and major bank forecasting suggests that interest rate cuts may commence between February and May 2025, with two to five cuts anticipated throughout the year. Interest rate reductions have a few purposes, but one aims to stimulate slowing economic activity, and so typically happen at the same time prices are declining. What is happening in the economy and property markets is far more dynamic as we come off the COVID hangover. The important thing to note is, reductions in interest rates do not automatically result in higher house prices. Monitor the Perth property market as a standalone market and be cautious listening to news reports especially if they are referring to the national property market as a whole.

6. Stabilisation in Construction Costs

The reported emergence (by Rowlinsons Cost Management) of stabilising construction costs will likely gain acceptance by the typical buyer in 2025. There is usually a lag in this, as it generally only gains acceptance after the media starts heavily reporting it. If this happens, it may lead to greater buyer confidence in pursuing new builds and we could see a short-medium term spike in land prices. Keep a close on eye on this if you want to build this year.

7. Economic Uncertainty in the Mining Sector

Uncertainty surrounding the mining sector could significantly impact Western Australia’s economy, and as always by extension, the property market. While the planned Naval Hub at Henderson is expected to rival our mining industry and thus giving WA much needed economic diversity, this is years away from actually impacting our economy. For now, it’s best to still pay the most attention to mining activity, as it may influence buyer confidence, spending power, and ultimately property prices.

Final Thoughts

The first half of 2025 still represents a great window of opportunity for price growth and sellers in Perth. By staying ahead of market trends, strategically timing your sale, and prioritising the presentation of your home, you can effectively navigate this evolving landscape. With interest rate cuts on the horizon and economic shifts at play, proactive planning and informed decision-making will be key to securing the best outcomes in 2025.