Listing stock rises 287% since January
- Perth dwelling values fell by a further 0.22 per cent last week, extending the decline to six consecutive weeks and pushing the four-week moving average down to negative 0.13 per cent.
- Established property listings have surged by approximately 287 per cent since the beginning of 2026, while the sales-to-listings ratio remains at a yearly low of 9 per cent, indicating a substantial shift in the balance between available supply and buyer demand.
- Headline inflation has eased, but trimmed mean inflation remains elevated at 3.6 per cent, reducing the immediate pressure for another interest rate rise while providing little prospect of lower borrowing costs in the near term.
To begin this week, the Australian Bureau of Statistics (ABS) released the July monthly inflation figures. While the Reserve Bank of Australia’s (RBA) preferred measure of underlying inflation, the trimmed mean, remains well above the 2-3 per cent target range, the latest results should provide the RBA with some support for leaving interest rates unchanged at its next meeting on 28–29 September. Importantly, the August monthly inflation figures are not due until 30 September, meaning the July results will be the latest monthly inflation data available when the RBA makes its next interest rate decision. We will return to the implications for Perth’s housing market later in the newsletter.
Last week we asked whether Perth’s 0.20 per cent decline in dwelling values represented an isolated weekly movement or the beginning of another downward adjustment. The latest data provide the first indication that it may be the latter. Perth’s estimated dwelling values fell by a further 0.22 per cent last week, marking the first time this year that weekly declines of 0.20 per cent or more have been recorded in consecutive weeks.
As shown in Figure 1, the latest decline pushed the four-week moving average further into negative territory, from negative 0.09 per cent to negative 0.13 per cent. This is particularly significant given the pattern evident over recent months. Following the almost continuous deterioration in price momentum between March and June, Perth’s housing market appeared to stabilise during July and early August, as modest weekly movements largely offset one another. The past two weeks have begun to challenge that period of relative stability.
It remains too early to conclude that Perth has entered a sustained downturn. However, dwelling values have now declined for six consecutive weeks, with the falls becoming considerably larger over the past fortnight. Two consecutive declines of 0.20 and 0.22 per cent are more difficult to dismiss as weekly volatility than last week’s result in isolation. Importantly, the current four-week moving average still includes two earlier weeks when dwelling values were almost unchanged. If another decline of around 0.20 per cent is recorded next week, the moving average will deteriorate further as one of these relatively stable weeks drops out of the calculation.
The next few weeks will therefore be particularly important in determining whether the recent falls represent a temporary departure from the broadly stable conditions evident since June or the beginning of a more persistent downward trend.
Perth’s estimated dwelling value declined by approximately $2,240 last week to around $1.001 million, following the approximately $2,060 decline recorded the previous week. The two consecutive larger falls have reduced cumulative price growth for 2026 to approximately 6.3 per cent. As shown in Figure 2, Perth’s estimated dwelling value has now fallen by around $10,500, or 1.0 per cent, from its May peak of approximately $1.012 million.
Figure 2 nevertheless provides some perspective on the scale of the adjustment. Despite six consecutive weekly declines and the more pronounced falls recorded over the past fortnight, Perth’s estimated dwelling value remains relatively close to its May peak. The emerging weakness is therefore considerably more apparent in the weekly growth data shown in Figure 1 than in the overall level of dwelling values. However, if the larger weekly declines continue, the relatively flat plateau evident in Figure 2 will increasingly begin to take on the appearance of a more sustained downward trend.
The latest estimated value also places Perth very close to falling back below $1 million. While this threshold has no particular economic significance in itself, crossing it would provide a simple illustration of how the modest declines accumulated since May are beginning to erode some of the substantial gains recorded earlier in the year.
The non-linear downside scenario also becomes increasingly relevant. Actual dwelling values remain above the projected trajectory, but the gap continues to narrow. Whether the recent deterioration develops into a more sustained decline will depend heavily on the strength of buyer demand. We therefore turn to the latest listings and sales data to see whether they provide further evidence that the market balance is shifting.
Last week provided the first indication in several months that the balance between housing supply and buyer demand may be shifting. The latest data reinforce that possibility. The number of established residential properties available for sale increased by a further 128 properties last week, from 7,076 to 7,204. This represents an increase of 1.8 per cent and follows the 3.3 per cent increase recorded the previous week.
The scale of the increase in the supply of established properties for sale this year is difficult to overstate. Listings have risen from just 1,862 properties at the beginning of January to 7,204 today, an increase of approximately 287 per cent. There are now almost four times as many established properties available for sale as there were at the beginning of the year. Nothing in the weekly listings data examined since 2019 shows a comparable percentage increase over a similar period. Table 1 shows that even excluding the unusually low level of listings at the beginning of the year, the change remains extraordinary: since the beginning of March, listings have increased by approximately 162 per cent.
The unprecedented speed at which listings have increased may also have important implications for seller expectations. Sellers entering the market may not have fully appreciated how quickly conditions were changing, particularly after several years in which the number of properties available for sale remained exceptionally low. Asking prices and expectations formed under those conditions may therefore have taken time to adjust as competing listings accumulated rapidly. As the number of properties available for sale increased and buyers gained considerably greater choice, sellers may have gradually begun adjusting their price expectations to the new market environment.
However, the adjustment in housing supply has not been matched by a comparable increase in buyer activity. Weekly sales recovered modestly from 605 to 630 properties but remain well below the levels recorded only a few weeks ago. More importantly, the four-week moving average declined for a second consecutive week, from 697 to 690 sales. This suggests that last week’s sharp fall in transactions was not fully offset by the latest improvement and that underlying buyer activity remains relatively subdued.
The combination of rising listings and subdued sales has kept the sales-to-listings ratio at 9 per cent for a second consecutive week. As shown in Figure 3, this remains the lowest level recorded this year and represents a noticeable departure from the relatively stable range of around 10 to 12 per cent that prevailed from June through early August. Last week’s fall to 9 per cent could reasonably have been interpreted as the result of a particularly weak week for sales. Its persistence this week, despite some recovery in transactions, provides stronger evidence that the balance between housing supply and buyer demand may be shifting in favour of buyers.
This is particularly noteworthy when considered alongside the dwelling price data. Perth has now recorded six consecutive weekly declines in dwelling values, including falls of 0.20 and 0.22 per cent over the past fortnight. We therefore have two indicators moving in the same direction: price momentum is weakening while the stock of properties available for sale is increasing faster than current buyer activity is absorbing it. Neither development is sufficient on its own to establish that Perth has entered a sustained downturn, but together they make the emerging weakness more difficult to dismiss as short-term volatility.
The strength of buyer demand over the coming months will also depend heavily on the direction of interest rates, which remains one of the most important risks facing Perth’s housing market. This is particularly relevant when considered alongside the composition of buyer demand examined last week. Western Australian investor loan commitments fell by 5.1 per cent between the March and June quarters, while first homebuyer commitments declined by 5.0 per cent. Higher rates reduce household borrowing capacity and increase mortgage repayments, weakening buyer demand. This becomes particularly important when demand is already showing signs of softening, with listings increasing rapidly, weekly sales relatively subdued and dwelling values declining for six consecutive weeks.
The latest inflation figures therefore provide an important indication of what may happen next. As shown in Figure 4, there is currently a noticeable difference between headline and underlying inflation. Headline inflation measures the overall change in consumer prices, whereas the trimmed mean removes the largest price increases and decreases to provide a clearer indication of persistent inflationary pressure across the economy. For this reason, the RBA places considerable emphasis on the trimmed mean when assessing whether inflation is returning sustainably to its 2-3 per cent target range.
The distinction is particularly important in the latest data. Headline inflation has fallen steadily from 4.6 per cent in March to 3.5 per cent in July. However, the underlying picture is less encouraging. Trimmed mean inflation has gradually increased over the past 12 months and remained at 3.6 per cent in July, still noticeably above the upper end of the RBA’s target range.
While the latest results should reduce the immediate pressure on the RBA to raise interest rates, they do not remove the underlying inflation problem. The RBA can afford to wait, but it cannot indefinitely accept trimmed mean inflation remaining above the target range. With the August monthly inflation figures not available until after the September meeting, the July result provides some support for leaving interest rates unchanged while the RBA waits for further evidence. However, if trimmed mean inflation remains around 3.6 per cent or begins rising again, the pressure on the RBA to consider further tightening will increase. The RBA ultimately needs evidence that underlying inflation is moving sustainably back towards the target range, rather than simply stabilising above it.
For Perth’s housing market, this means the immediate threat of another increase in borrowing costs may have diminished, but the interest rate environment remains a significant constraint on buyer demand. With dwelling values now declining and expectations of capital growth weakening, another increase in borrowing costs would further reduce prospective investment returns and could weaken investor demand in particular at a time when the broader housing market is already losing momentum. Conversely, any substantial boost to buyer demand from lower interest rates also appears unlikely in the near term. With trimmed mean inflation still at 3.6 per cent and having gradually increased over the past year, the RBA would need to see convincing evidence that underlying inflation is returning sustainably towards its target before considering monetary policy easing.
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Reproduced with permission from:
Ryan Brierty,
in house economist from Michael Keil @Â michaelkeil.com
Disclaimer: This publication is intended to provide general information only. It does not take into account the specific objectives, financial situation or needs of any particular person. You should consider the appropriateness of this information in relation to your personal circumstances before making any investment decision. While every effort is made to ensure the accuracy of the information provided, no warranty is given as to its correctness, completeness, or reliability.
