Perth economic and cost of living pressures

Perth is experiencing significant economic shifts characterized by rising fuel costs and a sharp downturn in the real estate market.

In October, fuel prices reached record monthly averages, with unleaded petrol in the metropolitan area rising to $2.37 per litre. While diesel averages decreased from an April peak, high costs remain a concern for the transport sector. The WA Transport Industry Association warned that these expenses could persist through 2027, potentially contributing to inflation and increased grocery costs.

Simultaneously, the housing market has seen a record quarterly decline. House prices in Perth dropped by 7.4 per cent during the September quarter, reaching an average of $1.115 million. Unit prices also fell by 6.5 per cent. Economists suggest this reversal is driven by interest rate hikes, changes to investment housing taxation, and broader cost-of-living pressures.

This downturn in Perth aligns with a broader national trend where Australian capital city house prices experienced their sharpest quarterly fall on record. For the first time in 15 years, all major cities saw simultaneous declines. While Perth recorded the most significant drop at 7.4 per cent, other cities such as Brisbane, Sydney, and Melbourne also saw price reductions. Experts attribute this national weakness to softening demand, reduced borrowing capacity, and weakened buyer confidence, particularly within the high-end market.

Recent data confirms the breadth of this decline, noting that Brisbane also saw a significant 5.4 per cent decrease. While most markets weakened, Darwin was the only capital city where unit prices rose, increasing by 2.2 per cent. Financial institutions, including HSBC and ANZ, have downgraded their forecasts, predicting further peak-to-trough declines of up to 13.5 per cent.