What Rate Cuts Could Mean for Perth’s Property Market

As interest rate cuts loom on the horizon, Perth’s property market is bracing for potential growth, with many industry experts predicting that lower borrowing costs could spark demand and drive home prices higher. The Reserve Bank’s upcoming decision could have a significant impact on affordability for buyers, particularly in areas with limited housing supply. However, while experts agree that rate cuts will likely help, there’s caution around how much they will influence Perth’s market, given its unique economic factors.

If the Reserve Bank proceeds with a 25 basis point reduction, Perth buyers could see their borrowing capacity increase by approximately $15,000, leading to heightened competition in the housing market. Suburbs like Bayswater and Bassendean are expected to experience some of the most significant price growth, with forecasts of a 3.1% increase in values. However, CoreLogic’s research also points out that Perth’s housing market doesn’t respond to rate cuts as strongly as other states, largely due to its reliance on the mining sector's cyclical nature.

Despite these challenges, local experts are optimistic about the outlook for Perth’s property market. High wages and strong employment growth in Western Australia provide a solid foundation for future price increases, especially as the city’s median house price remains relatively affordable compared to other major cities like Sydney. With many migrants flocking to Perth in search of work, continued demand for housing is expected to push property values higher in the coming years.

That said, the path forward may not be without turbulence. While some experts predict an immediate boost in the housing market, there are warnings of potential inflationary pressures. Finance expert Chris Foster-Ramsay notes that while interest rate cuts could stimulate growth, a brief pause in market expansion is likely to occur between Easter and June, coinciding with the federal election. Moreover, mortgage broker Romy Dhungana cautions that rate cuts could spark inflation, prompting the Reserve Bank to raise rates again, potentially leading to market volatility in the medium term.

While the anticipated rate cuts may spark growth in Perth’s property market, various factors—including strong wages and migration—will influence outcomes. Buyers should remain informed as the market could experience fluctuations, especially with potential inflation concerns. Understanding these dynamics will be key for navigating Perth’s real estate scene in the coming months.

If you'd like to talk about how this will affect your property plans, don't hesitate to contact the team at Bellcourt on 08 6141 7848