Perth will overtake Melbourne as the third most expensive capital city in Australia in 2027 if the current growth trajectory continues, according to Westpac’s economics team.
Australian housing markets could be in for a shake-up, with new analysis from the economics team at major bank Westpac predicting that Perth is on track to overtake Melbourne to become the third most expensive capital city by the end of 2027, driven by relentless price growth in the western state and a softening in Victoria.
Westpac Economics’ latest quarterly Housing Pulse, released on Tuesday (2 December), shows that the property market powered through spring with strong momentum in property prices, buoyed by tight on-market supply, resilient demand, and supportive policy.
Over the past three months, the major capital city measure recorded a 3.2 per cent gain, marking the strongest quarterly pace in more than two years.
Annual growth has accelerated to 7.1 per cent, according to Westpac, which is up from 3.5 per cent midyear. Houses have driven this growth (7.9 per cent annual rise), while units have seen a more subdued increase (4.5 per cent annually).
Perth, Darwin, and Brisbane have been leading the pack for price growth over the last quarter, with dwelling prices up 6.9 per cent, 5.9 per cent, and 5.4 per cent, respectively. This contrasts with Sydney and Melbourne’s more modest gains of 2.2 per cent and 1.5 per cent.
The bank has significantly revised its national price growth forecasts for the year, lifting the expected 2025 increase to around 8 per cent (up from an earlier 6 per cent forecast), led by exceptional gains in Brisbane and Perth, which are both tipped for annual growth of roughly 14 per cent, according to the major bank’s economics team.
Indeed, Westpac’s Housing Pulse shows that if current growth tracks as projected, Perth’s median dwelling price could approach $960,000 by the end of 2027 – a jump that would see it bypass both Melbourne and Adelaide to become the nation’s third most expensive capital.
The full forecast for 2027 shows that Sydney will continue to have the highest median dwelling price in 2027 – at $1.3 million – followed by Brisbane at $1.05 million.
Perth’s forecast median of $960,000 would make it the third most expensive capital, racing ahead of Melbourne, where the median value would be $914,000 in 2027, followed by Adelaide at $882,000.
This forecast reflects how the ongoing supply shortage is disproportionately impacting markets with historically lower median values.
Overall, Westpac believes that price growth is projected to ease nationally to around 6 per cent in 2026 (down from Westpac’s intial forecast of 9 per cent, reflecting “delayed rate cuts, as well as a worse starting point for affordability and slower population growth”) and down to 5 per cent in 2027 (returning to long-run averages in real terms).
Cotality and PropTrack forecasts
Similarly, Cotality’s Home Value Index for November shows Perth continuing to power ahead, recording a 2.4 per cent monthly gain. Cotality’s data already places Perth’s median dwelling value at $914,229 – narrowly surpassing Melbourne’s current median of $823,495 – which rose a mere 0.3 per cent in the same month.
PropTrack’s November Home Price Index supports this trend, reporting that Perth led capital city growth at 0.9 per cent for the month. On an annual basis, PropTrack highlights Perth as a clear outperformer, with values up 15.5 per cent over the past year.
In contrast, Melbourne’s monthly growth rate is significantly lower across both reports, confirming the city is struggling to maintain the strong price momentum seen in other areas.
The mid-term forecast comes as property prices continue to rise, albeit slightly slower than in previous months.
Cotality recorded a 1.0 per cent national increase in its Home Value Index for November, while PropTrack reported a 0.5 per cent rise, pushing national dwelling values to new record highs.
[Related: Spring selling season sees housing values surge]
