Will house prices continue to rise in Brisbane and Perth?

Brisbane and Perth. They’re the two capital cities rocketing to startling price records, but the question on all investors’ lips is: Will they last?

The latest Domain House Price Report reveals that house prices in both cities rose roughly 1.5 times faster in the June quarter than the previous one, and double that of the same time last year.

That acceleration has led to annual gains for Perth of 23.8 per cent – a 17-year high – and 16.9 per cent for Brisbane. Yet it’s unlikely that such boom times will be followed by bust.

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“This has been the steepest rise in Perth’s history,” says Domain chief of research & economics Dr Nicola Powell.

“But while this rate of gain isn’t sustainable in the long run, we expect that growth will still continue strongly into the future with a shortage of stock and strong demand [driven by] population growth.

“Brisbane house prices will also keep rising, but not at such a high rate. They’re now on track to surpass the $1 million median over the next quarter and it will only take another increase of 2.4 per cent to achieve that.”

Other experts agree, believing both cities – with Perth on a new house price median of $852,240 and Brisbane on $976,464 – will continue to offer good returns to investors and excellent capital appreciation.

Damian Collins, founder of West Australian property investment company Momentum Wealth, says the state’s population has increased by well over 3 per cent in the last 18 months, with most of the migrants settling in Perth.

In addition, stock is at its lowest level in almost 20 years.

“The economy here is very strong too, and we have a lot of jobs,” Collins says. “For a long time, property in Perth was ridiculously cheap compared to other capital cities, but we’re now fast catching up.

“It will come back to a more sustainable level – it can’t keep growing at more than 20 per cent a year into infinity. But rental returns are still good with people still getting a 5 per cent yield, and rental laws are much more balanced than we’re seeing in NSW, Victoria and Queensland.”

Brisbane is also still favoured by investors, with strong migration similarly buoying property prices, as well as the infrastructure spend and soaring confidence ahead of the 2032 Olympics.

David Notley, Brisbane director at valuers Herron Todd White, says the Brisbane market will continue to be strong, “provided nothing changes to the fundamentals of the availability of stock, with under-supply and demand, correlated with migration levels, pushing prices up”.

Much of the price growth has been at the lower end of both the Perth and Brisbane markets, in the $400,000-$800,000 price range, believes InvestorKit’s founder and head of research Arjun Paliwal.

It’s likely that the prices of higher-end property will rise, he adds.

“So in the future, we may well see growth in the $700,000 to $1.5 million price points which will benefit investors in that bracket,” Paliwal says.

“Although we’ve seen substantial growth already, there still remain fairly affordable pockets in both cities, and rents have kept up so yields have risen sharply too.”