Rising Rates Are Tightening Borrowing Power — Not Creating Supply
Interest rates may be rising and borrowing capacity may be tightening — but neither of these factors is creating additional housing supply.
Across Perth, the number of homes available for sale remains extraordinarily low. At the end of February, just 2,723 properties were listed across the entire market. That’s around 44% lower than the same time last year, which itself was already considered historically tight.
Stock Levels Remain Historically Low
In established areas such as Perth’s western suburbs, the imbalance is even more pronounced. These are mature neighbourhoods where meaningful new housing supply is rarely created.
As a result, the limited number of homes that do come to market continue to attract strong interest from buyers.
Competition Holding Firm
Competition remains active, days on market are short, and well-located, well-presented homes are still seeing continued price growth.
Entry-Level Buyers Feeling the Pressure
While the overall level of buyer demand remains strong, we are beginning to see genuine pressure emerging at the entry level of the market.
Borrowing Capacity: The Reality Check
Many first-home buyers are currently experiencing a difficult reality check when they assess their true borrowing capacity. Although low-deposit schemes remain available, higher interest rates and existing financial obligations — including HECS debts — are materially reducing borrowing power.
For younger buyers trying to enter an already rising market, this can be understandably frustrating. The desire to buy remains strong, but the ability to act on that demand is becoming more constrained.
Supply Remains the Defining Factor
Despite the impact of higher interest rates, demand for housing in Perth has not disappeared.
Instead, the key factor shaping the market continues to be supply — or more accurately, the lack of it.
Until the number of homes available for sale increases in a meaningful way, this imbalance between buyers and available property is likely to continue influencing both sales prices and rental conditions across Perth — and particularly in established western suburbs.
For now, and likely for some time, supply remains the dominant force in the market.
What This Means Moving Forward
The market isn’t slowing in the way many expected — it’s simply becoming more nuanced. For some buyers, conditions are becoming more challenging. For others, particularly sellers in tightly held areas, the fundamentals remain very much in their favour.
If you’re considering a move — whether that’s buying, selling, or simply understanding your position — it’s worth having a conversation. Even a quick check-in can help bring some clarity to what is, for many, a changing and often confusing market.