Perth property prices to rise up to 11 per cent in the coming year, as housing crisis continues

Perth property prices are forecast to soar in the coming year. (ABC News: David Weber)

Perth's soaring property prices look set to continue to rise over the next 12 months, with conditions unlikely to change until more homes are built.

According to PropTrack, property prices in the WA city are set to increase between 8 and 11 per cent, following growth of 18.9 per cent over the past year — the largest increase in the country.

Nationally, house prices are expected to grow by about 5 per cent over the next 12 months.

PropTrack economic researcher Cameron Kusher said low housing availability continued to be a significant contributor to ballooning prices.

"There's not a lot of new housing being built and there's a very low amount of stock available for sale in Perth," he said.

"Another problem in Perth is that people aren't putting their properties up for sale. So we're seeing a very low number of established properties on the market."

Mr Kusher said WA's population growth has also contributed to the stock shortage.

"You've got fewer people leaving Western Australia for other states and territories, but you've also got more people coming into Western Australia from other states and territories. Obviously, that drives demand for housing, too," he said.

Mr Kusher said high buyer demand in a market which was already critically tight made it increasingly difficult for people to buy property.

New builds in short supply

Currently there are about 23 per cent less houses on the Perth property market than the same time last year, with Perth experiencing the biggest annual decline of available houses across all of Australia's capital cities.

But Mr Kusher said little was likely to change in the short term, with high interest rates and increasing material costs pushing up the price of the limited number of new homes being built.

Mr Kusher said many could not afford the costs associated with new builds.

"So people, where they can, are preferring to buy something that already exists rather than something new, because that premium is just much larger than it usually is," he said.

"Margins have been crushed because material and construction costs have gone up so much."

Mr Kusher said the problem was not an isolated one.

"It's a challenge right across the country. New housing is not being built because interest rates are the highest they've been in 12 years, which makes it harder to make a new development," he said.

WA still more affordable 

Mr Kusher said Perth has experienced more than a decade of "fairly minimal property growth" and while it appears to be a "drastic" outlier when compared to other states, prices were merely catching up.

"It's still more affordable than Adelaide, Brisbane, Melbourne, Sydney now but it's certainly closing the gap on those capital cities," he said.

The federal government's upcoming stage 3 tax cuts could also have ripple effects on Australia's property market, as people receive larger tax returns which they could put towards buying a house.

Mr Kusher said tax cuts combined with the expected reduction of interest rates in 2025 will incentivise home buyers and further increase demand.

"The tax cuts … will improve people's borrowing capacity, probably not straightaway, you won't see the effect of this immediately, but certainly over the next 12 months, we'll see the effect of that," he said.