As 2025 wraps up (and into our 10th anniversary year in January 🎉), Perth continues to outpace the nation on prices and demand, even as affordability becomes the defining theme heading into 2026. Below is what’s changed, what stayed the same, and how to plan your next move with confidence.
Rates & Macro: RBA on hold; inflation nudges higher
The Reserve Bank of Australia held the cash rate at 3.60% at its final meeting of 2025, signalling patience as inflation shows renewed signs of stickiness. The Board noted headline CPI at 3.8% year‑on‑year to October and trimmed mean at 3.3%, with risks tilting to the upside. The next decision lands in early February.
What this means for borrowers:
- We’re likely in a “higher‑for‑longer” environment for a while. If it’s been more than 12 months since your last review, now’s a smart time to reassess your structure, buffers, and repayment strategy. Book an appointment.
Credit Policy Watch: APRA’s new DTI ‘speed limit’ from 1 Feb 2026
From 1 February 2026, APRA will cap the share of new loans with debt‑to‑income (DTI) ≥ 6 at 20%, applied separately to owner‑occupiers and investors. Bridging loans and loans for the purchase or construction of new dwellings are exempt. This is a guardrail, not a ban, and is designed to pre‑empt a rise in riskier lending as financial conditions ease.
Perth lens: Investors are more likely to hit DTI ceilings first (given multiple properties and layered debt). If you’re planning acquisitions in 2026, it’s worth modelling your DTI now and sequencing purchases to stay within lenders’ allocation appetite.
Home Values: Perth leads; national growth eases
National home values rose 1.0% in November (down from 1.1% in October). Perth again led the capitals with a 2.4% monthly gain, supported by exceptionally tight listings (more than 40% below average) and elevated buyer demand — adding just over $21,000 to the median in a single month. Perth median price now stands at $914,229 [cotality.com]
Auction activity has cooled from spring peaks, with Sydney and Melbourne clearance rates holding in the low‑60% range in late November. [cotality.com]
Affordability: WA’s quarterly lift masks annual squeeze
REIWA reports WA’s housing affordability improved slightly in the September quarter — the share of median family income needed to meet average loan repayments fell to 40.5%, down 0.5 percentage points from June. But affordability worsened over the year as rapid price growth lifted loan sizes (average WA loan $632,901, up 13.5% year‑on‑year). Rental affordability also deteriorated: 24.2% of family income required, with Perth median rents hovering around $700/week. [miragenews.com]
Takeaway for Perth: WA remains comparatively attractive nationally, but the speed of price gains means more income is being absorbed by repayments — a trend we expect to monitor closely into early 2026. [miragenews.com]
December market snapshot (selected indicators)
- RBA cash rate: 3.60% (hold); tone more hawkish given inflation drift. [rba.gov.au]
- National values (Nov): +1.0%; Perth: +2.4% (listings >40% below average; +$21k to median). [cotality.com]
- Affordability (WA, Sep qtr): 40.5% of income to meet average mortgage; avg loan size $632,901; rent affordability 24.2% (~$700/wk median rent). [miragenews.com]
- APRA macroprudential: From 1 Feb 2026, DTI ≥6 capped at 20% of new lending (owner‑occ & investor assessed separately; exemptions for bridging & new dwellings). [apra.gov.au]
What we’re recommending right now (Perth‑specific)
First‑home buyers
- Pre‑assessedl early: With listings scarce, being buy‑ready is critical. Tight serviceability + APRA’s incoming DTI guardrail means clean files and verified income matter more than ever.
- Budget buffers: Stress‑test repayments at higher rates and consider maintaining current repayment amounts even when your minimum falls — it accelerates principal reduction and builds equity faster. (We can model this for you.) [rba.gov.au]
Upgraders & owner‑occupiers
- Equity strategy: Perth’s +2.4% monthly lift adds meaningful equity for many households; consider whether to deploy it (renovations, offsets, or portfolio building) versus keeping liquidity for 2026 uncertainty.
- Pricing review: With the increases in property values, it’s worth trying to get a better rate as your loan to value ratio (LVR) may have fallen. Lenders base pricing on risk and the lower the LVR may allow you a better rate. Get in touch to review your loan.
- Fix vs variable? With the RBA signalling an extended hold (and no near‑term cuts), split‑rate structures can cushion volatility while keeping flexibility. [abc.net.au]
Investors
- Plan around DTI: If your DTI is near six, sequencing deals and diversifying lender panels can keep room within allocations once APRA’s cap activates. We’ll help with scenario planning.
- Yield vs growth: Perth’s demand remains robust, but affordability constraints are rising. Target suburbs where rental yield and tenant demand offset higher holding costs.
Local Perth pulse (why competition stays intense)
Cotality notes listings remain >40% below average here, keeping upward pressure on prices despite easing national momentum. With affordability stretched nationally and rates likely steady for longer, expect more buyers to prioritise markets like Perth where entry price points and job fundamentals still stack up — but be prepared for competitive conditions to persist into early autumn. [cotality.com]
Need help mapping a 2026 plan?
Fox Mortgage Services can:
- Review your current loan and identify savings or structural tweaks.
- Model DTI impacts and borrowing capacity under APRA’s new cap. [apra.gov.au]
- Prepare fast pre‑approvals so you’re buy‑ready when the right Perth property hits the market.
- Run equity scenarios anchored to the latest local data.
Book a meeting (in person or Zoom) — we’ll do the legwork so you can move decisively.
Sources & further reading
- RBA – Statement by the Monetary Policy Board (9 Dec 2025): cash rate 3.60%, inflation commentary, next meeting timing. [rba.gov.au]
- Cotality – Housing growth eases as affordability and rates loom large (1 Dec 2025): national +1.0% Nov, Perth +2.4%, listings >40% below average, +$21k to median. [cotality.com]
- REIWA – Quarterly gains offset by annual slide in housing affordability in WA (17 Dec 2025): WA mortgage affordability 40.5%, average loan $632,901; rental affordability 24.2% and Perth rent ~$700/wk. [miragenews.com]
- APRA – Limit on high debt‑to‑income home loans (effective 1 Feb 2026): DTI ≥6 capped at 20%, owner‑occ & investor portfolios assessed separately; exemptions for bridging and new dwellings. [apra.gov.au], [apra.gov.au]
Important: This update is general in nature and doesn’t consider your objectives, financial situation or needs. Always seek personalised advice before making decisions. (Eligibility criteria, fees & charges, and lender terms apply.)