Perth Property Investment in 2026: What Landlords Need to Know After the Federal Budget
Perth is the strongest-performing capital city property market in Australia right now. But the May 2026 federal budget has changed the investment landscape in ways every Perth landlord should understand.
Perth’s Property Market Is Outperforming the Rest of Australia
While Sydney and Melbourne are in the middle of a property downturn — recording monthly value declines of -0.7% and -0.6% respectively — Perth is heading in the opposite direction. According to Cotality’s May 2026 data, Perth recorded a rolling 28-day dwelling value change of 1.6%, the highest of any Australian capital city.
The combined capitals index has flatlined at 0.0% growth. Perth is not in that story.
The fundamentals behind Perth’s performance remain intact: continued population growth, a tight rental market with low vacancy, and a relative affordability advantage over the east coast that continues to attract both owner-occupiers and investors.
For Perth landlords, that context matters. This is not a market in retreat. But the investment rules have shifted, and understanding the new environment is essential for making good decisions in the year ahead.
How the 2026 Federal Budget Changes the Equation for Property Investors
The May 2026 federal budget introduced major tax changes for property investors. The most significant: changes to negative gearing and capital gains tax (CGT) concessions for established residential properties.
These changes don’t arrive in isolation. Cotality has tracked a decade of incremental policy changes affecting property investors — each one modest in isolation, but cumulative in effect:
- 2017: Depreciation benefits reduced, travel expense deductions removed
- 2018–2020: Early tenancy reforms limiting evictions and rent increase frequency
- 2020–2022: COVID-era rental moratoriums and hardship frameworks
- 2021–2023: Expanded minimum standards, heating/cooling requirements, rent bidding restrictions
- 2022–2024: Electrical safety checks, smoke alarm compliance, emerging energy efficiency standards
- 2026: Major tax changes removing or limiting negative gearing on established homes
Each change added holding costs or reduced tax advantages. The 2026 budget is the most significant structural shift in that decade-long sequence.
What This Means for Perth Investors: Two Key Issues
1. Cashflow Is Under More Pressure Than Before
Gross rental yields in Perth currently sit at approximately 3.6%, according to Cotality. With investor mortgage rates in the low-to-mid 6% range, highly leveraged investors are likely running a cashflow deficit — even before maintenance, property management fees, council rates, insurance, and land tax.
Historically, negative gearing made that deficit manageable. The tax benefit offset part of the annual loss, and investors banked on capital growth to deliver the return over time.
That model is now less viable for established homes. Investors entering the market today — or reviewing their portfolio — need to stress-test cashflow more rigorously than they may have done in previous years.
2. Investor Demand Is Expected to Ease Nationally
According to Cotality, investors currently comprise approximately 40.3% of all home lending by value — well above the 10-year average of 33.6%. That share is expected to come down as both cyclical and structural factors reduce investor appetite.
Cotality notes that investor lending has historically tracked housing value cycles closely. As the national cycle cools and the tax environment tightens, investor demand is forecast to ease toward — and potentially below — long-run average levels. Some demand may shift toward new housing (which retains certain tax advantages), but new builds carry their own risks including off-the-plan uncertainty, lower scarcity value, and thinner resale markets.
For Perth specifically, the rental market’s structural tightness provides some cushion. But landlords should not assume that the conditions of the last three years will continue unchanged.
What Should Perth Landlords Do Now?
The answer is not to sell. Perth’s rental market remains one of the tightest in the country, and the city’s ongoing population growth and infrastructure investment continue to support medium-term demand for quality rental properties.
The right response is to manage more actively and more deliberately. Here’s what that looks like in practice:
Review your cashflow assumptions
If your investment was modelled on negative gearing benefits that no longer apply, it is worth recalculating your annual holding position under the new rules. Your accountant should be the first call.
Prioritise yield over pure capital growth
With yield margins compressed and the tax environment tighter, the gross rental income your property generates becomes more important than it used to be. Properties that are well-presented, well-maintained, and competitively priced attract quality tenants and minimise vacancy — both of which directly affect your net return.
Make sure your property is genuinely well-managed
In a rising market, most properties perform reasonably well regardless of management quality. As conditions become more complex — expanded compliance obligations, more assertive tenancy legislation, tighter margins — the quality of your property manager starts to have a material impact on your return.
A good property manager keeps vacancy periods short, handles compliance proactively, maintains your asset, and resolves tenant issues before they become expensive. A poor one costs you money in ways that are often invisible until you review the numbers.
Stay across compliance requirements
WA’s tenancy legislation continues to evolve. Electrical safety standards, minimum habitability requirements, and notice period rules all have real implications for landlords. The cost of non-compliance — in fines, disputes, and vacancy — is higher than the cost of staying ahead of it.
Perth Remains a Good Market for Well-Managed Property
Perth’s 1.6% monthly value growth in May 2026 is not an outlier — it reflects a market with genuine structural support. While the national picture is complicated, Perth’s fundamentals remain stronger than most Australian capital cities.
The investors who will perform best in this environment are those who take the changed rules seriously, model their cashflow accurately, and ensure their properties are being managed to the standard the current market requires.
If you’d like to talk through how your investment is positioned heading into FY27, we’re always available for a straight conversation.
Frequently Asked Questions
Is Perth property still a good investment in 2026?
Perth remains one of the stronger-performing capital city property markets in Australia. As at May 2026, Perth recorded 1.6% monthly dwelling value growth — the highest of any Australian capital. However, the federal budget’s changes to negative gearing and capital gains tax have altered the investment equation, particularly for highly leveraged investors. Cashflow modelling and professional advice are more important than ever.
What did the 2026 federal budget change for property investors?
The May 2026 budget introduced changes to negative gearing and capital gains tax concessions for established residential properties. These changes reduce the tax benefits historically available to investors who hold negatively geared properties. Speak with your accountant about how the specific changes apply to your situation.
What are rental yields like in Perth in 2026?
According to Cotality, Perth’s gross rental yield sits at approximately 3.6% as at May 2026. With investor mortgage rates in the low-to-mid 6% range, highly leveraged investors are likely experiencing a cashflow deficit before holding costs. Strong rental demand continues to support Perth yields relative to Sydney (3.1%) and Brisbane (3.3%).
How does negative gearing reform affect Perth landlords?
For established property, negative gearing is no longer available (or significantly restricted) under the 2026 federal budget changes. Perth investors who have historically used negative gearing to offset holding costs against other income will need to review their cashflow position and tax structure with a qualified adviser.
Why is Perth property outperforming Sydney and Melbourne?
Perth’s relative outperformance reflects several structural factors: continued population growth, a tight rental market, infrastructure investment, and a lower entry price point compared to eastern capitals. As at May 2026, Perth recorded 1.6% monthly growth versus -0.7% in Sydney and -0.6% in Melbourne (Cotality, May 2026).
Data and analysis in this article are drawn from Cotality (formerly RP Data Pty Ltd t/as CoreLogic), “The Budget, the Market & the Investor” by Tim Lawless, May 2026. Cotality data referenced includes rolling 28-day dwelling value changes by capital city (as at 21 May 2026), investor lending as a percentage of all home lending by value (Cotality, ABS), gross rental yields by capital city, and a timeline of investor policy changes 2016–2026. Property sales data for Western Australia is derived from location information licensed from the Western Australian Land Information Authority (WALIA) trading as Landgate, 2026. Copyright in the location information data remains with WALIA.
This article is general in nature and is intended for informational purposes only. It does not constitute financial, tax, or investment advice. The implications of the May 2026 federal budget changes will vary depending on individual circumstances. Please consult your accountant or financial adviser before making any investment decisions.
