If you've been following the Australian property market in 2026, the story that stands out above the rest is the growing divide between Sydney and Perth. Currently, these two cities are going in different directions. Knowing what's going on in each market can have a big effect on your choices, whether you're a first-home buyer, an investor, or seeking to refinance. At KM Finance Service, we help clients across Australia navigate the lending landscape for both markets. Here’s what the numbers are telling us.
Where Prices Stand Right Now
The most recent CoreLogic Home Value Index (February 2026), Sydney’s median home dwelling value sits at $1,296,039, which makes it the most expensive capital city in Australia. Perth, by contrast, has a median dwelling value of $989,211. That's a big difference, and it's clear in the borrowing capacity and home loan requirements for buyers in each city.
What’s more telling is the growth trend. Perth's population, which grew by 2.3% in February 2026, was the strongest monthly result of any capital city. While Sydney was essentially flat, slipping 0.1% over the same period. In the last five years, Perth's population has grown by 90.3%, while Sydney's has grown by 31.1%. The two markets are moving at very different speeds.
Affordability and Borrowing: A Tale of Two Markets
Affordability affects everything for buyers and investors, from how much of a down payment you need to what kind of home loan structure makes sense. Because of the high prices in Sydney, most buyers need a substantial deposit. For people who are buying with less than 20%, Lenders Mortgage Insurance (LMI) is a big deal. Perth isn't as cheap as it used to be, but it still offers more accessible entry points easily, especially for first-home buyers in Western Australia and investors looking for rental income.
Sydney's gross rental yield is about 3.4% nationally, while Perth's is still higher. This is a big difference for property investors who are comparing their options. That said, Sydney's long-term capital growth story remains compelling, especially for people who can borrow money and have a 10-year or longer horizon to enter the market.
Supply, Demand, and What's Driving Each Market
The Perth property market is being driven by a genuine supply shortage. Listings in Perth are 48% lower than their five-year average, which keeps prices moving and competition high. Population growth, strong employment growth in the resources sector, and ongoing interstate migration are all feeding demand thar are current housing stock simply can’t keep up with.
On the other hand, Sydney's market is showing signs of reaching an affordability ceiling. There have been more new listings, which gives buyers more options. However, serviceability constraints and the RBA's February 2026 rate hike to 3.85% have made people feel less positive, especially at higher price points. In Sydney right now, the most active areas are the more affordable suburbs in Western Sydney, where first-time homebuyers and investors are competing hard. St Mary's, Merrylands, and Mount Druitt have seen some of the strongest growth in the city over the past year.
What This Means for Borrowers: Sydney or Perth?
There’s no universal right answer. The best market for property investment in Australia depends on your finances, goals, and timeline. Perth has better short-term momentum and lower entry prices, but it's no longer the low-cost option it was three years ago. Sydney has long-term stability and a lot of liquidity, but you need to make larger deposits and be able to afford the higher serviceability to enter comfortably.
Getting the right home loan structure from the start is the most important thing, no matter what city you're buying in. The interest rate, loan term, fixed or variable, and whether you can use government schemes like the First Home Guarantee can all have a big impact on your monthly payments and long-term situation. That's where KM Financial Service comes in. They help clients in both markets structure financing that works for them, not just the lender.
Frequently Asked Question
Is Perth still a good place to invest in property in 2026?
Ans: Perth continues to show strong momentum in 2026, but buyers should be careful. With prices up 90.3% over five years, there are fewer listings than usual. This means that competition is still high, and the easy gains may already be priced in. It still has better rental yields and affordable entry than Sydney, but like any market, timing, location, and loan structure all matter. Speaking to a mortgage broker before you sign anything.
Final Thoughts
In 2026, Sydney and Perth tell two very different stories. One is about stability and long-term depth, while the other is about momentum and low prices. Both are good for the right buyer. Getting your home loan right before you move is the first step to success in either market.
Book a free consultation with KM Finance Service; whether you're buying in Sydney, Perth, or anywhere in between, Kris and the team will help you find the right lender and structure for your needs.
Follow KM Financial Service on Facebook, Instagram, and LinkedIn to get weekly updates on the market, mortgage tips, and property investment insights across Australia.
