New figures show that first home buyers in Western Australia are stepping back from the property market faster than investors, despite government initiatives aimed at helping more people purchase their first home.

First Home Buyer Activity Falls Sharply

New data from Loan Market reveals that from February to June 2026, loan applications in WA fell by:

  • 35% for first home buyers
  • 24.5% for investors

Compared to the same time last year, first home buyer loan applications were down 30.5%, while investor applications declined 13%.

WA was the only Australian state where first home buyers pulled back more significantly than investors.

Why Are Buyers Waiting?

According to mortgage broker Balpreet Bal, many first home buyers are uncertain about where the market is heading.

Some are hoping property prices may soften, while others are finding it increasingly difficult to borrow enough to purchase a home.

At the same time, Perth’s strong rental returns continue to attract investors, helping keep investment demand relatively resilient.

Higher Interest Rates and Rising Prices

Affordability remains one of the biggest challenges for buyers.

Several factors have made entering the market more difficult:

  • Three recent interest rate increases have reduced borrowing capacity.
  • Home prices have risen significantly since the pandemic.
  • Competition for affordable homes remains strong.
  • Many buyers are waiting to see whether prices ease in the coming months.

While the Federal Government expanded the 5% Home Guarantee Scheme to assist first home buyers, some industry experts believe it also contributed to higher demand for entry level homes, pushing prices closer to the scheme’s upper price limits.

Investors Also Feeling the Pressure

Investors have also become more cautious following recent Federal Government tax changes.

Some have decided not to purchase investment properties because they are concerned about affordability and reduced financial incentives.

However, analysts believe continued rental shortages and rising rents could encourage investors to return to the market over time.

Homes Taking Longer to Sell

Local real estate agents have noticed a shift in market conditions.

Immediately after the tax changes, buyer activity slowed considerably, and some homes began taking much longer to sell than earlier in the year.

More recently, buyers have gradually started returning to inspections, looking for opportunities and hoping to negotiate better prices. Even so, many agents say property values have generally remained stable.

Affordable Suburbs Still Exist

Although affordability is a growing challenge, there are still areas offering relatively lower entry prices.

According to REIWA research:

House median prices below $800,000

  • Mandurah – $675,000
  • Medina – $680,000
  • Balga – $760,000

Unit median prices below $800,000

  • Glendalough – $500,000

These figures are based on suburbs with at least 28 sales during the year to June 2026.

What This Means for Buyers

The WA property market is entering a more cautious phase. First home buyers are taking more time to make purchasing decisions as affordability pressures, higher interest rates and market uncertainty continue to weigh on confidence.

While demand has eased, property prices in many suburbs have remained steady. Buyers who are well prepared and flexible with their preferred location may still find opportunities, particularly in Perth’s more affordable suburbs.