Western Australia's abundance of natural resources is the premier reason for the startling growth in Perth however recently the market has cooled some what with only small gains in the median housing prices over the past 12 months. Currently it's one of the highest in the country with a median price of $466,000.
Many experts predicted a 'boom and bust' scenario for the Perth market however a lot of data points more towards a stable market with steady house prices letting the market 'catch up'.
The very noticeable factor with the Perth market is the amount of local investors purchasing in other capital cities across Australia. I remember when I was selling property and the amount of calls I used to field from Perth investors was amazing and out numbered any other parts of Australia for enquiries on properties.
The main reason in my opinion is that Perth has the lowest rental yield out of all capital cities in Australia. The city is starting to catch up though as rents rose 23% in 2007. With Perth's vacancy rate dropping to 1.9% it is expected rents should raise further prompting better returns for investors.