Perth's apartment market is expected to remain challenging in the short term, but the improving economic conditions in Western Australia could spur an upturn in the medium term, according to the latest report by JLL.

Western Australia's economic recovery is picking up momentum and is poised to improve significantly starting next year, JLL analyst Michael Willers said.

"WA's domestic economy is expected to bounce back strongly over the next few years in line with a recovery in the mining industry. This should flow through to improvements in the labour market and migration patterns, which will underpin stronger housing demand conditions and price recovery," he said.

While the demand for homes remained subdued, the low interest-rate environment and easier access to credit would likely encourage more activity in the housing market.

Also read: Affordability improves in Perth

Some parts of Perth, however, have already enjoyed keen interest from buyers. For instance, suburbs in Inner South recorded a 2.2% increase in unit sales over the past year. This was opposite the Inner Northern suburbs' 21.9% slump in unit sales recorded in the year to June.

In terms of supply, Perth is forecast to witness a decline in unit stock next year. However, housing supply could start expanding again by 2021 and 2020, especially if pre-sale targets and construction timelines are met.

Perth's prices have been on a decline for half a decade as of September. Declines are occurring both in detached housing and apartment markets, although the latter has experienced a deeper annual cut at 9.2%.

Several years of decline have made Perth house prices quite affordable relative to other markets, and this could be attractive to investors, Willers said.

"As the major east coast markets begin to rebound and yield spreads increase, investors may turn to Perth in search of investment opportunities," he said.

Willers added that as investors capitalise on the market upswing, price-growth prospects are likely to be reinforced.

Furthermore, the state government appears committed to boosting Perth's housing market. Recently it announced a two-year stamp duty reform, allowing for a rebate of up to 75% on off-the-plan sales.