Perth's housing market continued to witness substantial gains in terms of sales and rentals in the luxury segment, but suburbs in the lower end of the market are quickly catching up, according to the latest report from the Real Estate Institute of Western Australia (REIWA).

Around 64% of Perth suburbs reported "statistically significant” activity in December, resulting in a stable increase in median house prices.

Of all suburbs, Applecross reported the most significant growth in median price at 3.2%, followed by Rockingham's 2.1%, North Perth's 1.5%, Butler's 1.4%, and High Wycombe's 1.3%.

Five of the 10 top-performing suburbs in terms of median sales price growth had a median value below Greater Perth's $479,000.

"It is pleasing to see that the higher end of the market still continues to do well and the lower end begins to see improvements. Trade-up buyers are most active and currently account for 53% of demand in line with earlier improvements seen at the higher end," said REIWA President Damian Collins.

Also read: 2019 winds up with price gains

However, this could change as suburbs in the lower end attract first-home buyers and more investors back to the market.

Collins said listings declined in December, with the number of properties available for sale decreasing by 12% on a monthly basis.

"With listings declining and the average days on market lowering to 67 for dwellings, current stock is being absorbed quickly. Therefore, buyers are advised to keep this in mind when looking for their next property," he said.

Listings for rental properties had a similar story — REIWA figures show that the listing stock declined further during the last month of 2019 by 7%. The recent decline brings the total listings down by 18% from the preceding year.

"This reduction in listings, combined with stable rent prices and healthy leasing volumes, has pushed the Perth vacancy rate to 2.3%, the lowest level Perth has experienced since February 2019," Collins said.

Despite the tight supply, the median weekly rent remained $350. Collins said this could change if the rental market remains on its upward trajectory.