Police said they responded to an early-morning phone call and arrived to find a “horrific incident” in the small town of Osmington near the world-renowned wine-growing area south of Perth.
Five bodies were found inside a house and two outside. Two weapons were found nearby.
Homicide detectives were investigating but police were not looking for a suspect – suggesting a murder-suicide although this was not confirmed.
“I can only say at this point in time, we have no information to raise concern about wider public safety issues,” Western Australia police commissioner Chris Dawson said.
“We’re still yet to make contact with other members of the family so at this point in time, all I’ll confirm is that there are four children and three adults that have all been located deceased.”
The ages of the children were not released.
Dawson said there appeared to be gunshot wounds, “but I don’t want to go further than that as two firearms have been located at the scene”.
It was believed those who died lived at the property, about 10 minutes drive from Margaret River, a popular tourist destination renowned for its wine, surf and natural beauty.
Felicity Haynes, who lives on a neighbouring property, told broadcaster ABC the family involved were “caring neighbours”.
“They were just such lovely people,” she said.
“They were a very socially-aware family, doing their best to create a safe community, and that is why it is so shocking to think that could be destroyed so quickly.”
Dawson refused to be drawn on who the person was that alerted police, their relationship to the victims or whether they heard gunshots.
“The loss of any life is tragic but four children and three adults, this is a significant tragedy,” he said, adding that police and other specialists would be at the scene for several days at least.
“This will be a very large scale and detailed investigation.”
Augusta-Margaret River Shire president Pamela Townsend said the incident had impacted everyone in the area.
Mass shootings are not common in Australia, which has strict gun laws. All weapons must be registered, although many arrive illegally from overseas through organised syndicates.