Even with repeated rate rises, WA remains among the most affordable states
While housing affordability declined in the March quarter, Western Australia remained among the most affordable states and territories, according to a new report from the Real Estate Institute of Western Australia.
The only state more affordable was the Northern Territory, the report found.
The proportion of income required to meet loan repayments in WA rose 0.6 percentage points to 34.5% in the March quarter, REIWA said.
That decline was driven more by spiking interest rates than rising home prices, the report found.
“Interest rate rises have certainly affected affordability, but WA’s market remains remarkably resilient,” REIWA CEO Cath Hart said. “This resilience has been supported by WA’s strong economy, low unemployment, growing population and relatively affordable housing.”
Hart said that WA’s comparatively affordable housing allowed the market to adjust to the RBA’s dozen rate rises more easily than pricier markets.
“However, WA’s market has not been completely unaffected,” Hart said. “We have seen sales activity decline in the sub-$500,000 price bracket. These areas are where potential buyers and homeowners are likely to be more greatly affected by cost of living and interest rate increases.”
Nationally, the proportion of family income required to meet loan repayments was 44.9%, REIWA said. That’s the worst affordability reading since the beginning of the Global Financial Crisis in September 2008.
Mortgage breakdown
First-home buyers accounted for 35.9% of the owner-occupier market in WA during the March quarter, REIWA found. However, they were less active than in the previous quarter, with the number of loans issued during the March quarter dropping 13.1% to 3,305. That was 30.9% lower than the same quarter in 2022, REIWA reported.
The average loan size for first-home buyers increased 2% from the December quarter and 4.9% annually, hitting $399,879.
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The total number of new loans to owner-occupiers in WA fell 12.7% quarter over quarter and 25.9% annually, to 9,194. The average owner-occupier loan size was $478,236, a decrease of 0.3% quarter over quarter but an increase of 4.4% annually, REIWA reported.
Rental affordability
Rental affordability fell across Australia, with the sole exception being the ACT.
Nationally, the proportion of income required to make rent payments was 23%. That’s the worst affordability for renters since September 2022, but still well short of the more than 26% of income required during the rental crisis of the GFC.
In Western Australia, the proportion of income required to meet rent payments was 21%, making it the third most affordable state or territory in which to rent, after Victoria (19.9%) and the ACT (20.8%).
Tasmania had the worst rental affordability, with 28.9% of median income required to meet rent payments.
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