State remains among Australia's most affordable housing markets
Housing affordability in WA showed a slight improvement in the September 2023 quarter, despite rising house prices, according to a new report from the Real Estate Institute of Western Australia.
The report indicated that homeowners in WA now require 34.5% of their family income to meet loan repayments, a 0.1-percentage-point improvement compared to the previous quarter. This calculation is based on a median weekly family income of $2,563 and an average monthly loan repayment of $3,827.
WA remains the most affordable state for housing, with only the Northern Territory (32.9%) and the Australian Capital Territory (34.4%) having better affordability. In contrast, New South Wales was identified as the least affordable state, with home buyers needing to allocate 56% of their family income to loan repayments.
At a national level, housing affordability worsened, with 45.5% of family income required to meet mortgage payments, REIWA reported. This represents a 0.1-percentage-point increase compared to the June quarter and marks the worst affordability result since the Real Estate Institute of Australia began reporting on affordability in 2002.
Despite the challenges posed by rising house prices and interest rates, REIWA CEO Cath Hart (pictured above) expressed confidence in WA's ability to adapt to these changes.
“With the exception of the ACT, WA has the highest median weekly family income. Other than Tasmania and the Northern Territory, WA has the lowest average mortgage repayment,” she said. “While price and interest rate increases do challenge family budgets, these factors work in our favour when it comes to being able to buy a home and adjust to changes in interest rates.”
Loan activity
The average loan size in WA increased by 0.7% from the June quarter to $474,474, which is 19.9% lower than the national average of $592,140. The total number of loans decreased by 6.4% to 9,457 in the September quarter compared to the same period last year.
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WA also stood out as the most affordable state for first-home buyers, with an average loan size of $419,792. Although the number of loans to first-home buyers in WA decreased by 9.2% to 3,668 over the three months to September, they still accounted for 38.6% of the owner-occupier market in the state.
Rental affordability
In terms of rental affordability, WA experienced a slight improvement in the September quarter but a decline over the year. The proportion of family income required to meet median rent payments decreased by 0.2 percentage points to 21.5% in the three months to September, but increased by 1.9 percentage points over the year. The Australian Capital Territory and Victoria remained the most affordable states for rentals, followed by WA and Queensland.
Hart acknowledged that WA's rental market remains challenging, with further increases likely in the coming months.
“The imbalance between supply and demand is the greatest factor affecting the rental market at the moment,” she said. “While the decline in number of rental properties appears to have stabilised, it is not increasing. Local investors are still selling, and although Eastern States investors are showing a lot of interest in our market, they seem to simply be replacing those who have left.”
Additionally, delays in the building industry have contributed to longer tenancies, further impacting the turnover of the rental market and maintaining pressure on rent prices, Hart said.
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