WA housing affordability declines amid worth surge

Housing affordability in Western Australia took successful throughout the June quarter, based on the most recent REIA Housing Affordability Report.

The report revealed that the portion of household revenue required for mortgage repayments jumped 1.7 share factors, bringing the full to 39.5% – a 4.8% improve in comparison with the identical interval final yr.

The typical weekly household revenue sits at $2,630, whereas typical month-to-month mortgage repayments have climbed to $4,504.

Value development and rates of interest impacting affordability

REIWA CEO Cath Hart (pictured above) attributed the decline in affordability to strong property worth development over the previous yr.

“A yr in the past, worth development was comparatively low, however 12 rate of interest rises noticed mortgage repayments improve by almost 50%, which has affected housing affordability,” Hart mentioned.

Whereas rates of interest have remained secure since late 2023, the continued surge in property costs – Perth’s median home worth elevated by 20.5% over the yr – has led to mortgage repayments rising by 16.1%.

Demand and provide challenges underpin worth development

Hart additionally famous that robust inhabitants development mixed with restricted housing provide, as a result of low constructing completions, has additional fueled worth will increase.

Regardless of the challenges, Western Australia stays probably the most inexpensive state for householders, with solely the ACT (33.3%) and Northern Territory (32.4%) requiring a decrease share of household revenue for mortgage repayments.

Nonetheless, states like South Australia noticed sharper declines in affordability, whereas New South Wales continues to be the least inexpensive state, with residents needing 57.9% of household revenue for mortgages.

Mortgage exercise grows regardless of affordability decline

Regardless of the drop in affordability, WA’s house mortgage market has remained resilient.

The entire variety of loans to owner-occupiers rose by 13% over the June quarter, with first-home consumers making up a considerable 38.1% of the market. The typical mortgage dimension for first-time consumers elevated to $475,393, reflecting a 17% rise over the previous yr.

Hart identified that WA stays one of many extra inexpensive locations for first-home consumers, with solely Tasmania and the Northern Territory providing decrease common mortgage quantities.

Rental affordability sees slight decline

Rental affordability in Western Australia additionally worsened barely throughout the June quarter, with the portion of household revenue wanted for lease funds rising by 0.6 share factors to 23.6%.

Hart famous that regardless of the marginal decline, “Altering market circumstances point out rental affordability will proceed to stabilise over the rest of the yr.”

As of August, rental costs have remained secure, with home rents at $650 per week and models at $600 per week, largely as a result of elevated provide from new investor-owned properties and accomplished tenant properties.

Nationwide rental affordability traits

On a nationwide stage, Western Australia sits mid-range when it comes to rental affordability, with Queensland, Victoria, and the ACT proving extra inexpensive.

New South Wales stays the least inexpensive state for renters, requiring 27.7% of household revenue for lease funds, though some areas, together with Tasmania and the ACT, skilled slight enhancements in rental affordability over the quarter.

Get the most popular and freshest mortgage information delivered proper into your inbox. Subscribe now to our FREE day by day e-newsletter.