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  • Writer's pictureWendy I Emerald Property Estate

Navigating the Housing Affordability Landscape in WA

The latest REIA Housing Affordability Report has shed light on the current state of housing affordability in Western Australia (WA) for the June 2023 quarter. While WA has retained its position as Australia's most affordable state for home buyers, there are some nuances that need to be explored. This blog post aims to break down the key findings of the report and what they mean for both buyers and sellers in the WA property market.

Key Findings on Housing Affordability in WA

A Slight Decline but Still Leading

WA continues to be a leader in housing affordability among Australian states, although it was surpassed by the Northern Territory and the Australian Capital Territory. The proportion of family income required to meet loan repayments in WA increased slightly by 0.4 percentage points to 35% over the quarter. This is based on a median weekly family income of $2,504 and an average monthly loan repayment of $3,801.

The Role of Interest Rates

The decline in affordability is attributed more to the rise in interest rates than to an increase in property prices. Perth’s median house price rose moderately by 5.5% over the year, while the median unit price decreased by 2.9%. REIWA CEO Cath Hart pointed out that average mortgage payments have surged by about 48% since interest rates began to rise, impacting people's borrowing power significantly.

Market Adaptability

Despite these challenges, the WA market has shown resilience. The state benefits from higher-than-average incomes and lower-than-average mortgages, allowing for some level of adjustment. Buyers are increasingly seeking value, showing strong interest in more affordable suburbs. This is a shift from last year when the top 10 fastest-selling suburbs were all above the Perth median house price.

National Context

On a national scale, housing affordability has declined in all states except Victoria. The proportion of family income required for loan repayments has increased to 45.9%, marking the lowest level of affordability since the Global Financial Crisis in 2008.

Loan Activity and First Home Buyers

The average loan size in WA was $471,274, which is notably lower than the national average. Despite the dip in affordability, the number of loans increased by 9.7% to 10,085 in the June quarter. WA also remains the most affordable state for first home buyers, with the lowest average loan size of $401,683.

Rental Affordability

Rental affordability has also declined in WA, with the proportion of family income required for median rent payments rising to 22%. This is the largest quarterly decrease in rental affordability nationwide.

Future Outlook

WA's rental market remains challenging due to strong population growth and increased demand. While there is a lot of activity from investors and builders, supply is struggling to keep up, putting upward pressure on rent prices.

While WA continues to offer relative affordability in the housing market, the landscape is evolving. Interest rates and population growth are key factors influencing both home and rental affordability. For buyers, this may mean recalibrating expectations and seeking value in more affordable suburbs. For sellers, understanding these trends can help in positioning properties more attractively in the market.

For more insights and tailored advice, feel free to contact our team at Emerald Property Estate.

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