Housing affordability improves slightly in WA: REIA

Despite rising house prices, housing affordability improved marginally in WA in the September 2023 quarter.

According to the latest REIA Housing Affordability Report, affordability improved 0.1 percentage points, with home owners requiring 34.5 per cent of family income to meet loan repayments.

This was based on a median weekly family income of $2,563 and an average monthly loan repayment of $3,827.

WA was again the most affordable state, with only the Northen Territory (32.9 per cent) and ACT (34.4 per cent) being more affordable.

New South Wales was the least affordable, with home buyers needing to allocate 56 per cent of family income to loan repayments.

At a national level 45.5 per cent of family income was needed to meet mortgage payments, rising 0.1 percentage points on the June quarter. It was the worst affordability result since 2002, when REIA commenced affordability reporting.

While rising house prices and rising interest rates pose a challenge for home buyers and owners, REIWA CEO Cath Hart said WA was currently in a good position to adapt to the 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.”

Table 1: Proportion of family income needed to meet loan repayments

Source: Real Estate Institute of Australia (REIA)

Loan activity

The average loan in WA was $474,474 in the September quarter, an increase of 0.7 per cent from the June quarter and 1.4 per cent annually. WA's average loan size was 19.9 per cent lower than the national average of $592,140.

The median weekly family income in WA was higher ($2,563) than the national median ($2,420), while the average monthly loan repayment was lower at $3,827 compared to the national average of $4,776.

The total number of loans decreased 6.4 per cent to 9,457 in the September quarter and was 11.6 per cent lower than the same time last year.

WA was the most affordable of all states and territories for first home buyers, recording the lowest average loan size of $419,792. This rose 3.3 per cent over the quarter and 4.8 per cent annually.

However, rising house prices and loans did not deter first home buyers. They made up 38.6 per cent of WA’s owner-occupier market.

The number of loans to first home buyers in WA fell 9.2 per cent to 3,668 over the three months to September and 12.5 per cent over the year.

Rental affordability

Rental affordability in WA improved over the quarter but declined over the year.

The proportion of family income required to meet median rent payments decreased 0.2 percentage points to 21.5 per cent in the three months to September but increased 1.9 percentage points over the year.

The two most affordable states were again the ACT (19.1 per cent) and Victoria (20.5 per cent), followed by WA and Queensland at 21.5 per cent.

Ms Hart said WA’s rental market remained challenging and more increases were 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.

“Nor have building completions been the saviour we were hoping for a year ago. In the past three years a total of about 42,000 new homes have been added to housing supply, but the number of households has grown by about 60,000 during that time.

“In addition, the ongoing delays in the building industry are keeping people in their rental properties longer, impacting the usual turnover of the market.

“This will maintain pressure on rent prices.”

Table 2: Proportion of family income needed to meet rent repayments

Source: Real Estate Institute of Australia (REIA)