The Real Estate Institute of Australia’s latest Housing Affordability Reportwas released this week revealing housing affordability continued its decline for the September quarter across Australia. As expected, NSW and Victoria remain the least affordable places to buy property with an eye-watering 51.6 percent of a family’s income devoted to meeting the average loan repayment in NSW. In Victoria, 43.6 percent of their hard-earned goes to meeting mortgage commitments. The national average is 42.2 percent.
Happily, Western Australia remains astonishingly affordable with 31.4 percent of our median weekly income of $2,379 covering the average loan of $467,910. In contrast, mortgage holders in NSW hold average loans of $743,586. WA’s housing affordability has barely moved in the last ten years falling a mere 0.1 percent. Average loan amounts across the nation have dipped 2.7 percent from the previous quarter, a clear response to rising interest rates.
the hysteria around rental affordability is being exaggerated
Both housing and rental affordability continued to deteriorate in the September quarter falling 3.8 percent. Annually, housing affordability across Australia has worsened by 7.6 percent and rental affordability is down 1.1 percent. Tasmania’s rental affordability remains the worst in the nation with Taswegians paying 30 percent of their income to rent, whilst in Western Australia tenants contribute 19.8 percent of their earnings to rent, the equal-lowest (along with Victoria) in the nation.
Whilst property ownership affordability has rapidly declined over the past five years, national rental affordability has proven more stable, dropping a mere one percent in twenty years. Rental affordability has, in fact, improved over the past five years across the nation, up 0.6 percent. Based on these numbers it could be argued the hysteria around rental affordability is being exaggerated.
Despite the relative stability of rental affordability over the past twenty years, the data reveals a step rise in median rents since 2020 moving from $425 per week to $508 per week in 24 months. The steepest increase has been felt in Queensland where rents have moved from $378 per week to $475 in two years.
Back home, median house rents have moved from $350 per week to $450 per week over two years, encouraging first home buyers into home-ownership. 36.7 percent of all WA buyers in the September quarter were first-time buyers, the highest proportion in Australia. Investors should take note too as WA property continues to deliver the best rental yields in the nation at 3.9 percent. Despite these appealing yield numbers, the proportion of lending to households for dwelling investment in WA remains behind all east-coast states at 24.6 percent.
WA continues to mount a clear argument for Australia’s most desirable destination when it comes to investing in property.
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