With double-digit annual house price increases across Perth for several years now, it is hard to fathom that comparatively, WA remains one of the most affordable places to buy and rent property in Australia. The Real Estate Institute of Australia’s latest Housing Affordability Report reveals housing affordability improved by 3 percent in the quarter across Australia. NSW and Queensland remain the least affordable places to buy property with a whopping 56.8 percent of a family’s income devoted to meeting the average loan repayment in NSW. In Queensland, 48.4 percent of their hard-earned goes to meeting mortgage commitments. The national average is 48 percent.
Western Australia remains relatively affordable with 40.8 percent of our median weekly income of $2,709 covering the average loan of $594,250. In contrast, mortgage holders in NSW hold average loans of $794,831. For Western Australia’s first home buyers, average loan size has jumped from $454,795 a year ago to sit at $506,965 today. Our home loan affordability has deteriorated by 15.2 percent over the past five years.
Annually, housing affordability across Australia has declined by a moderate one percent and rental affordability is down a meagre 0.1 percent. Rental affordability remains worst in NSW with New South Whalers paying 27.9 percent of their income to rent, closely followed by Taswegians at 26.8 percent. Whilst in Western Australia tenants contribute 24 percent of their earnings to rent behind Canberra (18.9 percent – public servants get well paid it seems) and Victoria at 21.3 percent.
Whilst property ownership affordability has declined over the past five years, the figures suggest the rate of deterioration has slowed, reversing course in the last quarter by 3 percent. National rental affordability has proven more stable, dropping a mere three percent in twenty years. Based on these numbers it could be argued the hysteria around rental affordability is being exaggerated.
It remains far more affordable to rent than to buy with the differential between home loan repayment commitments and weekly rents relative to family incomes varying as much as 29.2 percent in NSW. Put simply, in NSW, families need 29.2 percent more income to meet average loan repayments compared to rental commitments. For WA, this differential is 16.8 percent.
Back home, median house rents have moved from $620 per week to $680 per week over two years, encouraging first home buyers into home-ownership. First home buyers made up 35.8 percent of all buyers last quarter, above the long-term average. Investors should take note as WA property continues to deliver the best rental yields in the nation at 6.5 percent. Despite these appealing yield numbers, the proportion of lending to households for dwelling investment in WA remains behind all east-coast states at 26.7 percent.
WA continues to mount an argument for Australia’s most desirable destination when it comes to investing in property.
With the release this week that annual inflation has kicked up to 3.7% brings with it an increased chance the Reserve Bank will raise official interest rates next time they meet. Normally, rising interest rates have an adverse impact on property markets. Affordability and loan serviceability are impacted with some … Read more
In this rapidly rising local market, buying vacant land and building might be a smarter bet than buying an established home. Vacant residential land values across Perth increased about 34% last year, pushing the median lot price to $329,000. The old real estate saying of “land appreciates, houses depreciate” is … Read more