Housing Affordability Reaches Record Lows – What It Means for Landlords

Recent data from the Real Estate Institute of Australia shows that households are now spending a larger share of their income on housing, driven by rising interest rates and strong property price growth.

Rising Costs Are Impacting Buyers

Over the March 2026 quarter, the proportion of family income required to meet mortgage repayments in WA increased to 45.9%.

This sharp rise has been caused by a combination of:

• Interest rate increases earlier in the year
• Continued growth in property prices
• Limited supply during the quarter

As a result, buyers are taking on larger loans, and overall borrowing capacity is becoming more constrained.

For landlords, this can influence how quickly properties sell and who is entering the market, particularly first-home buyers.

Fewer Loans, But Larger Borrowing

Loan activity declined during the quarter, with fewer buyers entering the market. However, the average loan size continued to increase, reflecting higher property prices.

This suggests that while demand is still present, affordability is becoming a bigger consideration for buyers.

First home buyers remain active, supported by government schemes, but are also facing higher borrowing costs.

Rental Affordability Also Under Pressure

It’s not just buyers feeling the impact. Rental affordability has also declined.

Households are now spending around 24.6% of their income on rent, which is one of the highest levels seen in recent years.

This has been driven by:

• Rising rental prices
• Tight vacancy rates
• Ongoing demand for rental properties

For landlords, this reflects continued demand in the rental market, even as affordability becomes more stretched.

What This Means for Landlords

Current conditions highlight a few key trends for landlords to be aware of:

• Tenant demand is likely to remain strong, particularly as home ownership becomes less affordable
• Rental prices have grown, but affordability pressures may limit how quickly rents can continue to rise
• Fewer investors entering the market could impact future rental supply
• Changes to tax policies may influence investor behaviour over the coming months

For now, the rental market continues to be shaped by strong demand and limited supply. While affordability is becoming more of a factor for tenants, it hasn’t reduced demand in any meaningful way. Any improvement in supply is likely to take time, so conditions are expected to remain relatively tight in the near term.