decline in affordability
WA records smallest decline in affordability in 12 months
Western Australia has recorded its smallest decline in housing and rental affordability since the September 2023 quarter, as reported in the latest REIA Housing Affordability Report.
Western Australia experienced its smallest decline in housing and rental affordability since the September 2023 quarter, according to the latest Real Estate Institute of Australia (REIA) Housing Affordability Report. Both housing and rental affordability saw a marginal decrease of just 0.2 percentage points during the September 2024 quarter.
REIWA CEO Cath Hart highlighted several factors contributing to this trend. She noted that an increase in median weekly income over the quarter helped counterbalance rising loan sizes and rent payments. Additionally, the slowing rate of house price growth resulted in only a 1.2 per cent increase in the average mortgage over the quarter, while rent prices have shown signs of stability. These changes collectively helped ease the decline in affordability.
Housing affordability:
In the September 2024 quarter, the proportion of family income needed to cover monthly loan repayments in Western Australia increased slightly by 0.2 percentage points to 39.8 per cent. This calculation was based on a median weekly family income of $2,646 and an average monthly loan repayment of $4,566.
This increase was relatively modest compared to the previous quarters, which saw rises of 1.7 percentage points in June 2024, 1 percentage point in March 2024, and 2.2 percentage points in December 2023.
Despite the increase, WA remained the most affordable state for home ownership, with only the Australian Capital Territory (34.7 per cent of family income) and the Northern Territory (31.6 per cent) being more affordable. In contrast, New South Wales was the least affordable, requiring 58.1 per cent of family income to meet loan repayments.
Source: Real Estate Institute of Australia
Loan activity:
Loan activity in Western Australia showed a mixed performance during the September 2024 quarter, with a decline in new loans over the quarter but growth compared to the same period last year. According to REIWA CEO Cath Hart, the total number of new loans to owner-occupiers in WA dropped by 6.4 per cent over the three months to September, totaling 10,114. However, this figure was 6.9 per cent higher than in the September 2023 quarter.
The average loan size in WA increased to $554,459 in the September quarter, a rise of 1.3 per cent from the previous quarter and 16.9 per cent higher year-on-year, reflecting the significant price growth over the period.
First home buyers were less active in the September quarter, with the total number of loans to this group decreasing by 10.2 per cent to 3,713. Despite this quarterly decline, the figure was 1.8 per cent higher than the September 2023 quarter. The average loan size for first home buyers rose by 1.5 per cent over the quarter to $482,359, marking a 14.9 per cent annual increase.
Despite rising property prices, WA remains one of the most affordable states for first home buyers. Only the Northern Territory ($421,935) and Tasmania ($421,063) offered more affordable average loan sizes.
Rental affordability:
The proportion of family income required to meet rent payments in Western Australia increased slightly by 0.2 percentage points during the September 2024 quarter, reaching 23.8 per cent. This rise followed increases of 0.6 percentage points in both the June and March quarters and 0.9 percentage points in the December 2023 quarter.
REIWA CEO Cath Hart attributed the modest decline in affordability to changes in the rental market over the past year.
“The pressure in the Perth rental market has been easing over 2024,” she said. “We’ve seen new supply come to the market, which has increased the vacancy rate and led to periods of stability in rent prices.”
Nationally, WA ranked in the middle for rental affordability. The ACT was the most affordable state or territory, with tenants spending 19.1 per cent of family income on rent, followed by Victoria (21.8 per cent) and Queensland (22.9 per cent). New South Wales remained the least affordable, with 28.8 per cent of family income needed for rent payments. NSW also experienced the largest quarterly decline in affordability, with a 1.0 percentage point increase in the proportion of family income required for rent.
Rental affordability showed slight improvement in Victoria and Queensland, remained stable in the ACT, and declined in all other states and territories.
