Perth remains affordable to buy and rent

Despite rising interest rates making life more difficult for homebuyers, Perth is still the second most affordable property market in the country.

According to the Real Estate Institute of Australia (REIA) Housing Affordability Report, Western Australian homebuyers need to spend 33.8 per cent of their income to meet their loan repayments.

Only the Northern Territory (32.2 per cent) was more affordable.

Real Estate Institute of Western Australia (REIWA) CEO Cath Hart said buying a home in WA was still achievable compared to most major capital cities.

“Our median house price is significantly lower than many other states, which means a lower deposit, lower mortgage and lower interest rate impact, while our higher-than-average wages support home owners’ ability to service a loan and adjust to rate rises,” Ms Hart said.

In WA, the proportion of median family income needed to make loan repayments rose 2.3 per cent to 33.8 per cent in the December 2022 quarter, up from 31.5 per cent in the September quarter and 25.3 per cent in the December 2021 quarter.

New South Wales was once again the least affordable location in the country, with mortgage holders required to pay 54.8 per cent of their median weekly income to meet their mortgage commitments, while Victoria was second at 45.8 per cent.

Ms Hart said buyers could still find well-priced homes in Perth, with 26 suburbs having a median house price below $400,000, including Armadale ($310,000), Medina ($312,500), Camillo ($335,000), Mandurah ($345,000) and Calista ($349,000).

“A quick search of found nearly 1200 residences priced at $400,000 or less, which includes modern apartments, older apartments closer to the CBD, older homes on larger blocks, new homes on smaller blocks, villas, homes with pools and properties near the beach or in the heart of popular suburbs,” she said.

Rental affordability struggles

The rental crisis across the country continues to play out, despite affordability levels slightly improving nationally.

In WA, rental affordability worsened, with the proportion of income required to meet median rent payments rising 0.6 per cent to 20.4 per cent in the December 2022 quarter.

Ms Hart said despite the increase, WA was the second most affordable place for tenants.

“There is not a shortage of affordable areas for tenants,” she said. 

“Six in 10 Perth suburbs with rentals have a median weekly rent of less than $550, and many are well below this. 

“There is a shortage of available homes though, and that is one of the main problems facing the market at this point.”

Some of the WA suburbs that had weekly rents around $400 per week included Armadale ($400), Mandurah ($400), Parmelia ($435), Orelia ($420) and Midland ($400).

Tenants in Tasmania were the hardest hit, requiring 28.7 per cent of their family income to meet rent payments, however, this was down from the 30.1 per cent recorded for the September quarter.

Loan activity declines

Meanwhile, loan activity in WA also declined to 10,535 from 10,701 in the September quarter. 

Ms Hart said this was likely a reflection of the usual decline in sales activity over the festive season.

First home buyer loans also decreased over the quarter, down 4.8 per cent to 3802, which is 28.8 per cent lower than a year ago.

They made up 36.1 per cent of WA’s owner-occupier market.

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Rowan Crosby

Rowan Crosby is a senior journalist at Elite Agent specialising in finance and real estate.