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WA the most affordable for first home buyers

Perth has been named the most affordable capital city for first home buyers, with regional Western Australia taking the title of most affordable area in the country, according to a new report.

Canstar’s Bright Starter property report found Regional WA was the most affordable jurisdiction for first home buyers, with the fastest 10 per cent deposit-saving time frame of one year and four months for a dual income couple, and two years and nine months for a single. 

Repayments as a percentage of after-tax income are also relatively low at 9.8 per cent and 19.7 per cent respectively. 

Perth is the highest-ranking capital city for affordability in third place overall, followed by Brisbane, which ranked eighth, Darwin (ninth), and Adelaide (10th).

In contrast, Sydney is the least affordable jurisdiction and had the longest 10 per cent deposit saving time frame of five years and two months for a dual income couple, and over a decade for a single buyer.

Repayments as a proportion of after-tax income are much tighter at 26.9 per cent and 53.9 per cent.

Source: Canstar

The report found a dual income couple could save for a deposit on an entry-level home in less than two and a half years across eight of the 14 jurisdictions, including Brisbane, Regional Queensland, Regional New South Wales, Regional Victoria, Regional Tasmania, Regional South Australia, Perth, and Regional Western Australia.

In 10 of the 14 jurisdictions, loan repayments as a percentage of after-tax income did not exceed 17 per cent for a dual income couple with a 10 percent deposit, including Brisbane, Regional Queensland, Regional New South Wales, Regional Victoria, Regional Tasmania, Adelaide, Regional South Australia, Perth, Regional Western Australia, and Darwin.

Canstar’s Editor-at-Large, Effie Zahos said it can be tough for first home buyers in the current market, given the record level of house prices across the country.

“Saving for a deposit on a median-priced home can be disheartening for first-time buyers, especially when they realise it may take them close to a decade to achieve their goal,” Ms Zahos said.

“The Bright Starters Report is unique as it is based on the premise that first-timers don’t achieve their dream home initially. 

“Instead, they buy at the affordable end of the market, partner-up, and put down a 10 per cent deposit on an entry-level home with the view of working their way up from there.”

Ms Zahos said the research comes at an ideal time given the prospect of a Reserve Bank cash rate increase and rising interest rates. 

“The jurisdictions identified in the report are affordable with low income-to-loan repayment ratios, allowing room for potential repayment increases when interest rates rise,” she said.

Hotspotting property expert and co-producer of the Bright Starters Report, Terry Ryder said young couples can still get into a new home in a reasonable time.

“If you’re smart about where you buy, you could hold the keys to your first home in less time than you think,” Mr Ryder said. 

“It’s not just about affordability for first home buyers – they also want desirability and the knowledge that their home will grow in value over time.”

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Rowan Crosby

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