Housing affordability declined in Western Australia over the December 2024 quarter.

The latest Real Estate Institute of Australia (REIA) Housing Affordability Report showed the proportion of family income required to meet loan repayments in Western Australia increased 2.5 percentage points over the quarter to 42.5 per cent.

This was an increase of 5.6 percentage points year-on-year, based on a median weekly family income of $2,675 and an average monthly loan repayment of $4,931.

REIWA CEO Cath Hart said affordability continued to be impacted by strong property price growth, which has seen the size of loans increase. 

“The Perth median house sale price increased 23.3 per cent in the year to December 2024 and the regions have also seen strong growth. As a result, larger mortgages are needed to purchase property,” Ms Hart said.

“The report shows the average loan size in WA rose 7.3 per cent over the quarter and nearly 20 per cent over the year to $598,771, which has seen monthly loan repayments rise.

“There may be a slight reprieve in the next quarter following the RBA’s rate cut in February. For every 0.25 per cent cut in interest rates, the proportion of family income required to service the average loan usually drops by around 1 percentage point. This will of course be moderated by any property price growth over the quarter.”

Across the country, housing affordability declined in every state and territory in the December quarter.

WA remained the most affordable state, with only the two territories being more affordable.

New South Wales remained the least affordable place in the nation, with home owners requiring 59.9 per cent of family income to meet loan repayments.

Source: Real Estate Institute of Australia.

Loan activity

Despite the decline in affordability, the number of loans to owner occupiers increased in the December quarter.

“The total number of loans to owner occupiers in WA increased 5.7 per cent over the quarter to 10,659,” Ms Hart said.

“However, this was 1.3 per cent lower than the December 2023 quarter.

“While buyers were still active, our members report rising prices mean they are more mindful of their budgets and are making considered purchasing decisions.”

Ms Hart said the WA property market continued to be supported by higher than average wages and lower than average mortgage repayments.

“The median weekly family income in WA ($2,675) was higher than the national median ($2,528) and the second highest in the nation,” she said.

“The average monthly loan repayment ($4,931) was lower than to the national average of $5,484, and among the lowest in the country.

"These factors put West Australian home owners in a stronger position to weather affordability changes than those in other states.”

First home buyer activity also increased over the quarter.

The number of loans to first home buyers rose 3.6 per cent over the quarter to 3,852, however this was 9.9 per cent lower than a year ago.

“Despite declining affordability, first home buyers remain very active in the market, making up 36.1 per cent of owner-occupier loans,” Ms Hart said.

The average loan size for first home buyers increased 3.2 per cent over the quarter and 13.9 per cent over the year to $497,508.

Rental affordability

Rental affordability also declined in WA over the December quarter.

The proportion of family income needed to meet rent repayments rose 0.5 percentage points over the quarter to 24.3 per cent. This was 1.8 percentage points higher than the December 2023 quarter.

Ms Hart said while rental affordability had declined, the rate of decline appeared to be slowing.

“This reflects changes in the rental market in 2024,” Ms Hart said.

“As rental supply slowly increases and the vacancy rate rises, we are seeing the rate of growth slow for Perth median rent prices, which is helping ease the decline in affordability,” Ms Hart said.

Nationally, WA remained in the middle of the pack for rental affordability. The Northern Territory (24.3 per cent) was equal to WA, while Queensland (23 per cent), Victoria (21.5 per cent) and the ACT (19.2 per cent) were more affordable.

New South Wales remained the least affordable state for tenants, with 28 per cent of family income required to meet rent repayments.

Rental affordability improved in New South Wales, Victoria, Tasmania and the Northern Territory, and declined in all other states and territories.

Source: Real Estate Institute of Australia.