The latest data from the Real Estate Institute of Australia (REIA) offers encouraging news for the Western Australian property market, indicating a significant slowing in the decline of both housing and rental affordability. This market update breaks down the key findings and what they mean for buyers, sellers, and renters.

Key Takeaways

• Stabilizing Affordability: The September 2024 quarter saw the smallest decline in affordability since September 2023, with both housing and rental affordability decreasing by just 0.2 percentage points.
• Income Growth Offsetting Costs: Increased median weekly incomes have helped offset rising loan sizes and rent payments.
• Slowing Price Growth: The rate of house price growth has slowed, leading to smaller increases in average mortgages. Rent prices are also showing periods of stability.
• WA Remains Affordable: Despite recent changes, WA remains one of the most affordable states for both homebuyers and renters compared to other parts of Australia.

Housing Affordability

While the proportion of family income required for monthly loan repayments increased slightly to 39.8%, this represents a significant slowdown compared to previous quarters. This figure is based on a median weekly family income of $2,646 and an average monthly loan repayment of $4,566. Importantly, WA remains one of the most affordable states for homeowners, only surpassed by the ACT and Northern Territory. In stark contrast, New South Wales remains the least affordable, requiring 58.1% of family income for loan repayments.

Loan Activity

Loan activity presents a mixed picture. While the total number of new loans to owner-occupiers decreased by 6.4% over the quarter, it increased by 6.9% year-on-year. The average loan size reached $554,459 in the September quarter, reflecting previous periods of strong price growth. First home buyers were also less active this quarter, with a 10.2% decrease in loans compared to the previous quarter. However, this figure is still 1.8% higher than the same period last year. Despite these changes, WA remains one of the most accessible markets for first-time buyers compared to most other states.

Rental Affordability

The proportion of family income needed for rent increased slightly to 23.8%. This modest increase reflects positive shifts in the rental market. Increased supply has led to a higher vacancy rate and periods of rent price stability. While WA sits in the middle nationally for rental affordability, it still offers better value than states like New South Wales, which requires 28.8% of family income for rent.

What This Means for You

• Buyers: While prices have risen, the slowing growth and relative affordability compared to other states present opportunities for buyers, particularly first home buyers.
• Sellers: The market remains healthy, but realistic pricing is crucial in the current climate.
• Renters: Increased supply and stable rents offer some relief in a previously tight market.

Conclusion

The latest REIA report paints a picture of a WA property market that is finding a new balance. While affordability remains a key consideration, the slowing decline, coupled with income growth and increased rental supply, suggests a more stable period ahead. We encourage you to contact us for personalized advice on navigating the current market.