The Real Estate Institute of Australia released their quarterly Housing Affordability Report last week revealing that WA remains the most affordable state in the nation to buy property. The proportion of family income required to meet mortgage repayments in WA fell last quarter to 24 per cent, down by 0.7 per cent from last year.
By comparison, New South Welshers commit an eye-watering 42.3 per cent of their income to make their mortgage payments up from 39.9 per cent a year ago. Locked-down Victorians fork out 36.8 per cent of their wages to pay the mortgage, AFL-loving Queenslanders give up 29.7 per cent and Taswegians commit 29 per cent of their income.
With ‘mortgage stress’ normally considered to kick in after more than 30 per cent of your income goes towards the mortgage, West Australians - on average - are able to comfortably upgrade their existing homes and take on more debt comparative to east-coasters. And that appears to be what buyers are doing with local agents reporting significant increases in sales activity over the past two months. One prominent local agency sold more than double their average monthly volume in July and August, normally relatively quiet months.
WA is also the most affordable place to rent a home in Australia. Only 16.1 per cent of a tenants’ income goes towards rent here whereas in NSW, tenants have to come up with 27.5 per cent of their income. Tasmanian renters struggle the most with 28.5 per cent of their income going on rent.
Our zero community transfer of COVID-19 for several months, a hard border, a thriving mining sector and near-normal local economy makes WA the place to be. With demand to relocate to WA from the east coast on the rise, pressure on housing supply will inevitably build pushing up rents and property values across the state.
The cost of borrowings remains at record lows with some banks offering fixed term rates at 1.99 per cent for owner-occupier mortgages. There’s also myriad grants and incentives to buy property with a 75% off-plan stamp duty rebate, first home buyer grants and building incentives of up to $45,000.
Accordingly to data house CoreLogic, properties coming to market in Perth is increasing, up 4.7 percent compared to last month, giving buyers more choice. Metropolitan Perth’s median house price is at $450,000, the cheapest capital behind Darwin. To compare, Sydney’s median house price is $795,000, Adelaide’s is $462,000 and Hobart’s is $515,000.
Assuming WA avoids the horrors of a second wave coronavirus outbreak such as that experienced in Victoria, there is a sense of inevitability that the local property market is on the brink of a significant resurgence.
