First home buyers struggling to crack the east coast property market are being advised to look west as Western Australia once again tops housing affordability, according to new research.
The latest Real Estate Institute of Australia’s Housing Affordability Report has revealed that Western Australia is the most affordable state to rent or buy in, improving by 0.7 of a percentage point compared with the June quarter last year.
The report found that the proportion of income required to meet loan repayments in WA improved to 24 per cent in the June 2020 quarter, a decrease of 1 per cent compared with the previous quarter and the average loan size reduced by 2.1 per cent to $397,739.
REIWA president Damian Collins said it was an exciting time for buyers and investors, with various government bonuses and low interest rates making WA an even more desirable investment.
“In New South Wales, the proportion of income required to meet loan repayments is 42.3 per cent, while the average loan amount is $605,050 — significantly higher than WA and the highest in the country,” Mr Collins said.
“Although affordability has improved slightly across the country, the dream of home ownership remains challenging for many Australians on the east coast.”
He pointed out that the affordability issues that plague Sydney and Melbourne do not translate to Western Australia, with not all properties being out of reach.
“We’re lucky that this dream is very much alive in WA, which is evident by the large proportion of first home buyers WA has retained, despite the difficult economic conditions felt through the COVID-19 pandemic,” Mr Collins said.
However, Mr Collins believes first-time investors looking to invest should get in quick or risk missing out entirely.
“This is an exciting time for potential home buyers and investors. Not only is WA currently the most affordable state in the country, but this, combined with all of the various government bonus schemes and the current low interest rate environment, means it’s even easier to enter the property market,” Mr Collins said.
The report showed that rental affordability has improved in WA, with the proportion of income required to meet the median rent decreasing to 16.1 per cent. This is substantially below east coast markets, where rents make up as much as 28.5 per cent of median income.
“Given the low vacancy rate, it’s likely rents will rise in WA, which is good news for property investors. While tenants, of course, would rather not see rent rises, they can feel comfortable that it’s cheaper to rent in WA than any other state or territory, and that’s likely to remain so for some period of time” Mr Collins said.
“It certainly appears that WA has escaped the COVID-19-induced property slowdown, and given the high levels of demand and limited supply, we may even see house prices rise later in 2020. I would encourage anyone thinking of buying, whether as a home buyer or investor, to act sooner rather than later.”