Western Australia remained the most affordable place for buyers and renters despite increasing costs, according to a report by the Real Estate Institute of Australia (REIA).
The report found that the share of income needed to meet loan repayments in the state increased from 23.9% to 24.8% in the three months to December. The share of income allotted for median rent also increased from 17% to 17.8%.
The surge in first-home buyer activity reflects the affordability of Western Australia relative to other states. In fact, activity from the segment soared to 7,166 in the December quarter, representing a 41.6% quarterly and 97.1% annual increase. The segment accounted for 50.4% of owner-occupiers in the state. Overall, 15.7% of all first-home buyers across the country are in the state.
The average loan to first home buyers increased 5.7% during the December quarter to $360,675, which is 4.1% more than the December 2019 quarter.
Adrian Kelly, president of REIA, said the decline in affordability is largely attributable to higher house prices and larger loans.
“The market defied the doomsday predictions with median house prices rising across the country in 2020 with demand driven mostly from first-home buyers," he said.
However, Kelly said the surging demand could potentially pose a challenge to affordability.
"Seeing this trend in conversion to homeownership is particularly great news given the challenges many tenants and investors faced over the pandemic. However, surging house prices could see housing affordability obliterated unless measures to improve supply are implemented. This particularly applies to regional parts of Australia," he said.
