Real estate: Perth remains Australia’s most affordable capital city

Perth has regained its title of Australia’s most affordable capital city

Perth has regained its title of Australia’s most affordable capital city, according to new data from the HIA.

Affordability increased 7.1 per cent increase in the June quarter 2020 and is nearly double the 20-year average.

The HIA Affordability Report said Perth was especially impressive this quarter, given how much more affordable housing had already become following the mining and resources downturn.

“Perth had the fastest growing earnings in the country in the last quarter, increasing by 2.9 per cent, and the biggest fall in dwelling prices (-1.5 per cent),” the report said.

“The western capital has now reclaimed top spot over Darwin as the most affordable capital city in the country.”

Skyline of Perth seen from John Forrest National Park in Australia

Perth’s affordability index rose to 137.5, meaning only 0.7 incomes were required to service a mortgage, compared to the 2.2 incomes required in 2006.

A typical monthly mortgage payment has fallen to $1861, with repayments 21.8 per cent of earnings on average.

Affordability in regional WA improved by 7.4 per cent with dwelling prices declining by 1.6 per cent.

Regional WA required only 0.6 incomes to service a mortgage making it the most affordable region in the country.

Housing affordability improved across all capital cities in the June quarter and was at its most affordable nationally since 1999.

Housing affordability June quarter 2020
Housing affordability June quarter 2020 Credit: Housing Industry Association

Melbourne was a close second behind Perth (improving 6.9 per cent), followed by Sydney (6.1 per cent), Brisbane (5 per cent), Canberra (3.3 per cent), Hobart (3.1 per cent), Adelaide (3.1 per cent) and Darwin (1.6 per cent).

The index for regional Australia also increased by 4.9 per cent.

HIA chief economist Tim Reardon said the combination of lower interest rates, slow house price growth and relatively steady wage growth over the past three years had driven the improvement in affordability, but this was cold comfort for many first-home buyers.

“The challenge facing first-home buyers is no longer their ability to repay a loan, but in obtaining a mortgage in the first place,” he said.

“A raft of restrictions imposed by APRA and ASIC since the 2007 Global Financial Crisis has seen the number of home loans issued with a 10 per cent deposit fall from 21 per cent of all loans to just 7 per cent.

“The additional red tape imposed in recent years means that banks are increasingly lending to those that already own a home.”

Source: PerthNow