First home buyers double in Western Australia but affordability declines nationwide

author-avatar By on June 02, 2021
First home buyers double in Western Australia but affordability declines nationwide

A new report shows a bumper year in Western Australia for first home buyer activity, but affordability overall has declined.

The Real Estate Institute of Australia's (REIA) quarterly housing affordability report shows there are 105% more first home buyers in Western Australia compared to a year ago.

Affordability has worsened Australia-wide over the March quarter however, with the proportion of income required to meet loan repayments increasing to 34.7%, up 10 basis points (0.1%).

Loan sizes keep growing too, according to REIA President Adrian Kelly.

"Over the March quarter, the average loan size to first home buyers increased to $425,875, an increase of 2.2% over the quarter and an increase of 1.2% over the past 12 months," he said.

This is compared to a market-wide average loan size of $506,340, an increase of 1% over the quarter and up 2.6% on a year ago.

Tasmania led the charge in loan size growth, up 10.8% over 12 months.

The release of REIA's report comes after CoreLogic revealed on Tuesday that home prices were up Australia-wide by 2.2% in May.

Though compared to a year ago, affordability has improved 50 basis points (0.5%), according to REIA's report.


Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. The product and rate must be clearly published on the Product Provider’s web site. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.

Vacancy rates and rental affordability down

REIA's report also shows that rental affordability declined across the country, with the proportion of income required to meet median rents increasing to 24.4%.

This is an increase of 0.4% over the March quarter, and an increase of 0.7% over the past 12 months.

Domain figures released today also show the vacancy rate has declined for the second month in a row to 1.7% nationwide. 

This figure was buoyed by a return to pre-pandemic vacancy levels in Sydney, down to 2.7%, with a 5% drop in rental listings over May. 

Vacancy rates in Darwin, Adelaide, and Brisbane are at their lowest point since Domain's records began in 2017. 

In Melbourne, rental vacancies remain high at 4.2%, adding to fears about the city's 'fragile' property market.

Domain's vacancy rate report authors Henry Yu and Dr Nicola Powell said the overall rental market tightening "will be a welcome boost for landlords".

"The worst is now behind us... for the second month in a row, Melbourne’s vacancy rate tightened more than any other capital, declining from 4.2% to 3.8%," they said.

"Vacancy rates continue to remain tight in the smaller capital city rental markets, and this is likely to continue to put increased pressure on asking rents."

Lowest vacancy rates across capital city areas
May 2021
Rank
Sydney Melbourne Brisbane & Gold Coast Perth Adelaide
1 Camden (0.3%) Yarra Ranges (0.2%) Capalaba (0.2%) Kwinana (0.3%) Gawler – Two Wells (0.1%)
2 Blue Mountains (0.4%) Nillumbik – Kinglake (0.4%) Caboolture Hinterland (0.3%) Wanneroo (0.4%) Marion (0.1%)
3 Wyong (0.4%) Maroondah (0.4%) Nerang (0.3%) Serpentine – Jarrahdale (0.4%) Playford (0.2%)
4 Gosford (0.6%) Cardinia (0.4%) Coolangatta (0.3%) Cockburn (0.4%) Tea Tree Gully (0.2%)
5 Campbelltown (NSW) (0.6%) Mornington Peninsula (0.5%) Wynnum – Manly (0.4%) Swan (0.4%) Salisbury (0.2%)
Source: Domain
The vacancy rate represents the portion of available, empty rental properties relative to the total stock of rental property. The rental vacancy rate is based on adjusted Domain rental listings and will be subject to slight revisions over time. Areas are based on ABS SA3 geography that are located in a capital city GCCSA.

Photo by Nathan Hurst on Unsplash

Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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Harrison joined Savings in 2020. He is an experienced journalist, with previous stints at News Corp and financial comparison site Canstar. With a keen interest in personal finance, Harrison is passionate about helping consumers make more informed financial decisions.

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