First home buyers double in Western Australia but affordability declines nationwide

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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.

Lender

Variable
More details
UNLIMITED REDRAWSSPECIAL OFFER
  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
UNLIMITED REDRAWSSPECIAL OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
Variable
More details
AN EASY DIGITAL APPLICATION
  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
AN EASY DIGITAL APPLICATION

Neat Variable Home Loan (Principal and Interest) (LVR < 60%)

  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
Variable
More details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES
  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
Variable
More details
NSW/VIC/SA METRO & INNER REGIONAL AREAS$5000 CASHBACK. T&Cs APPLY.
  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
NSW/VIC/SA METRO & INNER REGIONAL AREAS$5000 CASHBACK. T&Cs APPLY.

Variable Home Loan (Principal and Interest)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services

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%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of May 25, 2022. View disclaimer.

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. 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. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

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Harrison is Savings.com.au's Assistant Editor. Prior to joining Savings in January 2020, he worked for some of Australia's largest comparison sites and media organisations. With a keen interest in the economy, housing policy, and personal finance, Harrison strives to deliver and edit news and guides that are engaging, thought-provoking, and simple to read.

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