WA still the most affordable State in the nation

But WA has retained its title as the most affordable State in the nation, according to the latest Real Estate Institute of Australia (REIA) Housing Affordability Report.

Affordability declined by 2.2 per cent during the December 2023 quarter, with WA homeowners requiring 36.7pc of family income to meet loan repayments.

This is 21.8 percentage points lower than the portion of income New South Wales homeowners require to meet their mortgage payments and 11 percentage points lower than the national average.

The analysis of affordability was based on a median weekly WA family income of $2590 and an average WA monthly loan repayment of $4123.

WA was the most affordable State for housing, with only the ACT (35.2pc of family income) and the Northern Territory (33pc of family income) more affordable.

At a national level, all States and Territories saw a decline in affordability during the quarter, except for the NT, which had no change.

Queensland homeowners had the biggest decline in affordability, with a 2.8pc drop.

NSW housing remained the least affordable in the nation, with homeowners now requiring 58.5pc of family income to meet loan repayments.

The average loan in WA was $500,649 in the December quarter, which was an increase of 5.5pc from the September quarter and 4.4pc annually.

WA's average loan size was 18.5pc lower than the national average of $614,029.

The median weekly family income in WA was $2590, which was higher than the national median of $2445.

Average monthly loan repayments were lower at $4123, compared to $5057 nationally.

Although housing affordability dropped, the number of new loans increased 14.1pc to 10,787 in the December quarter.

This was comparable to levels seen in the December 2022 quarter (of 10,537).

WA was one of the most affordable States for first home buyers with an average loan size of $436,848.

This was an increase of 4.1pc during the quarter and 11pc annually.

The NT ($412,393) and Tasmania ($402,091) were the only two States more affordable.

The number of loans to WA first home buyers rose 17.2pc to 4277 in the three months to December and 6.7pc during the past year, making up 39.6pc of the State's owner-occupier market.

Rental affordability in WA declined during the December quarter and across the year.

The proportion of family income required to meet WA's median rent payments increased by 0.9 percentage points to 22.4pc in the three months to December, which was an increase of 2.2 percentage points over the year.

This makes WA the third-most affordable State for rentals behind the ACT (19.2pc) and Victoria (21.1pc).

Affordability is at its worst in NSW, where 27.3pc of family income is needed to meet rent payments.

This is an increase of 1.9 percentage points over the year.

Real Estate Institute of WA (REIWA) chief executive officer Cath Hart said more increases were likely in the coming months as challenges in WA's rental market continued.

"The key issue facing the rental market is supply," Ms Hart said.

"Rental supply has been declining, while demand has remained strong.

"These factors are maintaining the pressure on rental prices.

"Until they ease, we are unlikely to see prices fall.

"We will see a change in the rental market when supply increases.

"When there is more competition and tenants have more choice, prices will decrease as has happened in the past."

Nationally, the proportion of family income required to meet mortgage repayments reached 47.7pc in the December 2023 quarter, rising 2.1 percentage points during the quarter and 3.4 percentage points during the year.

Housing affordability is now at its lowest point in 20 years in NSW, Victoria, South Australia, Tasmania and the ACT.

Ms Hart said demand for WA homes remained strong during the December quarter, underpinned by strong population growth.

"WA has a growing population that needs to be housed," she said.

"There is high demand to buy established homes and they are selling quickly - currently in a median of eight days.

"Building has its challenges of rising costs and blown-out construction times.

"Rising interest rates have affected people's borrowing capacity, making buying more difficult for some."

Despite the challenges, Ms Hart said WA home buyers were well-equipped to navigate the changes.

"WA currently has the highest median weekly family income, with the exception of the ACT (at $3274)," she said.

"This is coupled with one of the lowest average monthly loan repayments, only behind Tasmania and the Northern Territory, putting WA home buyers in a better position to adapt to future changes in market conditions."