HOME loan affordability in Western Australia fell by 0.5 per cent for the September 2003 quarter, according to the AMP Banking/REIA Home Loan Affordability Report.
Of all States to experience a decrease in the level of home loan affordability, WA’s quarterly result is the smallest drop in Australia for the year to September 2003.
Only South Australia and the Australian Capital Territory recorded an improvement in home loan affordability.
Perth’s median house price rose by 4.1 per cent in the September quarter, and by 16.0 per cent for the year, with the median rising to $218,900.
The State experienced one of the lowest increases in the number of home loans and, at 2.2 per cent, had the third lowest increase in loan size overall.
Monthly loan repayments increased by 1.9 per cent, with the proportion of family income required to meet average mortgage repayments rising to 23.3 per cent.
AMP Banking managing director Michael Guggenheimer said while investors’ expectation remained that asset values would continue to increase, they should proceed with caution.
AMP Henderson Global Investors chief economist Dr Shane Oliver said first home buyers were struggling to enter the housing market, with deterioration in affordability causing a steady decline in first home buyer activity since September 2002.
“While the usual alarm bells for a housing crash aren’t present, such as sky high interest rates or rising unemployment, falling investment demand and an improving share market may result in an even further weakening of the housing market,” he said.
Real Estate Institute of Australia president Kareena Ballard said that with home loan affordability at its lowest since the end of 1995, the recent interest rate rise would make the situation tougher than ever for home buyers.
“Property prices are softening and investors are adopting a more cautious and long-term approach to the market, so we are now seeing some of the heat come out of the market,” she said.
“It is time for the Commonwealth and State governments to look closely at the difficulties faced by home buyers, and particularly first home buyers, when confronted by rising interest rates and the enormous cost burden of State taxes such as stamp duty.”
© Business News 2017. You may share content using the tools provided but do not copy and redistribute.