Perth retains most affordable mantle

A new Housing Industry Association report has again labelled Perth as the most affordable capital city in Australia, but says WA’s first home buyers grant is not having the desired effect.

Perth registered a score of 113.5 on the HIA affordability index, gaining 5.1 per cent over the year, and was ahead of Darwin (98.9) and Hobart (95.4).

An index reading of 100 indicates an affordable market whereby mortgage repayments account for exactly 30 per cent of earnings under current market conditions.

The average across Australia’s eight capitals was 72.9, with Sydney (55.1) and Melbourne (65.8) considered the most unaffordable cities in the country.

“With house prices in Perth continuing their steady – descent, the city has retained its newly acquired mantle of most affordable capital city market,” the HIA said in the report.

“The housing affordability index for Perth registered 113.5 in the September quarter, indicating that mortgage repayments for homes at current market prices account for less than 30 per cent of average full time earnings in the city.”

Perth has held the mantle of the most affordable capital in the country since September last year.

The rest of the state recorded an affordability rating of 131.1, up from 128.7 last quarter, placing it as the most affordable region in Australia.

Perth’s typical monthly mortgage repayment was $2,119, while the rest of the state had an average payment of $1,516.

As a percentage of earnings, Perth homeowners are spending 26.4 per cent of their income on mortgage repayments.

The remainder of WA spends 22.9 per cent of its income on repayments.

The report also assessed the impact of WA’s first home buyer grant, suggesting it was not drawing a significant numbers of households into the market.

“The $5,000 boost payment that was in place throughout the first six months of 2017 lifted first home buyer lending by around 10 per cent but the level of lending had since dropped back to the levels observed prior to the boost,” the report said.

“Despite Perth being the most affordable capital city market in the country, first home buyers still appear reluctant to take advantage of the situation.

“There are likely to be other factors keeping first home buyers on the sidelines.”