Much has changed in the two years since the last Bankwest Curtin Economics Centre housing affordability report. Interest rates have risen from 0.1 per cent to 3.6 per cent, increasing mortgage payments for a household on a variable interest rate by around $1,000 a month on a loan of $600,000. These extra payments add to cost of living pressures driven by inflation and could lead to an increase in mortgage defaults. Borrowing capacity for new purchasers has fallen sharply making it more difficult to break into home ownership. Listings for sale remain well below the 10 year average, reducing choice and making households less likely to put their home on the market. The lack of established supply and the relative affordability of the WA housing market has underpinned price growth in the state and prevented the type of price falls seen in New South Wales and Victoria.

The report highlights key priorities for governments around housing affordability, including the need to deliver significant and ongoing investment in social housing, more investment in homelessness services and balanced residential tenancy reform. It is encouraging the see the commitment of the state government to increase social housing supply and grow the housing workforce, while a similar commitment to addressing the private rental crisis would be welcome.

Key findings and recommendations:

• Interest rate rises, dwelling price and rent increases have made housing less affordable in Western Australia. Strong, COVID-19 driven demand has pushed up prices and rents in regional WA while the availability of dwellings for sale across the state remains low.
• House rents in Perth have risen by 13 per cent over the last year (CoreLogic 2023), the largest rise of any capital city, while unit rents have increased by 13.6 per cent. These increases are placing significant financial pressure on renters.
• The COVID-19 stimulus grants increased building approvals and dwelling commencements sharply in WA but these housing starts have yet to feed through into completions and deliver new stock to the market. At the end of 2022 there were 27,000 dwellings under construction compared to around 12,000 at the end of 2019.
• New supply is likely to be well below the long-term average over the next two to three years because high construction costs mean much new development is not financially feasible for the industry and the time it takes to deliver new supply once development once again becomes profitable.
• Reforms to Commonwealth Rent Assistance are essential and State Government should consider financial support for low-income renters mirroring the support introduced during COVID-19 which saved many renters from homelessness.
• A recent State Government funding commitment to the provision of new social housing is welcome but required is the provision of around 900 social housing dwellings per annum just to maintain social housing at its current level as a proportion of total stock (3.8 per cent).
• The State Government should deliver greater investment in homelessness support services and an expansion of funding to support Housing First initiatives.