Perth’s $500k suburbs vanish as city plunged into ‘mortgage stress’

Perth has seen the most extreme change in housing affordability in the nation, with entry house prices up 26 per cent over the past year to $645,000, adding another $133,000 to prospective homebuyers’ mortgages.

It is one of the few Australian cities to see a rise in the time to save an entry-priced house and unit deposit, with wage growth or higher saving rates proving no match for double-digit price growth.

Domain’s annual First Home Buyers report found every city, bar Darwin, was in “mortgage stress” as higher interest rates and property prices took their toll.

In 2019, only Sydney and Melbourne experienced mortgage stress, classified by the ABS as when repayments consumed more than 30 per cent of income.

Sydney continued to be the most challenging city for first-home buyers, with the longest savings time of nearly seven years for an entry-price house and more than four years for an entry-price unit.

Domain chief of research and economics Nicola Powell said despite soaring prices, Perth still offered a faster path to homeownership than most other cities.

“Perth offers notable affordability for first-home buyers relative to other cities, with the second-shortest saving times for both houses and units,” she said.

“Despite experiencing the largest annual increases in entry-level prices and deposit-saving times, Perth’s time to save remains lower than those of other capital cities.

“Moreover, with the second-highest average wage among the capitals, first-time buyers benefit from the stronger purchasing power that helps somewhat counterbalance rising costs.”

In Perth, the quickest saving times for an entry-level house were Perth City (three years, seven months) while Mandurah, Belmont-Victoria Park and Rockingham took on average four years and three months. Kwinana clocked a month longer than that.

Nationally, the Perth CBD was the champion city for first-home buyers saving a deposit for an entry-price unit, topping the shortest time along with Bayswater-Bassendean at two years and seven months, followed by Essendon in Melbourne at two years and nine months.

A couple aged 25-24 could shave one year and seven months off the time to save for a deposit if they purchased an entry-priced unit rather than a house in Perth.

REIWA chief executive Cath Hart said currently no suburbs in Perth had a median house sale price below $500,000.

“However it’s important to remember that the median price represents the midpoint of all sales, meaning half of all properties sold fall below this figure,” she said.

“Many suburbs with median prices above $500,000 still have numerous homes available for under $500,000.”

Hart said Mandurah, Armadale and Gosnells recorded the most house sales under $500,000 in the past year, while in the unit market, Perth City, East Perth and Rockingham led unit sales under this price point.

“There are more options in the unit market, with 46 suburbs, including Perth City, Mount Lawley, Success and Joondalup, with median unit sale prices under $500,000,” she said.

“Strong price growth over the past year means buying a first home has become more challenging with many buyers reassessing their expectations, potentially shifting their focus from houses to more affordable options like home units, villas or townhouses to get into the market.

“They’re also needing to broaden their search to suburbs further from the CBD where prices tend to be lower.”

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