The latest data from the Real Estate Institute of Australia (REIA) presents a bittersweet picture for Western Australian residents. While the September 2025 quarter offered a brief moment of relief for homeowners, the broader annual trend highlights a tightening squeeze on affordability driven by surging property prices.
A Glimmer of Relief: The September Quarter
In a welcome turn of events, housing affordability in WA improved slightly over the September quarter. The proportion of family income needed to meet average loan repayments dropped to 40.5%, a decrease of 0.5 percentage points.
What triggered this dip? REIWA President Suzanne Brown points directly to the Reserve Bank of Australia’s (RBA) August rate cut, which brought the official cash rate target down to 3.60%.
“The RBA’s decision to lower borrowing costs is reflected in this slight improvement,” says Ms. Brown. “However, over the full 12 months, it is a different story.”
The Annual Slide: Prices Outpacing Gains
Despite the quarterly win, affordability has declined by 0.6 percentage points over the past year. While the rest of Australia saw a general increase in affordability, WA went against the grain.
The culprit? Strong upward price movement. As property values soar, Western Australians are forced to take on larger loans, eating up a greater share of their household income.
The Rising Cost of Entry
The scale of price growth is most evident in the size of the loans being taken out:
- Average Home Loan: Now stands at $632,901 (up 13.5% annually).
- First Home Buyers: Saw a 10.0% increase in loan sizes over the year—the highest growth rate in the country.
Interestingly, loan activity actually cooled in the September quarter, with new commitments for owner-occupiers dropping by 6.9%. However, experts believe this is a temporary lull before a “summer surge” fueled by government incentives.
Rentals: The Squeeze Continues
The rental market remains a challenge for many families. Rental affordability declined both quarterly and annually, with 24.2% of family income now required to cover median rents.
The silver lining? The pace of growth is finally losing steam. Median rents in Perth are currently hovering around $700 per week, signaling a stabilization after years of aggressive hikes.
Looking Ahead to 2026
While WA remains more affordable than most of the Eastern States—outperformed only by Tasmania and the territories—the road ahead looks steep. With the RBA holding rates steady in December and price growth showing no signs of stopping, affordability will likely be further challenged as we enter 2026.
One area of hope is the Australian Government’s 5% Deposit Scheme. REIWA agents are already reporting high activity levels in the first-home buyer sector, suggesting a stronger finish to the year than the September data implies.
WhatsApp Josh on +61 (0)488038805 or josh@domeproperties.com.au for further information for a confidential discussion regarding buying, selling or renting
