Mortgage stress: Perth homeowners with mortgages spending more than two thirds of wages on repayments

Figures to make Baby Boomers shudder at what their grandkids face in today’s red-hot property market have finally been revealed. Perth mortgage holders are spending more than two-thirds of their wages on repayments, while it is getting increasingly out of reach for other young people, new data shows. The average monthly mortgage repayment in Perth has reached 68 per cent of the monthly median wage. That’s a far cry from 50 years ago, when mortgage repayments chewed up less than one-third (32 per cent) of average wages. Young West Australians with mortgages know the pain of skimping on everything in order to keep a roof over their heads, but the Australian Bureau of Statistics figures hammer home how harder they’ve got it than previous generations because houses cost so much more. In 1975, the median house price in Perth was $24,500. It has risen to $777,921 in 2024. The median house price is now nine times the median annual wage compared with four times 50 years ago. Money.com.au research and data expert Peter Drennan said now is the toughest it’s ever been to afford a home in Australia. “We can put to rest any debate about which generation had it easier. The Silent Generation and baby boomers bought homes when prices were just four to five times the median wage, while today’s families are paying double to triple that – clearly, it’s not about skimping on avocado toast or making coffee at home,” he said. On the plus side, WA fares well on the wages front. It has the second highest average weekly ordinary time earnings for full-time workers ($2094), after the ACT ($2132). Tasmania ($1711) has the lowest, followed by South Australia ($1777). Much of the growth in wages in WA was through mining, an industry with the highest-paid workers on average at $3015 a week for full-time employees. While Perth’s house prices have risen sharply, it has not been as crazy as the higher growth of other capital cities. The Perth market is on track to achieve growth of 25 per cent over 2024, according to REIWA’s latest property market quarterly update. “Demand for property in Perth remains strong as both houses and units continue to sell quickly which has seen the continued growth in prices,” REIWA CEO Cath Hart said. She said the market continued to be driven by strong population growth and constraints in the building industry. “The ongoing growth in population has also seen strong and sustained demand for housing. “While new home build times are now recovering and being completed in quicker timeframes, Perth’s overall housing completions are still low, which is maintaining the strong demand for established homes and the continued upward pressure on prices.” Ms Hart said there would need to be an unexpected change in current conditions to significantly slow Perth dwelling price growth, but there were a couple of factors that could affect the rate of growth. “Factors that might impact the current price trend for Perth dwellings over the coming months and into the first half of 2025 include the upcoming elections, both federally and in WA, as well as potential changes to interest rates. “We know market activity often slows in the lead up to elections as buyers and sellers wait to see the outcome. This is especially so when housing is one of the key policy areas in both the upcoming federal and WA elections.” “The ongoing debate about if, or when, the Reserve Bank will cut rates may also lead to hesitation from some buyers who may be waiting for rates to fall before entering the market,” Ms Hart added. REA Group senior economist Eleanor Creagh said it was clear housing demand was defying persistent affordability constraints. “July’s tax cuts have boosted borrowing capacities and buyers’ budgets, which has supported growth. The persistent rise in home values has also motivated many to overcome affordability challenges and transact,” she said.