Property: Why WA homeowners are in for less pain as interest rates continue to rise

West Australian homeowners may have more of a protective shield than other states against rate rises, with the latest ABS figures revealing our average home loan amount is still significantly lower than the national average.

July figures showed the average new home loan in WA was $469,956 compared to $609,043 nationally.

Nu Wealth managing director Daniel McQuillan said this, coupled with weekly earnings also higher than the national average, will place the property market in a better position than other states in absorbing rising interest rates.

“The reality is that Western Australia did not have the same huge run-up in property prices and borrowing costs compared to the rest of Australia over the past two years,” he said.

“For example, over the past two years the average new home loan in Western Australia rose by $77,200 compared to $170,600 for New South Wales and $113,900 for Queensland.”

He said confidence in WA’s property market was underpinned by the level of enquiries from interstate investors, which was increasing concurrently with interest rates rises.

“It has increased to such a level that interstate buyers now account for over 60 per cent of Nu Wealth’s property sales in Perth,” he said.

“Overall, the outlook for the Western Australia property market looks positive compared to the rest of Australia and Nu Wealth predicts that our housing market will be a standout performer over the coming year,” he added.

Mortgage Choice broker Andrew Sawyer said WA’s lower loan values, and the fact many astute buyers had fixed their rates before they began to climb, had acted as a protective shield for homeowners.

“And thirdly, the economy is performing very well in a relative sense so that’s going to help people as the interest rates rise as well,” he said.

However, he said it was important not to downplay the impact consecutive rate rises would inevitably have, even on WA’s average loan amount of $469,956, which amounted to hundreds more in repayments each month.

“There was some expectation of interest rates going up and people were at least considering that last year when they were purchasing but I don’t think anyone saw the speed of the increases coming,” Mr Sawyer said.

Average loan sizes for owner-occupier dwellings (original) by state in July 2022

Australia: $609,043

New South Wales: $761,478

Victoria: $642,375

ACT: $583,292

Queensland: $528,241

Western Australia: $469,956

South Australia: $466,554

Tasmania: $461,036

Northern Territory: $446,862

Source: Australian Bureau of Statistics, Lending Indicators July 2022

Raquel de BritoThe West Australian

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