Perth ‘comparatively’ more affordable than other cities: CBA

The Commonwealth Bank of Australia’s (CBA) State & Territory Quarterly Perspective (June 2024) has shown that Perth’s housing market remains more affordable than other capitals throughout the quarter.

According to the report, while the housing market in Perth is “surging”, it is so from a lower base as a result of weaker long-term performance and remains more affordable despite recent price rises.

Additionally, Western Australia recorded the strongest total lending over the year, up by 39 per cent, with investor lending increasing by 70.5 per cent year on year.

For total lending, this was followed by NSW at 31.8 per cent, followed by Queensland at 28.5 per cent, with the weakest readings coming from Tasmania (0.2 per cent), ACT (9.8 per cent), and Victoria (17.5 per cent).

Investor lending also remained strong in Queensland, South Australia, and NSW (up by 46.4 per cent, 44.6 per cent, and 43.9 per cent, respectively) while the value of new investor loans grew by 16.6 per cent in Victoria, the weakest of the states and territories.

“The incredible strength of the Perth market should be viewed in the context of weaker performance during the decade prior to the pandemic,” the report stated.

“As such, prices have started from a lower base and have had greater room for values to rise quickly.”

The report noted that Melbourne (in terms of housing affordability) has been improved when compared to other cities, as the state has built more homes per capital than other states with elevated current listing levels.

Meanwhile, housing affordability in Brisbane is “now the second worst in the country” according to CBA’s latest calculations, with its housing marching higher with more internal and overseas migrants flowing into the city.

Affordability in Adelaide also worsened during this period, according to the report, with homes more expensive to buy relative to income than in Melbourne.

Canberra also ranked among the most expensive capitals, despite increased construction activity and affordability concerns working to subdue recent home price growth in the territory.

Domain’s Forecast Report Financial Year 2025 predicted that home prices in Perth, Sydney, Melbourne, Brisbane, and Adelaide are expected to climb by a further 2 percentage points in the coming financial year.

Canberra prices are expected to increase by 4 percentage points, while the Gold Coast and Sunshine Coast are set to rise by 3 percentage points, according to Domain.

[RELATED: House price forecast: What’s driving some areas to reach record highs?]