Australian properties are expensive-that has been a given over the years. In fact, it’s not difficult to find homes that cost at least a million dollars here.
But how did the pandemic affect home prices, and how do numbers compare between suburbs and cities, including in Perth? Better yet, how can first-time home buyers afford a property?
The Highs and Lows of Perth Home Prices
In the December 2020 report by the Australian Bureau of Statistics (ABS), the residential property price indexes rose by 3 percent over the last quarter (October-December 2020). It also increased by 3.6 percent within the past 12 months.
Property price indexes were also up across the major cities during the last quarter, although they were significantly higher in Hobart, Canberra, and Melbourne. These three might have benefited from internal migration during the pandemic. Many Australians might have moved to places with a much lower population density.
Sydney, meanwhile, posted a growth of 3 percent, while Brisbane’s property price index rose by 2.7 percent. Perth performed better at 2.9 percent.
The percentages changed as soon as the data from the remaining months were included. Within a year, the index rose by over 3 percent in cities like Hobart, Canberra, Perth, Adelaide, and Sydney. Melbourne and Darwin had the slowest growth within this period.
Overall, in the country, the mean price of residential dwellings was already over $700,000, while the total value hit $7.72 billion in the last quarter.
As for Perth, the data from REIWA, the real estate institute of Western Australia, revealed that the median home price had already crossed the $500,000 benchmark for the first time since December 2018.
CoreLogic also shares that the Western Australian capital continues to make recovery for nine consecutive months until April. The home value index has already grown by 9 percent, of which 5.9 percent occurred in 2021. However, the pace of growth is actually slow in April.
How to Make Perth Homes Affordable
Based on the data, Perth is currently a seller’s market, which means home prices are higher than expected. It may also continue to increase at least within the next few months. But it doesn’t mean first-time home buyers won’t be able to afford it.
A Perth house will still be cheaper than the same property in Sydney, where the average home price is already $1.2 million. In Melbourne, most homes cost around $935,000. Even in a small city like Canberra, a house may be worth $855,000.
1. Choose the Neighborhood Wisely
According to REIWA, some suburbs are more expensive than others. Properties in Secret Harbour, for example, could cost $445,500 after the median house price increase by 3.3 percent. In Bullsbrook, where the growth was highest at 7.8 percent, homes could be worth a little over $350,000.
Merredin, which is about 4 hours away from Perth, posted a high growth rate of 36 percent over the last 12 months. But the annual median price is $150,000. You may purchase a bigger property in a nicer location for $235,000, but if you know how to look, prices can be as cheap as $88,000.
Potential homeowners can also spend less if they decide to buy a home in sloped yards. Many sellers often offer these properties at a lower price because of the complexity of the terrain, which may not be appealing to a lot of home buyers.
Although these homes may need more work, solutions like putting up retaining wall systems can offset the additional costs of improving the yard since these walls can boost curb appeal and, in turn, the property’s resale value.
2. Explore First-time Homebuyers’ Schemes
In 2020, the Commonwealth Government introduced the First Home Loan Deposit Scheme. In this setup, the government acts as a guarantor for the difference between the deposit the first-time home buyer makes and the ideal minimum deposit, which is 20 percent.
This way, you can pay as low as a 5 percent down payment and still avoid spending more on lenders’ mortgage insurance (LMI). Many lenders charge LMI for first-time deposits below 20 percent as a security if the borrower goes on default. It is a one-off payment, but it could add at least $10,000 more to the loan spending.
There’s also the First Home Super Saver Scheme, where home buyers may be able to save their first deposit through their super. You can contribute up to $15,000 a year, which you can withdraw once they’re ready to purchase a house.
While Perth isn’t for everyone, it’s a great choice for those who want to buy more affordable homes in Australia. However, if this is your motivation to move, you may want to do it now before prices continue to go up.