WA First Home Buyers: Cracking the Code or Chasing Rainbows?

For many West Australians, the dream of owning their own home remains a deeply held aspiration. But in a market characterised by fluctuating prices, rising interest rates and deposit hurdles, is that dream still within reach, or are first-time buyers facing an increasingly uphill battle? Recent data paints a complex picture, suggesting both challenges and emerging opportunities for those seeking to enter the property market.

The Shifting Sands of the Perth Market

Strong price growth across Perth over the past year has undoubtedly made the initial foray into the property market more difficult. Many prospective homeowners are finding they need to broaden their search areas, considering outer suburbs or alternative property types like townhouses and apartments to find something within their budget. However, there are indications the market is beginning to soften, offering some potential reprieve.

According to the Australian Bureau of Statistics (ABS), first home buyers accounted for 35.1 per cent of new loans in the December 2024 quarter. This figure, while seemingly positive, requires careful interpretation. While participation remains significant, it doesn’t necessarily reflect the *ease* with which first-time buyers are entering the market. Increased loan sizes and longer repayment periods are potentially contributing factors influencing this figure.

Increased Listings and Easing Demand

One potentially positive sign is the increase in properties listed for sale. In March, Perth saw a 41.5 per cent year-on-year jump in listings, reaching 5,082 properties. This surge, which began in October and November of the previous year, points to a potential shift in market dynamics, moving away from the seller’s market that characterised much of the recent past. Slower population growth has also contributed to a tempering of the “FOMO-fuelled” demand that drove rapid price increases.

Real Estate Institute of Western Australia (REIWA) President Suzanne Brown suggests these changing conditions are gradually improving the landscape for buyers. “First home buyers now have more choice, and with homes taking slightly longer to sell and fewer properties selling at the first home open, they can take more time in their purchasing decisions,” says Ms. Brown.

According to REIWA, the median time to sell a house has increased to 13 days, up from nine days a year prior. “There is still strong demand for property, but not at the levels it was a year ago,” Ms Brown stated. This extended timeframe allows buyers to conduct thorough due diligence, arrange financing, and negotiate more effectively – options often unavailable in a rapidly escalating market.

The Deposit Dilemma and Affordability Hurdles

While the easing of demand offers some encouragement, the substantial hurdle of saving a deposit remains a significant obstacle. With Perth’s median house price climbing 20.7 per cent in the past year to $766,500, ANZ estimates that it now takes an average of nearly 10 years to save a 20% deposit. This figure highlights the widening gap between wage growth and property price appreciation, placing immense pressure on potential first-time buyers.

Furthermore, rising interest rates and the burden of stamp duty compound the affordability challenge. Stamp duty, in particular, is a perennial point of contention. A recent REIWA survey indicated that 63 per cent of over 15,000 respondents identified stamp duty as a major barrier to home ownership. The re-elected WA Labor Government’s adjustments to stamp duty thresholds offer some relief, potentially saving first home buyers close to $18,000 on properties valued up to $500,000.

Navigating the Market: Strategies and Considerations

Given the complexities of the current market, potential first-time buyers need to adopt a strategic and well-informed approach. Here’s a summary of key considerations:

• Financial Discipline: Start saving the equivalent of your anticipated mortgage repayments to demonstrate financial responsibility.
• Financial Planning: Establish a clear understanding of your borrowing capacity *before* commencing the property search to avoid disappointment and wasted effort.
• Pre-Approval: Obtain pre-approval for a home loan to solidify your budget and signal seriousness to sellers.
• Conditional Offers: Minimise conditions in your offer to strengthen your negotiating position.
• Realistic Timeframes: Account for potential delays in finance approval and allow ample time for settlement (at least six weeks).
• Market Research: Attend home opens, compare suburb data (prices, growth, rental yields, amenities can be found on websites such as reiwa.com).
• Strata Considerations: If considering a strata property, meticulously review Body Corporate AGM minutes and financial statements, paying particular attention to the reserve fund.
• Investment Strategy: Consider renting while investing in a more affordable property to get a foot on the ladder, but carefully assess rental demand and budget for potential vacancies and maintenance.
• Government Assistance: Explore eligibility for government support programs such as the First Home Owner Grant, the First Home Super Saver Scheme (FHSSS), and Keystart.
• Location Flexibility: Consider “bridesmaid suburbs” – nearby areas offering more affordable options.

As Ms Brown from REIWA rightly points out, prospective buyers should carefully consider their long-term plans, including how long they intend to live in the property, commuting distances, and future family needs. “A first home is often a stepping-stone along the home ownership path, not the final destination,” she concludes.

A Realistic Outlook

The path to homeownership in WA may be challenging, but it’s not insurmountable. Success hinges on adapting to market conditions, making informed decisions, and leveraging available resources. While the dream of owning a detached house in a blue-chip suburb might be unattainable for some, alternative pathways, such as purchasing in emerging areas, considering different property types, or adopting an investment-first approach, offer viable routes to achieving the ultimate goal of property ownership.

Source: The West Australian, Australian Bureau of Statistics (ABS), Real Estate Institute of Western Australia (REIWA), ANZ Bank, Industry research and analysis.

This article is based on a report from thewest.com.au titled “Is the dream still alive? Navigating WA’s housing market as a first home buyer”. You can find the original article here: https://thewest.com.au/lifestyle/home-decorating/is-the-dream-still-alive-navigating-was-housing-market-as-a-first-home-buyer-c-18383036