A study for the Perth metropolitan South East sub-region area€¦ · household income. Indicative affordability for the December quarter 2015 is shown below.4 Household Income Category

Research and analysis conducted by:

In association with industry experts: And supported by:

2016HOUSING AFFORDABILITYA study for the Perth metropolitan South East sub-region area

Housing Affordability – A study for the metropolitan South East sub-region area2

1. Introduction ..................................................................................................................3

2. Executive Summary – South East sub-region ........................................................4

3. Defining Affordability ................................................................................................5

3.1 Household Income Category ...................................................................................................................5

3.2 Affordability .......................................................................................................................................................5

3.3 Sub-regions .......................................................................................................................................................6

3.4 Income groups .................................................................................................................................................7

3.5 Data sources ......................................................................................................................................................7

4. Analysis of results for established housing market ...............................................8

4.1 Private Sales by Perth Planning Region ................................................................................................8

4.2 Private Sales by Household Income Category .................................................................................8

4.3 Private Sales by Each Household Income Category (by Planning Region) .......................9

4.4 Private Sales by Planning Region (by Household Income Category) ...................................10

4.5 Private Sales by Product Type ...................................................................................................................11

4.6 Housing Authority Sales ..............................................................................................................................13

5. Analysis of results for newly housing constructed housing ................................14

5.1 Lot Sales by Region ........................................................................................................................................14

5.2 Lot Sales by Household Income Category .........................................................................................15

5.3 Lot Sales by Household Income Category (by Region) ................................................................15

6. South East sub-region, Suburb analysis ..................................................................16

6.1 Very Low Income ..........................................................................................................................................16

6.2 Low Income .....................................................................................................................................................16

6.3 Moderate (Lower) Income .........................................................................................................................17

6.4 Moderate (Upper) Income .........................................................................................................................18

6.5 High income ....................................................................................................................................................19

7. Concluding Remarks ...................................................................................................20

Contents

3Housing Affordability – A study for the metropolitan South East sub-region area

1. IntroductionAccess to affordable housing is essential for the wellbeing of individuals, families and communities. Very low to moderate income earners1 are most at risk of not being able to access affordable housing and own their own home. In this study, the Housing Authority shares its own internal research to shed a more detailed light on what is affordable to purchase in Perth’s housing market. This includes where stock is located, its characteristics and who can afford it. It seeks to answer key questions about the type of affordable housing within an area – is it affordable, is it appropriate and is it available?

The information in this report is being used by the Housing Authority to inform the delivery of its commitments under the State Affordable Housing Strategy 2010-20202 which has now been revised upwards to deliver 30,000 affordable housing opportunities by 2020 . The current focus on the Affordable Housing Strategy is consistent with the Housing Authority’s role in providing housing to meet the needs of the community and support the economic development of Western Australia through the sale of land, the building and sale of houses, the provision of housing finance, the supply of rental properties and continuing partnerships with the community and private sectors.

This publication complements the Housing Affordability report for the Perth Metropolitan Area. It focuses on the South East sub-region which is made up of the Perth Planning regions: Armadale, Gosnells, and Serpentine-Jarrahdale.

1 See Section 3.1 for household income definitions.

2 Affordable Housing Strategy 2010-2020: Aiming Higher


2. Executive Summary – South East sub-regionThis report analyses house, unit and land sales in the South East sub-region of Perth from 2013 to 2015, looking at both established house and unit sales, and land sales for the construction of new houses. It looks at both private market sales and sales undertaken by the Housing Authority and its development partners. This report analyses sales by household income groups, and by Perth planning regions, as defined in Section 3.

Private housing sales in the South East sub-region are heavily skewed towards being affordable only to higher income households. Of the 12,093 private sales in the South East sub-region 38% of sales were only affordable to those on high incomes. Just 14% of sales in the South East were affordable to those on low incomes. Armadale had the most sales affordable to those on very low and low incomes, while Gosnells had the highest proportion of sales only affordable to the upper ends of the income distribution.

The South East housing market is heavily weighted towards larger properties, with over 90% of sales having three or more bedrooms. This ranged from 90% of sales in Armadale to 95% of sales in Serpentine Jarrahdale.

The Housing Authority provides a role in increasing the amount of affordable housing stock available for sales, which was reflected in its dwelling sales. Of the 207 properties sold by the Housing Authority and its development partners in the South East sub-region between 2013 and 2015, 68% were affordable to those on low incomes, while 21% were affordable to those on moderate (lower) incomes.

As with the established market, sales of lots are skewed towards those affordable to higher income groups. Around 43% of private lot sales were only affordable to those on high incomes, and only 11% were affordable to those on low incomes. In comparison 43% of Housing Authority sales were affordable to those on low incomes, while a further 39% were affordable to moderate (lower) income households.


3. Defining Affordability

3.1 Household Income CategoryIn this report, income categories are defined using proportions of the Perth median household income. This is the standard definition used by many affordable housing providers. For the Perth Metropolitan area, the definitions for December quarter 2015 are calculated below.3

Very low income (<50% of median) under $42,850

Low income (50-80% of median) $42,851–$68,560

Moderate income – lower (80-100% of median) $68,561–$85,700

Moderate income – upper (100-120% of median) $85,701–$102,840

High income (over 120% of median) Over $102,841

Estimated median income for Greater Perth $85,700

3.2 AffordabilityFor the purposes of this study, calculations have been undertaken to estimate an affordable established dwelling and land price for the Perth Metropolitan Area. These estimates are based on a number of assumptions which are outlined below. One of the main assumptions is the 30% rule. That is, for households to avoid housing stress, their mortgage repayments should not exceed 30% of their gross household income. Indicative affordability for the December quarter 2015 is shown below.4

Household Income Category

Gross Household

Income

Affordable loan amount Deposit Affordable

house price

Very low income $42,850 $187,000 $20,8005 $207,800

Low income $68,560 $299,200 $33,200 $332,400

Moderate income – lower $85,700 $374,000 $41,600 $415,600

Moderate income – upper $102,840 $448,800 $49,900 $498,700

High income Over $102,840 Over $448,800 Over $49,900 Over $498,700

Assumptions5 Interest rate: 5.58% (RBA, average standard variable rate, December quarter 2015) Deposit: 10% Term of loan: 30 years Percentage of income: 30%

3 Household income data is based on the median Perth income from the 2011 Census, adjusted using the ABS’ Wage Price Index for 2013, 2014 and 2015. For further information, see the Explanatory Notes publication.

4 These numbers are adjusted for 2013, 2014 and 2015. For further information, see the Explanatory Notes publication.

5 A deposit of this amount is likely to be difficult for a very low income household to achieve, however households may be able to access products such as Keystart low deposit home loans.


3.3 Sub-regionsThis report focuses on the South East sub-region which is shown below.


3.4 Income groupsThe 2011 Census is the most up-to-date data available on detailed income household groups within the community. Figure 1 shows the proportion of households in the Perth Metropolitan Area that fell into each of the income groups defined in Section 3.1. According to Figure 1, over 40% of households were in the very low to low income household categories at the time of the 2011 Census.

Figure 1

Perth Households by Income Category

36%

27%

16%

8%

13%

Very Low IncomeLow IncomeModerate income (lower)Moderate income (upper)High Income

3.5 Data sourcesThis report analyses property sales records for houses, units and land in the Central sub-region of the Perth Metropolitan Area from 2013-2015. The data has been extracted from the private sector product “APM PriceFinder”, which uses Landgate data, sourced through REIWA. For Housing Authority house, unit and land sales (2013-2015), admin-by-product data has been used. This is because the Housing Authority has thousands of transactions within the Landgate data, of which only a small number were actual sale transactions. For more information on data and methodology, see the accompanying publication Housing Affordability - Explanatory Notes.

Sources: PriceFinder, Housing Authority


4. Analysis of results for established housing market

4.1 Private Sales by Perth Planning RegionThis section gives an overview of the private housing market in the South East sub-region. Figure 2 looks at the proportion of sales by each Perth Planning Region. It shows that over half of all sales within the region were in Gosnells (53%), 38% of sales were in Armadale and only 9% of sales were in Serpentine-Jarrahdale.

Figure 2

Proportion of Sales by Perth

Planning Region

38%

53%

9%

ArmadaleGosnellsSerpentine-Jarrahdale

4.2 Private Sales by Household Income CategoryThis section gives an overview of the South East sub-region, looking at affordability by household income group. Figure 3 shows the proportion of private sales affordable to each of the household income categories. While less than 1% of sales in the South East sub-region were affordable to those on very low incomes, 14% were affordable to those on low incomes. Around 38% of sales in the region were only affordable to those on high incomes.

Figure 3

Very Low IncomeLow IncomeModerate (Lower) IncomeModerate (Upper) IncomeHigh Income

Proportion of Sales by Income

25%

23%

38%

0%14%




4.3 Private Sales by Each Household Income Category (by Planning Region)

This section examines each household income category, and identifies where sales for each category were located. Armadale had the largest proportion of housing affordable to very low or low income households. Gosnells had the highest proportion of sales affordable to the upper ends of the income distribution. In all income categories, there were only a small proportion of South East sub-region sales located in Serpentine-Jarrahdale (this ranged from 2% of sales affordable to low income households, to 13% of sales affordable to moderate income (upper) households.

Figure 4

Armadale Gosnells Serpentine- Jarrahdale


Very Low Income Low Income

0

%

60

50

40

30

20

10

58

37

5

0

%

60

50

40

30

20

10

69

2

29



Moderate (Lower) Income Moderate (Upper) Income

0

%

60

50

40

30

20

10

40

53

7

0

%

60

50

40

30

20

10

25

62

13




High Income

0

%

60

50

40

30

20

10

33

57

11


4.4 Private Sales by Planning Region (by Household Income Category)

This section examines private sales by each Perth Planning Region within the South East sub-region. Of the sales in each Perth Planning Region, it looks at the proportion affordable to each household income category. Figure 5 shows that Armadale had the highest proportion of sales affordable to the lower income categories, while Serpentine-Jarrahdale had the lowest.

Figure 5


Armadale

Serpentine- Jarrahdale

Gosnells

26%

19%

25%

15%

32%

27%

33%

46%

41%

1%

0%

0%

25%

2%

8%



4.5 Private Sales by Product TypeThis section analyses private sales by product type. This is to take into account the ‘appropriateness’ aspect of housing affordability. For the purposes of this report, sales are broken into those that are two bedrooms or less – viewed as appropriate for singles, couples and small families; and three bedrooms or more – viewed as appropriate for larger families and households.

Of the 12,093 South East sub-region private sales (2013-2015), 92% had three bedrooms or more.

In each of the planning regions, the vast majority of sales were of the larger product type, ranging from 90% in Armadale to 95% in Serpentine-Jarrahdale (Figure 6).

Figure 6

0


Regional Sales by Product Type

80

90

100%

60

50

70

40

30

20

10

Two bedrooms or less Three bedrooms or more

90 92 95

10 8 5Armadale Gosnells Serpentine-

Jarrahdale

Across the 11,088 three bedrooms or more sales, Gosnells had the highest proportion of sales with 53%, followed by Armadale (38%). For the two bedrooms or less product (only 1,005 sales), Gosnells also had the highest proportion of sales (with 50%), followed again by Armadale (44%).

Figure 7

0


Product Type by Region

50

%

40

30

20

10

38


44

5350

69



This report also looks at the proportion of product sales affordable to each household income category (Figure 8). At the middle and upper ends of the income distribution over 90% of affordable sales are in the three bedrooms or more product type. For the lower income categories, the majority of affordable product is still three bedrooms or more, but there are a higher proportion of affordable sales that have two bedrooms or less.

Figure 8Product Type by Income

Very low Moderate (lwr) Moderate (upr)Low High

0


80

90

100%

60

50

70

40

30

20

10


97949176

62

38

249 6 3


4.6 Housing Authority SalesThis report analyses sales made by the Housing Authority and its development partners separately from private sales. This is because the Housing Authority has thousands of transactions within Landgate’s data, of which only a small number are reportable sales. To ensure accuracy, the Housing Authority’s own sales data was used throughout this report. Figure 9 shows that the data for the Housing Authority sales is strongly skewed towards lower income households compared to the private market. There were 207 Housing Authority sales of houses and units in the South East sub-region between 2013 and 2015.

Figure 9


0


Proportion of Sales by Income

80

90

100%

60

50

70

40

30

20

101

14

25 23

38

3 0

68

21

8

Housing Authority Sales Private Sales

Sales undertaken by the Housing Authority and its development partners have a very different distribution than sales in the private market. Of all Housing Authority sales within the South East sub-region, 68% were affordable to low income households, while only 14% of sales in the private market were. Almost 40% of sales in the private market were only affordable to high income households.


5. Analysis of results for newly housing constructed housing

Consumers wishing to purchase a house have a choice between purchasing an established house or unit, or building a new home. The new home market is made up of land only or house and land package purchases. Both of these are generally reported through Landgate’s data as land purchases. In order to consider this market as part of the South East sub-region’s affordability options, this section looks at sales of land at different affordable land price points.

An affordable house and land price is calculated within Section 3. To separate the affordable land component, an expected proportion of land expenditure is derived using UDIA and ABS data6. For the very low income category, land affordability is manually set. This is because the minimum build price for a basic home in WA is estimated at around $150,000. When the affordable land price defined below is combined with the assumed price of building a dwelling, the affordablity price points (for land and build) are the same as for the established price points defined in Section 3.

Household income category Affordable land purchase category 2015

Assumed cost of building dwelling

Total house and land cost

Very Low Income Household $57,800 $150,000 $207,800

Low Income Household Up to $175,500 $156,900 $332,400

Moderate Income Household (lower) Up to $219,400 $196,200 $415,600

Moderate Income Household (upper) Up to $263,300 $235,400 $498,700

High Income Household Over $263,300 Over $235,400 Over $498,700

5.1 Lot Sales by RegionThere were 4509 land lot sales in the South East sub-region. Within the South East sub-region, 43% of lot sales were in the Armadale planning region, 29% in Serpentine-Jarrahdale, and 28% in Gosnells. This is a very different distribution than established sales, and suggests that Serpentine Jarrahdale is growth area for newly constructed housing.

Figure 10

Lot Sales in the South East sub-region

11%

89%

ArmadaleGosnellsSerpentine-Jarrahdale

6 See publication: Housing Affordability – Explanatory Notes



5.2 Lot Sales by Household Income CategoryThis section looks at lot sales, both in the private market and by the Housing Authority and its development partners, showing what proportion were affordable to each household income category. There were no lot sales affordable to very low income households. Only 11% of sales in the private market were affordable to low income households. In contrast, 43% of sales by the Housing Authority and its development parters were affordable to low income households. In the private market, 43% of sales were only affordable to high income households.

Figure 11

Private Lot Sales Housing Authority Lot Sales


0


Proportion of Lot Sales by Income

80

90

100%

60

50

70

40

30

20

1011

0 0

43

24

39

2314

43

4

5.3 Lot Sales by Household Income Category (by Region)Of the 4,509 land lot sales in the South East sub-region, 2,589 were affordable to households on less than a high income. By far the most sales in this category were in Byford (1,016 sales). Other suburbs with high numbers of sales affordable to those on less than a high income included: Harrisdale (177), Seville Grove (151) and Piara Waters (149).


6. South East sub-region, Suburb analysis7

This section looks at each household income category, as defined in Section 3, and shows the top 10 suburbs with sales affordable to the income group. This section looks only at sales in the private market for houses and units.

6.1 Very Low Income Only 0.6% of South East sub-region sales were affordable to very low income households.

Less than two bedrooms

Locality Distance from CBD

No. sales 2013-15

Median price

Median Build age

Median Bedrooms

Median building area

Median land area

Armadale 33.7Km 19 185,000 1973 2 76 133

Armadale had a small number sales which were older-style two bedroom houses.

Three bedrooms plus


No. sales 2013-15

Median price

Median Build age

Median Bedrooms


Median land area

Armadale 33.7km 14 166,000 1979 3 n.p 825

Gosnells 20.4Km 12 180,000 1978 3 n.p 740

Sales for Armadale included a very small number of properties, with some being older-style three bedroom houses on large blocks and others being newer unit accommodation on redeveloped sites. Gosnells had a small number of sales of three bedroom older-style houses on larger blocks.

6.2 Low Income 5.1% of South East sub-region sales (2013-2015) were affordable to low income households.



No. sales 2013-15

Median price

Median Build age

Median Bedrooms


Median land area

Armadale 33.7Km 157 250,000 1974 2 104 221

Kelmscott 32.0Km 64 284,000 1972 2 138 412

Gosnells 20.4Km 62 284,000 1971 2 73 194

Maddington 17.7Km 35 300,000 1988 2 170 222

Thornlie 17.3Km 18 277,500 1972 2 70 73

Armadale had a high number of low rise units and villa sales. Kelmscott had sales of both older-style, two bedroom houses and villas, and newer-style low-rise units. Gosnells had a number of older style, two bedroom duplexes and villas. Maddington had mixed product in the sales, from older-style houses and villas to 2011-built low-rise units. Thornlie had sales for a small number of two bedroom houses and low-rise units.

7 Only suburbs with 10 or more sales recorded between 2013 and 2015 are included.


Three bedrooms plus


No. sales 2013-15

Median price

Median Build age

Median Bedrooms


Median land area

Armadale 33.7Km 480 298,000 1978 3 211 698

Gosnells 20.4Km 182 305,000 1986 3 216 637

Camillo 32.9Km 154 300,000 1978 3 88 688

Kelmscott 32.0Km 122 305,000 1988 3 214 307

Seville Grove 31.5Km 76 310,000 1993 3 203 542

Maddington 17.7Km 68 307,500 1978 3 274 680

Brookdale 32.6Km 62 300,000 1992 3 108 641

Thornlie 17.3Km 34 292,500 1981 3 145 228

Kenwick 16.8Km 29 309,000 1990 3 305 313

Huntingdale 19.1Km 16 307,250 1980 3 443 665

Langford 15.4Km 16 309,750 1971 3 204 297

Armadale, Gosnells, Camillo and Maddington had a number of older-style house sales. Seville Grove and Brookdale had sales for newer style houses. Kelmscott, Thornlie, Kenwick and Huntingdale had sales of villas and duplexes of mixed-age.

6.3 Moderate (Lower) Income Only 24.7% of South East sub-region sales were affordable to moderate income (lower) households.



No. sales 2013-15

Median price

Median Build age

Median Bedrooms


Median land area

Gosnells 20.4Km 49 352,000 1969 2 267 809

Kelmscott 32.0Km 41 360,000 1967 2 206 812

Thornlie 17.3Km 37 353,000 1969 2 92 761

Armadale 33.7Km 35 345,000 1963 2 201 835

Maddington 17.7Km 28 359,500 1968 2 261 808

Langford 15.4Km 20 358,500 1970 2 272 693

Beckenham 15.0Km 10 368,000 1970 2 92 96

Jarrahdale 50.7Km 10 357,500 1950 2 n.p 798

Sales for product with two bedrooms or less were for older-style houses and units (with median build ages ranging from 1950 (Jarrahdale) to 1970 (Langford and Beckenham). All but Beckenham had large block sizes (with median land area ranging from 693 to 812 square metres).


Three bedrooms plus


No. sales 2013-15

Median price

Median Build age

Median Bedrooms


Median land area

Gosnells 20.4Km 537 360,000 1983 3 159 694

Seville Grove 31.5Km 304 369,000 1994 4 132 612

Armadale 33.7Km 302 345,000 1981 3 226 708

Maddington 17.7Km 295 365,000 1979 3 124 683

Kelmscott 32.0Km 237 365,000 1976 3 207 734

Thornlie 17.3Km 201 380,000 1977 3 142 692

Byford 43.7Km 142 385,000 2010 3 144 462

Huntingdale 19.1Km 135 379,000 1980 3 n.p 683

Kenwick 16.8Km 117 370,000 1981 3 119 680

Camillo 32.9Km 99 350,000 1981 3 85 696

For sales with three bedrooms or more (in the South East sub-region), newer-style product could be found in Seville Grove and Byford (median build age of 1994 and 2010 respectively). Older-style product (with a median build age ranging from 1976 to 1979) could be found in Maddington (295 sales), Kelmscott (237) and Thornlie (201).

6.4 Moderate (Upper) Income 22.7% of South East sub-region sales were affordable to moderate income (upper) households.



No. sales 2013-15

Median price

Median Build age

Median Bedrooms


Median land area

Thornlie 17.3Km 36 436,000 1967 2 n.p 839

Gosnells 20.4Km 24 430,000 1957 2 n.p 1,012

Beckenham 15.0Km 16 452,500 1955 2 60 964

Roleystone 35.6Km 15 460,000 1969 2 n.p 2,023

Kelmscott 32.0Km 11 435,000 1964 2 49 936

Maddington 17.7Km 11 445,000 1956 2 121 872

All areas shown had sales for older-style houses on large blocks (these had a median build year of between 1955 and 1969). Although the price is affordable to upper moderate income households, it is likely that the sale is mainly land value (due to the redevelopment potential of the block).


Three bedrooms plus


No. sales 2013-15

Median price

Median Build age

Median Bedrooms


Median land area

Thornlie 17.3Km 455 445,000 1979 3 143 700

Byford 43.7Km 305 445,000 2009 4 184 540

Gosnells 20.4Km 298 433,000 1988 4 155 687

Huntingdale 19.1Km 228 446,500 1993 4 146 639

Seville Grove 31.5Km 199 435,000 2006 4 168 602

Beckenham 15.0Km 139 442,000 1975 3 200 685

Canning Vale 18.5Km 132 460,000 2009 3 200 279

Kelmscott 32.0Km 124 440,750 1977 3 n.p 822

Maddington 17.7Km 121 430,000 1994 4 138 627

Kenwick 16.8Km 91 435,000 1996 4 145 585

For sales of three bedroom product in the South East sub-region, Byford, Seville Grove and Canning Vale had the youngest product with a median build age ranging from 2006 to 2009. In Byford and Seville Grove, sales were for four bedroom houses on moderate-sized blocks (with a median land area of 540 and 602 square metres respectively). Sales in Canning Vale were for three bedroom, higher density product (micro-houses and units).

Gosnells, Huntingdale, Maddington and Kenwick were showing sales for newer-style houses (median build age ranging from 1988 to 1996), on blocks ranging from 585 to 687 square metres.

Beckenham, Kelmscott, Langford and Mount Nasura were showing sales of older-style product with a median of 3 bedrooms. Block size varies between 685 square metres (Beckenham) to 931 square metres (Mount Nasura).

6.5 High incomeAround 38% of South East sub-region sales were only affordable to high income households. In the suburbs of Oakford and Bedfordale, over 99% of sales were only affordable to households on a high income.

Suburb Number of sales 2013-2015

Proportion of sales only affordable to high

income households

Oakford 83 100.0

Bedfordale 122 99.2

Canning Vale 1366 89.4

Southern River 463 87.9

Harrisdale 400 86.0

Piara Waters 368 84.8

Roleystone 374 80.2


7. Concluding RemarksThis report highlights the challenges for low to moderate income earners in the North West sub-region. Only 14% of sales in the sub-region were affordable to low income households, and almost no sales were affordable to very low income households. The lack of diversity in the region was also highlighted, with over 90% of sales having three or more bedrooms.

Sales undertaken by the Housing Authority and its development partners were more affordable to lower income households, and the findings of this report will help inform the Housing Authority’s future house and land sales programs.

This report complements the Housing Affordability report for the Perth Metropolitan Area, and the other Housing Affordability reports for each of the Perth sub-regions.


October 2016

Documents

A study for the Perth metropolitan South East sub-region area€¦ · household income. Indicative affordability for the December quarter 2015 is shown below.4 Household Income Category