WA borrowers have the bleakest outlook in the nation. Here’s why

West Australians have the lowest level of borrower sentiment in the nation, according to the latest survey from the Mortgage and Finance Association of Australia.

Housing supply and limited availability of suitable properties have been cited as the key drivers of low sentiment in the state, while the current interest rate environment is also a major factor.

In the MFAA’s market sentiment survey, taken from February 2 to February 27 and including the recent cash rate rise to 3.85 per cent, WA members reported negative sentiment levels at 28.2 per cent compared to Queensland’s rate of 21.1 per cent.

Sonam Capital executive director Wayne McCarthy, who was one of the WA mortgage brokers surveyed, believes supply has become a real issue for the state.

“I didn’t expect us to be that far down, but when you do consider it, it is probably not that surprising,” he said.

“I think what’s really driving the negative sentiment in WA is the market just feels gridlocked at the moment.

“If you look at the people who own a home in Perth, most of them would have got on the ladder before the uplift in property values in the last four years.

“So you would think people are pretty comfortable and happy, but it is the opposite, and I think it is people feeling stuck where they are that is probably driving that.”

According to the latest figure from the Real Estate Industry of WA, there were 3355 properties for sale in the Perth metropolitan area at the end of last week, an increase of 1.9 per cent compared to the previous week.

However, REIWA statistics showed that figure was 21.9 per cent higher than four weeks ago – but 34.1 per cent lower than levels from 12 months ago.

McCarthy said while the traditional way of upgrading a home meant selling a property in order to afford the next one, the dwindling housing supply meant mortgage brokers had to become more creative for their customers.

“We are seeing a lot more customers inquiring about bridging loans,” he said.

“So that only really works if you do have a good amount of equity in your current home, but you can then go and put an offer in that place, and then certain lenders we work with will basically give you 12 months to sell your old place.

“Historically, there was always a risk around selling your old place, because you weren’t sure about how the market would take it.

“But I think now, because of that lack of stock, people aren’t that worried about them having to go back and sell their old home once they’ve moved into the new one. And it means they’re only moving once as well.”

MFAA chief executive Anja Pannek was not surprised by the weakening borrower confidence in WA.

“Western Australia has got one of the fastest moving property markets in the country,” she said.

“So in terms of time on the market for properties from a home-owner perspective, that’s probably a positive, but from a borrower perspective, or looking to get into the market, you’re faced with some real challenges.”

Pannek said while customer sentiment was lowest in WA, the latest survey identified housing supply as a major concern across the country.

“The number one challenge is whatever can be done to address housing supply at the national and also at the state level. And it’s all levels of government that are required to weigh into that,” she said.

“The outlook isn’t necessarily rosy when it comes to housing supply, What we’re really encouraging our members to do is to proactively reach out to their existing clients, because even if you are an existing borrower, you still have a lot more options other than just to refinance.”