Housing Affordability – Part 2

There has been much discussion lately about housing affordability and in particular with key workers.

For the purposes of this blog post, we will focus on key workers as being nurses, teachers, police, firefighters and paramedics – all of which are important roles for our community and many of those roles tend to be located in some of Perth’s more expensive suburbs.

So how far should a key worker commute to work, just to serve the community in which you live?

Those of you who have been following the PropertyESP blog will know we recently undertook a detailed analysis of the suburbs surrounding the new Fiona Stanley Hospital, so let’s start there.

Example 1: A nurse working at Fiona Stanley Hospital

According to the industrial award for nurses working at Fiona Stanley Hospital, a registered nurse can expect an annual salary of around $84,000 after 8 years of continued work and training. This would give a couple who were both registered nurses a household income of around $167,800. Assuming no dependents, no other commitments and credit / store cards to the value of $20,000, they could borrow around $1,000,000 to finance the purchase of a house.

Could they afford to live in Murdoch, where Fiona Stanley Hospital is located?

Yes, they could – the median house price of $770,000 is comfortably within budget. However, with only 13 house sales in Murdoch in the quarter to September 2015 they might find it hard to find one. The good news for our nursing household is that there were many more sales (106 to be exact) in a neighbouring suburb (Kardinya) and it’s still within their budget and only a short 5 minute drive to work.

But what if they decided they wanted to base their borrowing on one income? The State Government is foreshadowing job cuts, the economists are predicting an interest rate hike later this year and after 8 years in the workforce our nursing couple household may want to think about starting a family. Basing their purchase on a single income would be sensible (and used to be what families did).

A single nurse’s income of $84,000 would give them a budget of $428,000 for a house. With that budget, it gets much harder for our nursing household to find a property.

Using REIWA’s Interactive Map showing sales information for the suburbs, we were looking as far afield as Kenwick and Gosnells (around a 20 minute drive away with no traffic) to find suburbs with a median house price that was within budget. And if they opted for a house priced in the lower quartile for the suburb, they could shave 5 minutes from their commute with properties in Thornlie and Langford.

We have looked at other occupations including teachers, firefighters and police and the same principle applies to all of these occupations.

This leads to the argument that diversity of product in the market place is essential in order to provide choice within a variety of budgets.

If you are interested in viewing the rest of our case studies – then please contact us at info@propertyesp.com.au.

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PropertyESP is a group of property experts – analysts, marketers, PR people, sales experts – who understand Australia’s obsession with property and love to share that knowledge. At PropertyESP, we appreciate property and exploring what is being sold and how that is changing over time. We like to get behind the trends to see what people are buying and selling at the local level. We share our knowledge with our clients so they can make informed decisions when developing, buying and selling property. We believe that better understanding leads to better decision-making.

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