How the latest RBA interest rate rise will impact WA, the most mortgaged state in Australia

Western Australia is by far the most mortgaged state in Australia, but the latest rate hike doesn’t mean it’s all doom and gloom.

Yesterday’s decision by the Reserve Bank of Australia to raise the cash rate target to 2.35 percent means the average Western Australian household will pay an extra $621 on their mortgage each month.

However, that’s below the national average of $653, because WA houses tend to be cheaper.

According to the most recent census data, Western Australians paid $21 less on their mortgage each month in August last year, compared to the rest of the country.

But WA’s low wage growth shows where a key source of pain lies: that each year, people’s wages tend to fall further in real terms, leaving bills and mortgages to take up a larger proportion of their budget. .

And that’s likely to leave local businesses hurt.

WA’s Most Mortgaged Suburbs

This map shows what proportion of homes in each Perth suburb were mortgaged, according to the most recent census.

At the top of the list are new suburbs like Brabham (82.7 per cent), Piara Waters (74.7 per cent) and Dayton (72.3 per cent) and at the other end of the scale are places like Bentley and Mandurah (both with 16.1 percent). ), and Murdoch (17.9 percent).

Those suburbs with more mortgages will likely see residents with less to spend, hurting some businesses.

But Bankwest Curtin Economics Center researcher Silvia Salazar said WA was generally in a better position than the rest of the country.

Silvia Salazar says Western Australians are better off than most people in the eastern states because of the lower cost of real estate.(ABC News: Keane Bourke)

“WA has had some price increases in terms of homes in the last couple of years…but not as much as the eastern states,” he said.

“So even though there are more people who got mortgages during that period, at a higher value than…ever before, they’re still better off.”

Bookstore suffers drop in sales

In Aveley, part of Perth’s mortgage belt where about two-thirds of homes are mortgaged, Madhi Chavoshi runs a Persian bookstore.

Mahdi Chavoshi leans on a stack of books
Mahdi Chavoshi says it is getting harder and harder to make ends meet.(ABC News: Keane Bourke)

A few years ago, he said the store, which sells online and in person, could move around $15,000 worth of books a week. Now it’s down to just a fraction of that.

“Our business is down these days and I don’t know why,” he said.

Chavoshi suggested that rising expenses were putting a greater burden on people’s shoulders.

With your own mortgage rising as well, making ends meet is becoming increasingly difficult.

Now he has also started working as a photographer and has qualified as a disability support worker.

“Last night I just got a letter from the bank saying I have to pay $600 more per month [for my mortgage]Chavoshi said.

“I do what I can, I have to keep my mortgage up there.”

Tough times ahead as households rein in spending

Dr. Salazar said that as rising interest rates continued to bite and people reined in their spending, businesses like Madhi’s are likely to only have a harder time.

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