A typical household can now afford only around one in ten properties sold nationally, with mortgage repayments relative to income at their highest since 1989, new research shows.
Housing affordability has just hit its lowest point on record, even though prices have been falling for five straight months. New research shows a household on a typical income can now afford to buy only around one in every ten properties sold across the country over the past financial year. Mortgage repayments, measured against incomes, are sitting at their highest share since 1989. For first home buyers, the headline is a reminder that a softer market is not the same thing as an affordable one.
National dwelling prices fell approximately 0.9% in August, the fifth consecutive monthly decline, with the combined capital cities easing further than regional areas. The national median dwelling price is now around $910,000 according to Cotality (formerly CoreLogic) data. On paper, five months of falls should be good news for anyone trying to save a deposit and get into the market.
The affordability data tells a more complicated story. Despite the price falls, the share of properties a typical household could actually afford to buy has dropped to a record low. Slower income growth, several years of elevated interest rates, and a large gap that built up between prices and wages over recent years mean a modest price correction has not been enough to undo the underlying squeeze.
The research also breaks the picture down state by state, and the gap between the best and worst performers is wide:
A gap that size means where you are prepared to buy, not just when, can materially change what is realistically within reach. Two buyers with identical incomes and deposits can face very different odds depending on which state, or even which part of a state, they are searching in.
Economists point to a structural mismatch rather than a temporary blip. Housing supply has lagged population growth for years, and several rounds of interest rate rises since 2022 have pushed mortgage repayments up faster than most households' incomes have grown. NAB's chief economist described the broader housing problem as one that will take "a generation" to resolve through supply alone, a view echoed across the banking sector. A few months of price softening does not undo that gap, particularly while borrowing costs remain elevated.
None of this means the market is closed to first home buyers. It does mean that relying on prices to "become affordable" on their own may be a longer wait than it looks from the headlines, and that buyers may get more out of using the tools and schemes already available today.
A record-low affordability reading is discouraging to read, but the practical response is fairly concrete:
A mortgage broker or lender can assess your personal financial situation and talk through how these market conditions apply to your own borrowing capacity. These figures describe national and state-level trends, not a forecast for any individual buyer's circumstances.
Use these tools to see how the current affordability picture applies to your own situation, rather than relying on national averages: