Australian housing affordability at record lows: the real numbers and what first home buyers can actually do

Housing affordability in Australia has never been worse since records began in 1994-95. In Sydney, mortgage repayments on a median-priced house now consume roughly 61.8% of median household income. Brisbane sits near 50%, Adelaide 44%, and Perth around 42%. A median-income household can currently afford only about 14% of homes for sale nationwide. Those numbers are confronting, and pretending otherwise does not help anyone.

The good news is they do not mean buying is impossible. They mean the strategy first home buyers need in 2026 is not the same one their parents used. This article walks through where the pressure is strongest, what actually drove us here, and the specific levers a first home buyer can still pull.

The real numbers, capital by capital

Repayment-to-income ratios matter more than sticker prices. A cheaper city with lower wages can be less affordable than a dearer city with stronger salaries. The 2026 pattern by capital, using median house prices and median household incomes, looks roughly like this:

• Sydney. Median house near $1.7 million, median household income around $112,000. Repayment-to-income ratio approximately 61.8%.
• Melbourne. Median house near $950,000, ratio approximately 43%.
• Brisbane. Median house near $860,000, ratio approximately 50%.
• Adelaide. Median house near $780,000, ratio approximately 44%.
• Perth. Median house near $760,000, ratio approximately 42%.

Rules of thumb such as the 30% mortgage stress line were written when national ratios sat around 25%. Every capital city is now well above that line for the median house. That is why unit prices, regional markets, and government schemes have moved from optional to central in most first home buyer plans.

What actually drove us here

It is easy to blame a single group for the current picture. The honest answer is more structural, and understanding the drivers helps you respond to them.

• Chronic undersupply. Population growth from migration has run well ahead of new dwelling completions for a decade. The National Housing Accord target of 1.2 million new homes by 2029 is currently tracking well below pace, which puts a structural floor under prices in most capital cities.
• Demand-side support. First home buyer schemes, shared-equity programs, and stamp duty concessions all lift buyer capacity. When supply cannot respond quickly, more capacity feeds into prices as well as sales.
• Interest rate normalisation. The 2024 to 2026 rate cycle has reset repayments at a higher level than the low-rate decade that preceded it. Even a stable price implies a much larger annual repayment than it did in 2021.
• Construction cost inflation. NCC 2025 compliance, insurance, materials, and skilled labour have added an estimated $25,000 to $35,000 to the cost of a new build. That flows through to house-and-land pricing and reduces the pace of new supply.

Framing this as systemic matters. It is not the fault of your broker, your lender, your builder, or the agent selling the home next door. Each of them is responding to the market they operate in, and each of them can be a useful partner when you are ready to buy.

Five levers a first home buyer can actually pull

None of these are magic. Each is a real, measurable way to shift the equation in your favour.

Lever 1: Government schemes. Help to Buy takes up to a 40% equity share in your property in exchange for a much smaller loan on your side. On a $700,000 purchase, that means borrowing closer to $420,000 instead of the full amount. The scheme does not solve national affordability, but it can change your personal equation dramatically. First Home Guarantee can also remove the LMI cost with just a 5% deposit, which frees thousands of dollars for other setup costs.

Lever 2: Property type switch. Units have quietly grown faster than houses in most capitals through 2025 and 2026, and the price gap is significant. Sydney units sit near $820,000 against houses at $1.7 million. Melbourne units sit near $620,000, Brisbane units near $580,000. For many first home buyers the tradeoff between a small yard and a much smaller mortgage is worth serious thought.

Lever 3: Location shift. Regional Australia is where much of the practical affordability sits in 2026. Ipswich in Queensland sits near $620,000, Ballarat in Victoria near $560,000, Launceston in Tasmania near $520,000, and Geraldton in Western Australia near $400,000. Regional markets are not risk-free, but they are where many first home buyers now find a workable entry price.

Lever 4: First Home Super Saver. Saving your deposit through concessional super contributions taxes it at 15% instead of your marginal rate. For a household on around $80,000 income, salary sacrificing $15,000 a year can save roughly $2,250 in tax annually, which speeds the timeline to a full deposit without changing take-home lifestyle much at all.

Lever 5: Rentvesting. Buying somewhere affordable while continuing to rent where you actually want to live is a real strategy for many buyers priced out of their preferred suburb. The tax deductibility of investment property costs partially offsets the dual-housing-cost burden. It comes with tradeoffs, including forfeiting owner-occupier grants and concessions, so the numbers need careful modelling before committing.

What not to do

Three things are worth avoiding in the current market.

• Do not try to time the market. Prices have defied confident predictions in nearly every direction for more than a decade. Waiting for a specific level is not a strategy.
• Do not assume a correction is coming. The combination of undersupply, migration, and construction cost inflation puts a structural floor under most capital city prices. A big correction is possible but is not something to plan around.
• Do not measure yourself against your parents. The market they entered no longer exists. The right comparison is not what a 1990s house cost, but what your options actually are today.

What this means for you

National averages are a useful backdrop, but your own numbers are what actually decide whether a plan works.

• Model your borrowing capacity honestly at current assessment rates, not the headline rate.
• Compare at least two scheme paths before locking in a strategy. The right scheme depends on your income, deposit, and target property.
• Look at unit prices and regional prices in your budget range, not only the median house in your preferred suburb.
• Talk to a licensed mortgage broker or your lender directly. This article is general information and does not take your personal situation into account.

Run the numbers

Use these tools to see how the five levers apply to your specific situation:

• Borrowing Power Calculator - see how much you can borrow under current assessment rules before picking a target price.
• Scheme Comparison Tool - compare Help to Buy, First Home Guarantee, and standard purchase paths side by side.
• Grant Stacker - work out which grants and concessions you may be eligible to combine in your state.
• First Home Buyer Quiz - a five minute walkthrough that points you to the schemes and tools most relevant to your circumstances.