Homes in Australia are now less affordable than ever, as property prices soar out of reach and mortgage burdens continue to grow.
A new report from Cotality revealed that the price-to-income ratio, the years needed to save a deposit, and the share of income required for rent all reached record highs in 2025, leaving both buyers and renters struggling.
Despite recent interest rate cuts, servicing a new home loan still consumes about 45 per cent of the median household income. Saving a standard 20 per cent deposit now takes an average of 12 years nationwide, and over a decade in Sydney, Adelaide, Brisbane, and Perth.
Tenants are dedicating a record 33.4 per cent of their income to rent, well above the 20-year average. Affordability has declined most sharply for houses, which are now valued at an average of 8.9 times the typical household income, up from 6.6 five years ago.
Homes outside the capital cities are also becoming less affordable, with prices averaging 8.1 times the annual income, compared to 8.2 in cities. Sydney remains the most expensive and least affordable city, while affordability is worsening in Adelaide, Brisbane, and Perth.
Some improvement has been observed in Canberra, Hobart, and Melbourne, while Darwin is currently the most affordable capital city. The Northern Territory is the only major region where less than 30 per cent of income is required to service a new mortgage.
Eliza Owen, Cotality’s head of research, said a combination of pandemic-era factors and post-pandemic developments has driven the steep decline in housing affordability.
“Australian home values have risen roughly 47.3 per cent since March 2020, adding about $280,000 to the median dwelling value. This surge was fueled by pandemic-era monetary stimulus and record-low interest rates, which boosted borrowing capacity and demand, while housing supply lagged behind household formation,” Owen said.
She added that supply constraints—caused by construction sector insolvencies, rising material costs, and planning bottlenecks—have further limited new housing projects.
“In short, over the past five years, extraordinary demand combined with supply constraints has created a dramatic boom in both home values and rents,” Owen said.
