Housing affordability in Australia has deteriorated to its worst level since records began in 1995, according to the latest PropTrack report. A median-income household earning about $112,000 can now afford just 14% of homes sold, down from 43% three years ago. First home buyers increasingly rely on wealthy families or high-income jobs to enter the market.
The report shows stark regional disparities: affordability is worst in New South Wales (10% of homes affordable) and Tasmania (9%), while Western Australia is the most affordable state (26%). For a median-income renting household, only 11% of homes are affordable, compared to 34% for households with existing mortgages.
Paul Ryan, senior economist at PropTrack, said high interest rates and prices have created an acute affordability issue. 'The unspoken message is that wealth matters enormously in the Australian housing market now, in a way it didn't a generation ago,' he said. Households earning $50,000 a year can afford just 3% of homes, effectively locking out the bottom 20% of income earners.
Angus, a 30-year-old doctor looking to buy with his social worker partner, said they have compromised on property type and location. Despite saving for years, high rent ($1,200 per month) has made it difficult. 'We've gone from a house down to a unit, weighing up whether we have a garden,' he said, acknowledging their privileged position.
Economist Saul Eslake blamed '60 years of bad policies' that inflated demand through tax breaks, shared equity schemes, and stamp duty concessions while constraining supply. 'Stop needlessly inflating demand by scrapping all the programs that needlessly inflate demand, and stop constraining supply,' he urged. Eslake noted political inaction stems from numbers: 11 million homeowners and 2 million investors versus 100,000 first-time buyers annually.
