Overview
- Mortgage burden: Despite recent rate dips, the cost of servicing a new loan is stubbornly high, requiring 45% of median household income.
- Deposit barrier: Saving a standard 20% deposit nationally takes nearly 12 years, and now over a decade in four major capital cities, Sydney, Adelaide, Brisbane, and Perth.
- Rental squeeze: Tenants are now dedicating a record 33.4% of their income to rent, significantly exceeding the 20-year average.
- Houses vs. units: Affordability has deteriorated most sharply for houses, where the median house value is now 8.9 times the average income (up from 6.6 five years ago).
- Regional convergence: Regional affordability has nearly matched capitals on the value-to-income ratio (8.1 vs. 8.2), erasing what was once a more affordable alternative for buyers.
- Market differences: Sydney remains the most expensive and unaffordable city, while conditions have severely deteriorated across Adelaide, Brisbane and Perth.
- Pockets of relief: Canberra, Hobart, Melbourne show mild improvements in affordability, but most areas continue to face mounting entry barriers and rising rental costs.
- NT most affordable: Darwin is the most affordable of the capital cities to buy in. Darwin and the rest of the Northern Territory are the only major regions where less than 30% of income is required to service a new mortgage.
Australia’s housing affordability has hit new lows over the past five years, with home values drifting even further out of reach and the share of income needed to pay a mortgage has nearly doubled, according to Cotality’s Housing Affordability Report.
The report shows three out of four national metrics (price-to-income ratio, years required to save a deposit, and the share of income needed to rent) have all hit record highs in 2025, signalling that both buying and renting have reached unsustainable levels for many Australians.
Affordability meter
Source: Cotality, ANU
Cotality Head of Research Eliza Owen said a confluence of factors over the pandemic and post-pandemic period years have driven major deterioration in housing affordability.
“Australian home values have climbed roughly 47.3% since March 2020, an extraordinary rise that added about $280,000 to the median dwelling value. This surge was fuelled by pandemic-era monetary stimulus and record-low interest rates that supercharged borrowing capacity and demand, even as housing supply lagged well behind household formation.”
“Supply-side limitations have also compound these demand pressures with construction sector insolvencies, rising material costs, and planning bottlenecks restrictednew housing delivery.
“In short, the past five years combined extraordinary demand drivers withsupply constraints, creating an extraordinary boom in both home values and rents,” she said.
