Housing affordability in Australia hits record low in FY24
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Housing affordability in Australia has fallen to its lowest level on record in the financial year ending June 2024, according to a new report from PropTrack.
Key findings from the report include:
- The Housing Affordability Index dropped to 0.51, the lowest since reporting began in 1994-95
- A median-income household ($112,000) could afford only 14% of homes sold during FY24
- NSW was the least affordable state, with median-income households able to afford just 10% of homes sold
- Western Australia was the most affordable, with median-income households able to afford 26% of homes sold
- Mortgage costs are at their highest since 2008, with average-income households needing to spend about a third of income on repayments for a median-priced home ($690,000)
Paul Ryan, PropTrack senior economist, attributed the decline in affordability to several factors:
“Above average increases in home prices, along with interest rates at the highest level in the past decade, have resulted in the worst housing affordability conditions since our records began,” Ryan said.
He noted that first home buyers and renters looking to enter the market are facing particularly challenging conditions.
“Mortgage rates hit their highest level since 2011, and this has had a drastic impact on housing affordability, reducing borrowing capacities by as much as 30 per cent for new borrowers and increasing repayments for existing borrowers by up to 50 per cent in just two years,” Ryan explained.
While affordability pressures are expected to ease when interest rates fall, possibly within the next six months, Ryan emphasized the need for broader changes:
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“Meaningful improvement โ returning to a period where a typical household could afford half of homes โ requires change on many fronts to build more homes across the country,” he said.
The report underscores the growing challenges in the Australian housing market, particularly for first-time buyers and middle-income households.