Housing affordability in Australia hits record low, PropTrack report reveals

PropTrack’s annual Housing Affordability Report has found that housing affordability in Australia has reached its worst level on record, driven by high mortgage rates and rising home prices.

Key findings from the report include:

A median-income household ($112,000) can now afford only 14% of homes sold in FY2023-24, down from 43% three years ago
NSW, Tasmania, and Victoria are the least affordable states
In NSW, a median-income household can afford only 10% of homes sold
South Australia saw the largest drop in affordability, from 49% in 2020-21 to 16% in 2023-24
A median-income renting household could afford only 11% of homes sold over the past year

Paul Ryan, senior economist at PropTrack, commented on the findings:

“Housing affordability is a critical issue affecting Australians in 2024,” Ryan said.

“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 highlighted the impact on first-home buyers and renters:

“First-home buyers, or renters looking to buy, who often rely on significant borrowing to enter the housing market are facing incredibly stretched affordability,” he said.

Other key points from the report:

Current mortgage costs are comparable to those seen in 2008
National home prices have risen for 20 consecutive months, up 6.6% over FY23-24
Low-income households have been effectively locked out of the market
An average-income household needs 5.5 years to save a 20% deposit on a median-priced home
Western Australia remains the most affordable state

Ryan suggested that while affordability may improve when interest rates fall, significant changes are needed to address the issue:

“Meaningful improvement – returning to a period where a typical household could afford half of homes – requires change on many fronts to build more homes across the country,” he concluded.