Australian housing affordability hits worst level since records began

Housing affordability in Australia has plunged to its lowest point since monitoring began in 1996, according to new data from the Real Estate Institute of Australia (REIA).

The proportion of median family income needed for average loan repayments reached 48.6 per cent in the September quarter of 2024, rising 0.4 percentage points from the previous quarter.

REIA President Leanne Pilkington said families were facing mounting pressure from rising mortgage sizes and high interest rates.

“The figures underscore the persistent challenges faced by families striving to enter the housing market or manage their existing commitments. Rising mortgage sizes coupled with stagnant variable interest rates continue to push affordability further out of reach,” she said.

The rental market also deteriorated, with the proportion of income required for median rents climbing to 24.9 per cent.

While Victoria and Queensland saw slight improvements, New South Wales experienced the sharpest decline in rental affordability, dropping 1.0 percentage points.

First-home buyer loan commitments fell 3.9 per cent over the quarter but remained 9.4 per cent higher than the previous year.

The average loan size for first-home buyers increased to $536,561, up 0.8 per cent over the quarter and 6.7 per cent annually.

Queensland recorded the highest increase in average loan size at 3.0 per cent, while New South Wales, Tasmania and the Australian Capital Territory saw decreases.

Despite the cash rate holding at 4.35 per cent and stable quarterly average standard variable rates of 8.8 per cent, affordability continues to worsen.

The three-year fixed interest rate dropped slightly by 0.5 percentage points to 6.3 per cent, providing little relief for borrowers.

“The data reveals the need for targeted policy interventions to address housing supply and affordability issues. Without meaningful action, homeownership will remain an increasingly elusive goal for many Australians,” Pilkington said.