A Victorian household earning a median wage could only afford less than 20 per cent of homes sold in the state last year. Middle picture: NewsWire/David Crosling.
The typical Victorian household can afford less than a fifth of homes hitting the market across the state.
PropTrack’s Housing Affordability Report, released today, shows those earning a $120,000 median wage could only comfortably buy 18 per cent of the Victorian homes that changed hands in the past financial year.
It’s a slight improvement on the 13 per cent recorded in the 2023-2024 financial year.
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Mortgage repayments on a typical new loan have eased to 32 per cent of a household’s average household income, down from a 35.5 per cent peak.
However an average-income household saving 20 per cent of their earnings would still take 5.6 years to put away enough for the $143,000 deposit to buy a $715,000 house with a standard 20 per cent deposit.
While this is less than the nearly-seven year saving period from late 2021, it still represents a significant barrier for many aspiring homeowners.
Victoria’s improved housing affordability in the last financial year reflected falling interest rates, growing wages and “stagnant” home prices.
But the report noted Melbourne home values have been growing consistently in recent months, and the city’s median house price topped $1m in October.
Victorians were priced out of most homes across the state, based on typical wages against the prices of homes for sale in the 2024-2025 financial year.
PropTrack economist Angus Moore says housing affordability in Victoria in 2026 hinges on factors including further interest-rate cuts.
Victoria’s improved affordability makes it Australia’s second-most affordable state behind WA.
REA Group senior economist Angus Moore said Victoria’s housing affordability faced one of two paths in 2026, depending if there were any rate cuts and how fast home prices grew.
Mr Moore said the high number of people who had left Victoria during the Covid pandemic and the Victorian government building more homes per person than other states had played a role in property prices remaining stagnant since 2022, inadvertently improving affordability.
The Jacinta Allan-led government is aiming for 800,000 homes to be built across the state by 2034.
The report stated that low-income households, those earning $72,000 a year or less, could only afford 3 per cent of homes which sold across Australia last year.
Victoria is now the second-most affordable state in the country, behind Western Australia. Picture: David Caird.
However, Australian Bureau of Statistics figures show just 60,000 new Victorian dwellings were delivered in 2024, well below the 80,000 new dwellings a year needed to realise the goal.
Mr Moore added that building more homes in places where people wanted to live would help to keep housing affordable, but would not completely solve the problem.
“Clearly the government has a role there, that is mostly a state and local government issue,” Mr Moore said.
But he said the federal government could assist by supporting infrastructure programs and incentives around building homes.
Property Investment Professionals of Australia says the nation faces a “massive challenge” in helping more low-income earners to buy a home.
In the 2023-24 and 2024-25 financial years, Victoria’s median sale price remained largely unchanged, helping falling mortgage costs and growing wages to boost affordability.
Property Investment Professionals of Australia board chair and Melbourne-based buyers’ advocate Cate Bakos said the Allan government’s proposal to ban homes from going to auction, unless their owners disclosed a reserve price seven days in advance, would help give buyers clarity — but would otherwise be unlikely to improve affordability.
Ms Bakos said most first-time buyers opted for mortgage insurance rather than waiting more than five years to save up a 20 per cent deposit.
“You’re not going to sit there for six years letting the market outpace you,” she added.
Ms Bakos described the federal government’s expanded 5 per cent scheme for first-home buyers, introduced in October, as an affordability “game-changer” – although she said more needed to be done to help low-income earners afford a home.
The PropTrack report showed Australian households on a yearly income of $72,000 or less could only afford 3 per cent of homes sold last year, essentially locking them out of the market.
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