On all measures, housing affordability is at an all-time worst.
That’s the damning revelation made in PropTrack’s 2025 Housing Affordability Report, released today.
According to the report, households across the income distribution can afford fewer homes than this time last year, when the situation was already pretty dire.
The result of this is South Australia is now the second-least affordable state in the Lucky Country, behind only New South Wales.
In what will likely come as no surprise to South Australians in the throes of a cost-of-living crisis, a median-income household (those earning almost $97,000) could afford to buy just 10 per cent of all homes sold in the 2024-25 financial year without putting themselves into financial hardship.
That means spending no more than 30 per cent of their income on mortgage repayments.
The majority of average income-earning households are currently in mortgage stress, as home value rises outpace wages. Picture: Brenton Edwards
The result was even more dire for those already struggling to make ends meet, with those households at the 30th percentile income-wise able to afford less than 5 per cent of all homes sold during that period.
You’d think that 80th percentile income-earning families would be able to buy 80 per cent of that stock pool, right?
In reality, those high earners could afford just over 60 per cent of them, highlighting the growing disparity between house prices and wages.
It gets worse.
Mortgage repayments for a median-priced home now equate to 40 per cent of the average household income in June, and they were at a record-high 41 per cent in March – the highest in history.
In Sydney, it’s just under 38 per cent of the average income.
REA Group senior economist Angus Moore. Supplied
Report author, REA Group senior economist Angus Moore said the wage disparity across the states was particularly evident when you look at South Australia.
“Adelaide has, much like Brisbane and Perth, seen enormous growth in home prices,” he said.
“Over the last five years or so, home prices have effectively doubled.
“That means the cost of servicing a mortgage is obviously much higher than it used to be, and that’s coupled with the fact that South Australia is a lower income state than New South Wales, Victoria, Queensland and WA.
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“That makes any given home price much less affordable for a typical income household, which earns about $97,000 a year in South Australia, versus say Victoria, which is $120,000.
“There’s a reasonable gap there and that means the cost of servicing a mortgage in South Australia is very high relative to its history and even to other states.
“This rapid growth in home prices has not been matched by growth in incomes, which is true for all states, but perhaps particularly challenging for South Australia.”
As tough as all of that is for homeowners, it’s even worse for househunters.
Today, it takes an average-income household 7.2 years to save a 20 per cent deposit on a median-priced home.
This is at a time most of them would be paying record-high rental prices.
SA homeowners are feeling the pinch. Picture: Stephen Brookes
But Mr Moore said this house price growth could slow over the next 12 months, albeit not right away due to pressure from low stock availability.
“South Australia, like New South Wales, does typically see more people moving out than moving in, but that wasn’t true during the pandemic,” he said.
“We saw a lot of people moving into South Australia, which obviously drove significant housing demand, and is a big part of the story for why we’ve seen such strong home price growth.
“That is starting to fade.
“We’re not seeing as strong interstate migration into South Australia as we were three or four years ago.
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“So, much like affordability, we’d expect that to start to temper the pace of home price growth.”
The report comes after another one earlier this month showed more SA buyers were in mortgage stress than ever before, with the flow-on effects of this detrimental.
Digital Finance Analytics data scientist and banking analyst Martin North said high-growth suburbs were seeing highest stress levels defined by cashflow, because of a concentration of new purchasers, especially first-time buyers, plus home and land packages which tend to have high a loan-to-value ratio.
“Stress shows households have cash flow pressure, so they cut back on spending, and hunker down, leading to lower economic activity,” he said.
Digital Finance Analytics CEO and founder Martin North. Pic: Hollie Adams/The Australian
“If this continues some people may eventually default on their mortgage, but this process takes a long time, and banks try to “extend and pretend” by extending loan terms or offering interest only.
“It also means more people working more jobs, more social pressure, and eventually higher crime and family violence.
“Rental stress is way worse than mortgage stress.
“This is the bigger immediate issue given low rental supply and rising rents.”
– with Tim McIntyre
English (US) · 