Aussies earning a typical income will only be able to afford about one in seven of the country’s homes as experts warn housing affordability remains close to record lows, despite recent interest rate cuts taking some of the edge off repayments.
PropTrack’s latest Housing Affordability Index released Friday showed there has been little material improvement in affordability this year and prices remain drastically less affordable than during the height of the pandemic in 2021.
Part of the reason is that price increases have negated many of the benefits of cheaper loans.
PropTrack noted that a household earning the national median-income of $118,000 a year could afford just 15 per cent of all homes sold in the 2025 financial year.
NSW and South Australian households faced the most challenging affordability in the country, with a median-income household in those states able to afford just 11 per cent and 10 per cent of homes, respectively.
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Home owners in NSW pay the highest mortgages in the country. Picture: iStock
Mortgage costs for NSW homeowners, measured as a proportion of average income, also remain higher now than at any time since the 1990s. They typically require about 38 per cent of the yearly income of a household on the typical state income.
It was a similar picture nationally: an average-income Australian household would need to spend a third of their income (32.7 per cent) on mortgage repayments to buy a median-priced home. That’s a slight drop from 2023, but still high by historical standards.
PropTrack economist Angus Moore said home seekers across the country were experiencing “ challenging conditions”, with home prices growing and interest rates still at “very high levels” despite this year’s interest rate cuts.
“Higher mortgage costs and much higher home prices mean the cost of servicing a mortgage relative to incomes has grown far faster,” he said.
For a median priced home in NSW, homeowners are spending just under 38 per cent of their yearly income on mortgage repayments.
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Greater housing supply would moderate home prices. Picture: Jonathan Ng
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With the state’s median household income sitting at $120,000, that is a total of $45,600 a year for homeowners, on top of the inflated price of goods and services.
While NSW residents are paying more on their mortgage repayments than anywhere else in the country, PropTrack found that other states have surpassed them in some measures.
NSW is not the least-affordable state for mortgages as a proportion of income, with South Australian households spending an even higher 40 per cent of their salaries on home loan repayments.
South Aussies also take the longest time to save a 20 per cent deposit for a median-priced home at 7.2 years, thanks to surging prices which have brought housing affordability to a record low for the state, according to PropTrack.
NSW ranked second in this measure, with buyers needing to save for the equivalent of 6.8 years to put a deposit down on a median-priced home, compared to 6.5 years in 2023-24, PropTrack reports.
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South Australians are contributing the highest proportion of their income to mortgage repayments, according to PropTrack.
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In Queensland, mortgage repayments remain the highest they have been in 15 years.
Meanwhile, Western Australia was ranked as Australia’s most affordable state, though mortgage repayments have returned to the same level as in 2011, when the state’s mining boom was driving up property prices.
Victoria was an outlier in that it improved in affordability over the year, with falling mortgage rates and growing wages making more homes affordable for more households.
NSW, conversely was ranked overall by PropTrack as the most unaffordable property market.
In NSW, home seekers earning the average income can only afford 11 per cent of the state’s properties, with Mr Moore saying interest rate cuts have been counteracted by rising property prices.
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PropTrack economist Angus Moore says affordability will remain a challenge for home buyers.
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Conditions remain particularly challenging for lower income buyers, who could only afford about 3 per cent of all the homes sold nationally in the past year and require longer to save for a deposit.
While rate cuts and growing incomes over the last year have actually marginally improved affordability, Mr Moore said this has largely been offset by the fact home prices have been growing as well.
Mr Moore said it was rare for NSW to be eclipsed in terms of unaffordability.
“NSW is obviously driven by Sydney – a very expensive housing market – and so it is the least affordable state in Australia as a result,” he said.
“It may not be every single year, but New South Wales is usually the least affordable state in Australia.”
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Low-income households in NSW could only afford about 3 per cent of all the homes sold nationally in the past year. Picture: NCA NewsWire/Nicholas Eagar.
On top of mortgage repayments, the consumer price index rose to 3.8 per cent in October, an inflationary high not seen since June 2024.
Mr Moore said in 2026, he expected to see affordability to continue to remain challenging Australia-wide.
“We’re expecting home prices will still grow next year across the country, and while incomes will be growing too, and we might see a rate cut, the balance between those things is unlikely to materially improve affordability,” he said.
“We might see small improvements, but probably not getting back to the sort of levels we were a few years ago.”
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