Falling property values haven’t made homes more affordable, with higher interest rates and larger loans more than cancelling out price falls for buyers on typical incomes, according to new analysis from Compare the Market.
The comparison site found that couples earning two average salaries could afford a median-priced property in 38.61% of suburbs this year, down from 53.63% in 2025. In most cases, the affordable option was a unit.
The analysis looked at Cotality median values across 3,363 suburbs and compared estimated repayments with median earnings, assuming an 80% loan-to-value ratio. A property was counted as affordable if repayments came to no more than 30% of household income.
Compare the Market property expert Andrew Winter (pictured) said the result runs counter to what buyers might expect.
“Property values are coming down, which should make homes more affordable, but higher interest rates are wiping out those gains by squeezing borrowing power,” he said.
Cotality data shows national home values fell 1.2% in October, a seventh consecutive monthly decline. Meanwhile, rate pressure increased this month when the Reserve Bank lifted the cash rate to 4.85%, its fifth rise this year and the highest level since 2008.
Brisbane was the least affordable capital for couples. Only 12.76% of Greater Brisbane suburbs were within reach, down from 43.43% a year earlier. Perth also fell sharply, from 60.66% to 22.11%.
Adelaide, at 14.95%, and Sydney, at 16.88%, were also among the least affordable capitals. Darwin remained the most accessible, with 90.48% of suburbs affordable for couples despite a small decline.
Winter said the average home loan is now about $731,000. At a 6.25% interest rate, that means monthly repayments of around $4,502. To keep repayments under the 30% threshold, a household would need a gross income of roughly $15,000 a month.
He warned that couples need to understand their borrowing capacity, as “there’s very little wiggle room between your income and your repayments” if one partner loses their job or takes a career break.
Single buyers on an average salary could afford just 2.83% of suburbs, less than half the 6.24% recorded last year.
Winter said singles are often competing for units with couples who have been priced out of houses, while the supply of homes within reach of a single income is very limited.
Sellers and buyers out of step
Winter said low auction clearance rates suggest sellers’ price expectations haven’t kept pace with what buyers can afford, and that buyers are wary of overpaying and ending up in negative equity.
He said “realistic price expectations could help bring buyers and sellers back together.”
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