Australia’s most affordable housing is experiencing stronger price growth than typical properties, with the bottom quartile of the market outperforming across most capital cities.
“Nationally, affordable houses (25th percentile pricing) are growing at 8.3% annually compared to 8% for typical properties, whilst affordable units are surging at 7.1% versus 6.3% for the broader unit market,” said Nerida Conisbee (pictured), chief economist at Ray White.
Sydney leads the affordable house outperformance, with entry-level properties at $1.13 million growing 7.2% annually – nearly a full percentage point ahead of typical Sydney houses at 6.3%. Regional Queensland’s affordable houses surged 13.8% annually compared to 11.6% for typical properties, a 2.2 percentage point differential.
Recent rate cuts and lower mortgage rates are expected to further boost first-home buyer activity and affordability, according to the PropTrack CommBank First-Home Buyer Report 2025. The Reserve Bank has delivered three rate cuts in 2025, lowering the cash rate to 3.6% and making more homes accessible for new buyers.
The surge in affordable housing coincides with an unprecedented expansion of first-home buyer support schemes.
“The federal government’s decision to bring forward and significantly expand the First Home Buyer Guarantee scheme to October 2025...has removed key barriers for entry-level buyers,” Conisbee said.
The expanded scheme eliminates income caps and raises property price thresholds, allowing first-home buyers to purchase with just a 5% deposit and avoid lenders mortgage insurance.
Treasury estimates the uncapped scheme will issue an additional 20,000 guarantees in its first year, directly targeting the affordable segment.
“These layered incentives create powerful demand drivers specifically targeting properties in the affordable tier,” Conisbee said.
Not all markets are seeing affordable outperformance.
“Melbourne affordable houses are growing at 4.2% annually, actually lagging behind typical Melbourne properties at 4.3% – the only major city where this occurs,” Conisbee said. “Similarly, Canberra affordable houses trail typical properties by 0.2 percentage points.”
For units, both cities show identical growth rates between affordable and typical properties, likely reflecting more responsive supply.
The limited stock of affordable housing is intensifying competition among entry-level buyers.
“With median house prices now approaching $1 million nationally, the pool of sub-$800,000 properties has shrunk dramatically, concentrating demand among remaining affordable options,” Conisbee said.
Unit markets are showing even stronger affordable outperformance, with Perth leading at 16.5 per cent annual growth for affordable units compared to 14.5 per cent for typical apartments.
“The combination of government incentives, constrained supply, and demographic pressures from millennials entering peak home-buying years is creating a structural shift in how different price segments perform,” Conisbee said.
“This trend appears likely to persist while government support remains targeted at first home buyers and affordable housing supply constraints continue.”
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