The share of homes within reach for an average first-home buyer has fallen sharply across Australia, according to new KPMG analysis.
Today, first-home buyers with an average annual household income of $180,000 can only afford to buy around 12% of the housing stock. In 2019–20, first-home buyers on $150,000 could access about 30% of homes.
Separate affordability gauges from PropTrack and Cotality show a similar picture: median‑income households could afford only around 15% of homes sold in FY25, mortgage serviceability is hovering near 45% of income, and renters are spending more than one‑third of their pay on housing.
KPMG urban economist Terry Rawnsley (pictured) said the profile of first-home buyers has shifted quickly.
“In just five years, the face of first-home buyers has changed dramatically," Rawnsley said. "Median home prices continue to soar, but average first-home buyers aren’t targeting median priced homes.
“Instead, they’re seeking more affordable options, focusing on regional markets or competing for a shrinking pool of apartments and greenfield homes in major cities.”
Home loan data shows first-home buyers also need to earn more than the average household to get into the market. Buyers now need household incomes of around $180,000 to service a typical first-home loan – well above the average household income of about $145,000 for two full-time workers.
Using that $180,000 benchmark, the situation is most acute in New South Wales, where first-home buyers can only afford around 5% of the housing stock – the same share as in 2019–20.
“The fact the pool of affordable properties in NSW remains unchanged over five years despite house price increases suggests it may have reached the limit of unaffordability,” Rawnsley said.
South Australia is currently the most favourable state for first-home buyers, with around 25% of housing stock within reach. But in 2019–20, a first-home buyer household on $150,000 could have purchased more than 75% of homes on the market there.
Western Australia and Queensland now each have roughly a quarter of homes affordable to the average first-home buyer household, while Victoria has about 10%. In 2019–20, an average first-home buyer household on $150,000 could have bought around 60% of homes in Queensland and Western Australia, and 15% in Victoria.
KPMG’s analysis, drawing on ABS and UDIA data, shows how rapidly price growth has eroded accessibility. Between 2019–20 and 2024–25, median home prices rose by around 40% in New South Wales and 20% in Victoria, about 80% in Queensland and South Australia, and roughly 75% in Western Australia.
“The sharp rise in house prices across WA, QLD, and SA over the past five years has significantly reduced the share of the market accessible to first-home buyers and meant these regions now face the same challenges as traditionally unaffordable markets of NSW and Victoria,” Rawnsley said.
Across Australia overall, the share of homes within budget for the average first-home buyer has fallen from about 30% in 2019–20 to 12% in 2024–25 – a 60% drop.
Rawnsley said the supply side of the market must be judged not only by the number of new homes, but also by the price bands they fall into.
“Housing supply needs to be considered not just in terms of absolute numbers of new homes being delivered, but also at what price point they are being delivered,” Rawnsley said.
Over the past three years, the amount of new housing supply priced at $800,000 or lower has steadily fallen. In 2024–25, approximately 12% of new dwellings were within this price range, compared with about one‑third in 2022–23.
“Rising construction costs and higher interest rates have reshaped the housing market," Rawnsley said. "Since 2022, a wave of builder insolvencies has pushed developers to pivot toward premium, high-end projects. These dwellings may be fewer in number, but they’re easier to sell and carry lower financial risk, marking a clear shift away from affordable housing supply.
“Easing of construction costs and cheaper capital combined with the raft of planning changes occurring at the state and federal level are now helping boost housing supply. But more work is needed to target the supply of affordable housing to really help first home buyers.”
PropTrack’s Angus Moore likewise warns that, even with recent RBA rate cuts and slightly higher incomes, affordability “remains near record lows”, while Cotality’s Eliza Owen notes that house values have climbed roughly 47% since 2020, pushing mortgage and rental burdens to multi‑decade highs.
KPMG’s modelling assumes a typical first-home buyer household:
Based on those assumptions, the average purchase price for a first home has climbed from roughly $560,000 to $760,000 in five years – yet the share of homes within budget has dropped from 30% to 12%.
KPMG notes that its approach reflects average values, and that lower‑income buyers can still secure a property under favourable market conditions. But the national and state‑level figures, combined with other affordability indices, underline how much harder it has become for an “average” first-home buyer to find something affordable.
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