Australia’s housing affordability has fallen to its lowest level in decades, with buying and renting pressures intensifying across almost every major metric, according to Cotality’s latest Housing Affordability Report.
Three out of four national indicators – the dwelling value-to-income ratio, years needed to save a deposit, and the portion of income required to rent – hit series highs in 2025. Servicing a new mortgage now absorbs 45% of median household income, while saving a standard 20% deposit takes around 11 years.
Renters are also under strain, with affordability at a record 33.4% of income.
Eliza Owen (pictured), head of research at Cotality (formerly CoreLogic), said a combination of powerful demand drivers and supply shortages over the past five years has pushed housing further out of reach.
“Australian home values have climbed roughly 47.3% since March 2020, an extraordinary rise that added about $280,000 to the median dwelling value," Owen said.
"This surge was fuelled by pandemic-era monetary stimulus and record-low interest rates that supercharged borrowing capacity and demand, even as housing supply lagged well behind household formation.”
Supply constraints have compounded the pressure, with construction insolvencies, rising material costs and planning bottlenecks limiting new dwelling completions.
Affordability has deteriorated most sharply for houses, with the median house value now 8.9 times the median income, up from 6.6 five years ago. Saving a 20% house deposit takes almost 12 years, while unit deposits take around nine years.
The share of income needed to service a new mortgage has almost doubled for houses – from 26.5% to 50.8% – and risen from 23.9% to 36.8% for units. Rent costs have also risen from roughly one-quarter to one-third of household income.
For mortgage brokers, this is translating into tighter borrowing capacity, greater reliance on parental assistance and shared-equity pathways, and growing interest in units and townhouses over detached homes.
Regional affordability has converged with the capitals, ending the long-held assumption that buyers priced out of cities can easily relocate.
The dwelling value-to-income ratio is now 8.2 in the capitals and 8.1 in regional Australia, driven by remote work, elevated migration, and sustained demand for lifestyle markets.
Over the past five years, regional values rose 72.2%, compared with 48.3% in the combined capitals.
Sydney remains Australia’s most unaffordable housing market. Saving a 20% deposit takes 13.3 years, while the rest of NSW requires 12.1 years. Many first-home buyers rely on family support or turn to rent-vesting to gain a foothold.
Adelaide has become the second-least affordable city, with dwelling values up 77.2% in five years against income growth of 20.1%. Deposit timelines have blown out to 12.3 years.
Brisbane ranks third-least affordable, while the rest of Queensland is one of the hardest regional markets for both buyers and renters.
Despite the strongest value growth of any capital over five years, Perth sits mid-pack on affordability, with a value-to-income ratio of 7.7 and a deposit timeline of 10.3 years.
Affordability has improved modestly in Canberra, Hobart, Melbourne, and the Northern Territory. Darwin is now the most affordable capital, and the only one where less than 30% of income is needed to service a new mortgage.
Rental affordability has eroded across most states. In the rest of Queensland, the income share needed to rent has surged to 39%, while incomes rose only slightly. Adelaide is the least affordable city for renters, requiring 35.5% of income.
The ACT is one of few bright spots, with rental affordability improving since mid-2022 due to strong apartment construction and slower population growth.
Owen said affordability metrics often understate purchasing power because most mortgage holders aren’t starting from scratch on a single income.
Around 65% of new owner-occupier loans go to existing homeowners, many of whom leverage strong capital gains into their next purchase. A sizeable share of first-home buyers also receive deposits funded by family support.
This helps explain why dwelling values remain far higher than the “affordable price” implied by median income, and why lower-value segments have seen strong competition from higher-income purchasers.
The worsening affordability landscape signals several clear trends for mortgage brokers:
Owen said the past five years have fundamentally reshaped the housing landscape.
“Australian home values have climbed roughly 47.3% since March 2020, an extraordinary rise that added about $280,000 to the median dwelling value,” the Cotality economist said, noting that affordability pressures are unlikely to ease without meaningful structural reform.
For brokers, 2026 is shaping up as a year defined by tight serviceability, rising demand for strategic borrowing advice, and clients navigating markets increasingly out of sync with household incomes.
For more information and details, read the full Cotality report.
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