Australia's housing affordability has fallen to its worst level on record, with a median-income household now able to afford just 12% of homes sold over the past financial year — down sharply from 43% just five years ago, according to the realestate.com.au Housing Affordability Report 2026.
For households earning $76,000, that figure drops to just 2%. Mortgage repayments on a median-priced home now swallow 35.5% of average household income, the highest share since 1989.
This comes despite national home prices falling for a fifth straight month in August, down 0.2% for the month and 2.7% below their March 2026 peak — though values remain 1.8% higher year-on-year and 27.5% higher than five years ago.
UDIA national president Oscar Stanley (pictured left) argued that boosting buyer assistance alone will not fix the underlying problem.
"Helping Australians overcome the deposit hurdle is worthwhile, but demand assistance without additional supply simply moves people forward in the queue while making the queue more expensive," Stanley said. "The lasting solution to housing affordability is housing abundance. Australia must make it faster, easier and more viable to build the homes people can afford."
The UDIA is pushing for every major first-home buyer or demand-side initiative to be tied to measurable new housing supply, alongside faster planning and infrastructure approvals and more stable investment settings for rental housing and construction finance.
This lending slowdown lends weight to that argument. APRA figures for July show total mortgage growth has slowed to its weakest pace in three years, with NAB's book shrinking for the first time since July 2024 — a sign that fewer buyers are entering the market even before affordability constraints are factored in.
Angus Moore (pictured right), Report co-author and realestate.com.au senior economist, said this year's three rate hikes had significantly reduced borrowing capacity.
"That has more than offset the income growth and softening of home prices towards the end of FY26," Moore said, adding that "without a meaningful increase in housing supply, affordability will remain a significant challenge, particularly for lower-income households."
The timing adds further uncertainty: the RBA's next decision, due 29 September, has NAB forecasting a further 25 basis point rise, with CBA and ANZ both tipping a hike in November instead.
Against that backdrop of tightening credit and worsening affordability, federal housing minister Clare O'Neil has voiced similar concerns about long-term equity in the housing market, noting that house prices have risen roughly 400% since 2000.
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