Housing affordability strengthened slightly over 2025 but remains close to record lows, according to the new PropTrack Housing Affordability Report.
The findings draw on the PropTrack Housing Affordability Index, which measures the share of homes affordable to households across the income spectrum.
Separate Cotality report shows longer-term pressures remain severe, with mortgage serviceability near 45% of income and renters spending over 33% of income.
Higher incomes and the Reserve Bank’s rate cuts in February and May eased borrowing costs in FY25, but mortgage serviceability and deposit saving remain significant obstacles.
A median-income household earning about $118,000 could afford 15% of homes sold nationally in FY25, up from 11% the prior year. Lower-income households fared far worse, with those at the 30th percentile able to afford only 3% of homes.
Saving for a 20% deposit remains a formidable hurdle, with the typical household needing 5.8 years to save for a median-priced home.
New South Wales and South Australia posted the toughest conditions, with median-income buyers able to afford 11% and 10% of homes respectively. Western Australia remained the most affordable state, followed by Victoria.
Borrowing capacity rose 9.8%, roughly offsetting the pace of home price growth between 2023/24 and 2024/25. Mortgage serviceability eased modestly, with the income share falling from 34.3% to 32.7%.
Housing affordability improved slightly for higher-income households, while conditions deteriorated for lower- and middle-income buyers due to faster price gains in more affordable markets.
For the first time since 2021, South Australia overtook New South Wales as the state with the highest deposit burden.
REA Group senior economist Angus Moore (pictured) said conditions improved only modestly in 2025.
“The PropTrack Housing Affordability Index shows that nationally, conditions improved modestly in 2025,” Moore said. “Higher income growth, coupled with lower interest rates following the RBA’s cuts in February and May, eased borrowing costs and boosted borrowing capacity.”
But housing affordability remains severely stretched.
“But even so, affordability remains near record lows, with conditions particularly challenging in New South Wales and South Australia,” Moore said.
Home prices have risen 7% since the start of 2025.
“Since the start of 2025, home prices have risen 7% and are growing consistently around the country," Moore said.
"While there's still a chance of another rate cut next year, we aren't likely to see more than that. The three cuts we've already seen in 2025 will continue to support home price growth, albeit at a slower pace than in recent years given the very challenging level of housing affordability. As a result, affordability will remain challenged in the year ahead.”
The full report is available at www.realestate.com.au/insights.
Get the hottest and freshest mortgage news delivered right into your inbox. Subscribe now to our FREE daily newsletter.
