With property prices continuing to climb nationwide, the race for entry-level homes is becoming more intense. And the pool of attainable options is shrinking.
Nationally, property values jumped 8.5% in 2025, according to research firm Cotality. That's equal to an additional $72,000 added onto the median home price.
But not all houses are created equally.
"What we're kind of seeing [is] the idea that if the median property is kind of out of reach to a large proportion of the population, then that median value doesn't necessarily mean all that much anymore," Gerard Burg, head of research at Cotality Australia, said earlier this month at Australian Finance Group's AFG Now roadshow in Sydney. "It's in that more affordable segment of the market where there is the greatest amount of competition; that's where the heat is and that's where there's still growth evident in Sydney. Similarly, we see the same sort of pattern in Melbourne. And, in fact, go to any capital city right now and you see a similar pattern. The difference being in the mid-tier [cities], there's still growth essentially across the entire market."
That's bad news for would-be homeowners trying to break into the market. As affordable properties become scarcer, competition is intensifying for the homes that remain within reach.
Layer in rising living costs, elevated interest rates, a persistent housing shortage and growing investor demand, and for many buyers, homeownership is starting to feel unattainable.
Some brokers have reported prospective buyers have offered tens of thousands above the asking price to stay in the game.
"People are going in and offering a good $100,000 over the purchase price, just so they can beat the investors," Janine Ashmore, cofounder and director at Darwin-based Bliss Home Loans, told Australian Broker. "But then they're being talked into, by the applicants, to basically have no conditions on the contract: no builder compares and no finance period. And they do this before their pre-approval period comes through. They're panicking to beat everyone else.
"It's really hard at the moment to find housing, for anyone really," she added.
As competition intensifies, more buyers are turning to apartments as a more attainable way into the market. Burg noted that in 2026, units have been outperforming detached homes in Sydney, a shift in buyer behaviour.
"Young people are moving into units and apartments for living more than they used to," said Belinda Sugars, franchise owner and mortgage broker at Mortgage Choice Parkside in South Australia.
But Burg noted: "That's not normally the case. Most households still have this preference for the standalone house. That's an Australian dream idea, what a lot of people sort of view as being necessary to raise a family. That's still very much in the mind [of many Australians.]
"The recent trend though… is that the median dwelling value for houses has been contracting while units have been continuing to rise," he continued. "And this really reflects the kind of broader story around affordability once again.
"So affordability is the huge thing that we are seeing across the country," Burg added. "It was already a constraint before the Reserve Bank [of Australia] started lifting rates earlier this year and that has only exacerbated it further. As people find themselves priced out of these markets, their borrowing capacity starts to come down. They either deflect away from say the median into these lower value properties, or if they're priced out of those, start to look at units, perhaps, instead. These decisions get made when these, sort of, affordability constraints really start to bite."
