Housing affordability in Australia has deteriorated to its poorest level since records began, according to a new report.
The PropTrack Housing Affordability Index shows high mortgage rates and rising home prices have pushed affordability to new lows over the past year.
A median-income household earning around $112,000 could afford just 14 per cent of homes sold in the 2023-24 financial year, down from 43 per cent three years ago and the lowest share since records began in 1995.
New South Wales ranks as the least affordable state, with a median-income household able to afford only 10 per cent of homes sold.
Tasmania and Victoria follow closely behind.
South Australia recorded the biggest decline in affordability, with a median-income household able to afford just 16 per cent of homes sold in 2023-24, compared to 49 per cent in 2020-21.
Renters face even greater challenges, with a median-income renting household able to afford just 11 per cent of homes sold over the past year.
PropTrack Senior Economist Paul Ryan said mortgage costs have reached levels not seen since 2008.
“Housing affordability is a critical issue affecting Australians in 2024,” Mr Ryan said.
“Above average increases in home prices, along with interest rates at the highest level in the past decade, have resulted in the worst housing affordability conditions since our records began.”
The report also found low-income households have been priced out of the market, with those earning $50,000 per year able to afford just 3 per cent of homes.
Western Australia ranked as the most affordable state, but even there a median-income household could afford only 26 per cent of homes for sale.
Mr Ryan said that first-home buyers and renters looking to buy are facing “incredibly stretched affordability” due to reduced borrowing capacity from high mortgage rates.
He said significant improvement in housing affordability is unlikely without policy changes to boost housing supply and construction across Australia.
“Housing affordability is expected to ease when interest rates fall, which could be as soon as within the next six months,” he said.
“But meaningful improvement – returning to a period where a typical household could afford half of homes – requires change on many fronts to build more homes across the country.”
