Australia’s housing market continues to push the limits of affordability, with soaring property prices making homeownership increasingly elusive for many. A recent report from Cotality revealed that national dwelling values have surged to record highs, exacerbating the challenges faced by first-time homebuyers and renters across the country.
As of July 2024, the median dwelling value across Australia’s capital cities stood at $926,854, according to Cotality’s latest housing report. Sydney and Brisbane are leading the way as the most expensive markets, with median values of $1,228,435 and $934,623 respectively. This price growth—35.5% in Sydney and 76.3% in Brisbane over the past five years—has made the dream of owning a home increasingly out of reach for many Australians.
Affordability Crisis: A Growing Concern
The affordability of Australian housing has reached a critical point, with the national dwelling value to income ratio and the percentage of income required to service a new mortgage hitting record levels. Cotality’s research suggests that these indicators reflect a significant gap between income growth and property price increases, making it harder for the average household to enter the housing market.
The situation is worsened by ongoing monetary policy. While the Reserve Bank of Australia (RBA) has initiated rate cuts to stimulate the economy, these reductions have had little impact on improving affordability.
Tim Lawless, Cotality’s Research Director, explained that while a rate cut may help with borrowing capacity, the overall affordability issues are likely to persist due to high property prices and restrictive lending conditions. Even with a potential 50 basis-point cut, interest rates remain at historically high levels, leaving little room for substantial improvements in affordability.
Government Measures and Limited Impact
In an attempt to address the crisis, Australian governments have introduced various demand-side policies designed to boost homebuyer demand. The Albanese government’s 5% deposit scheme for first-time homebuyers and the expansion of the Help-to-Buy shared equity scheme are some of the measures aimed at easing the path to homeownership. However, critics argue that these policies may only serve to inflate property prices further, making housing even less affordable.
The situation is similarly dire for renters. As population growth, particularly due to immigration, continues to outpace supply, rental affordability is also declining. With more people vying for fewer properties, renters are feeling the pressure as rental costs rise, contributing to a nationwide housing affordability crisis.
Ultimately, the combination of soaring prices, slow income growth, and government policies struggling to keep up means that homeownership remains out of reach for many Australians, and renters continue to face increasing challenges in securing affordable housing.
