Affordability gaps push buyers to outer suburbs and units
New research from Domain Group highlights a growing mismatch between what home buyers can afford and what is available on the market in Melbourne and Brisbane, as affordability pressures continue to reshape buyer behaviour and property trends in two of Australia’s major capitals.
In Melbourne, buyers looking within 10 kilometres of the CBD face a median affordability gap of $310,000 between their budgets and actual asking prices for houses. That gap widens to $967,500 in premium suburbs such as Boroondara and Stonnington-West. In contrast, outer-ring suburbs more than 30 kilometres from the city centre, show a reversal, with buyer budgets exceeding asking prices by up to $83,000.
Brisbane presents a similar picture, with a median shortfall of $350,000 in inner-city areas. In sought-after locations like Brisbane Inner, the gap rises to $800,000, while middle-ring suburbs such as Sherwood-Indooroopilly and Mt Gravatt report gaps ranging from $350,000 to $500,000. Buyers in the outer suburbs see slightly more favourable conditions, with budgets exceeding prices by up to $8,000.
Despite recent interest rate cuts, average wage earners in Australia are still unable to afford the median house price in most major cities, separate research from financial comparison platform Canstar has shown. A full-time worker earning the average annual salary of $103,024 would only be able to borrow $425,000. With a 20% deposit, this provides a purchasing budget of $531,250 — well below the median house prices across Australia’s largest property markets.
In both Melbourne and Brisbane, affordability constraints are fuelling a surge in demand for more accessible property types.
In Melbourne, buyers are increasingly targeting townhouses and units within 20 kilometres of the CBD, where they still face shortfalls of up to $198,000. However, in the city’s outer growth corridors, townhouse budgets outpace listings by as much as $81,000, and by $55,000 for units.
Brisbane is seeing a similar trend. Budgets in outer suburbs exceed asking prices by up to $100,000 for townhouses and $301,000 for units, reflecting strong demand for larger or family-friendly homes outside the inner city.
Interest in outer suburbs is also on the rise. Since 2020, Brisbane has recorded a 37.5% increase in buyer searches beyond 20 kilometres of the CBD, while searches within that radius have declined by 13.4%, indicating a shift driven by affordability pressures, remote work options, and population growth.
“Brisbane’s rapid property price growth is forcing many buyers to make tough trade-offs, either compromising on location or adjusting their expectations around property type,” said Nicola Powell (pictured), chief of research and economics at Domain. “We’re seeing sustained demand for well-located, medium- and high-density housing like townhouses, apartments, and mixed-use developments within 20 kilometres of the CBD, as well as increased interest in outer suburban areas and growth corridors.
“These trends highlight a pressing need for more diverse, affordable housing options. For developers and urban planners, understanding these shifting buyer preferences is essential to delivering liveable, future-ready communities that align with where and how people want to live.”
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
