Median Australian house values reach 8.9 times average income; rental costs also surge
Housing affordability in Australia has deteriorated substantially over the past five years, with purchasing and rental costs now presenting significant barriers to millions of households, according to analysis from Cotality.
The property data and analytics provider's latest Housing Affordability Report found that three of the four principal metrics – the price-to-income ratio, years required to save a deposit, and the share of income needed to rent – have reached record levels in 2025. The deterioration reflects a combination of elevated property valuations, prolonged elevated interest rate servicing costs, and constrained rental availability.
The research also presents a sobering picture across several key indicators.
Potential homeowners must now dedicate 45% of the average household income to service a new mortgage, even following recent rate decreases. Accumulating the customary 20% deposit has become a lengthy undertaking, requiring approximately 12 years at the national level, with four capital cities – Sydney, Adelaide, Brisbane, and Perth – each requiring more than a decade.
The rental market situation has intensified pressure on tenants. Renters are now allocating a record 33.4% of their income to accommodation, a substantial increase above the 20-year historical average.
Sydney's dubious honour
The gap between house and unit affordability has widened considerably. The median house value now stands at 8.9 times average income, a significant increase from 6.6 times five years previously.
Regional areas have converged with capital city valuations, with the ratio standing at 8.1 compared with 8.2 in major centres, largely eliminating the historical affordability advantage that regional properties once provided.
Conditions vary across jurisdictions.
Sydney maintains its position as the nation's least affordable market. Adelaide, Brisbane, and Perth have experienced substantial deterioration. Canberra, Hobart, and Melbourne have registered minor improvements, though entry-level barriers remain elevated in most areas. Darwin and the Northern Territory offer marginally better conditions, with fewer areas requiring more than 30% of income for mortgage servicing.
"Australian home values have climbed roughly 47.3% since March 2020, an extraordinary rise that added about $280,000 to the median dwelling value," said Eliza Owen (pictured right), head of research at Cotality. "This surge was fuelled by pandemic-era monetary stimulus and record-low interest rates that supercharged borrowing capacity and demand, even as housing supply lagged well behind household formation.
"Supply-side limitations have also compound these demand pressures with construction sector insolvencies, rising material costs, and planning bottlenecks restricted new housing delivery. In short, the past five years combined extraordinary demand drivers with supply constraints, creating an extraordinary boom in both home values and rents."
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