Cost of entry-level homes rising faster than that of premium properties
Housing affordability in Australia has deteriorated further, with new research from property data firm Domain indicating that younger generations are finding it increasingly difficult to enter the property market.
The study, which reviews trends since the 1990s, highlights that the cost of entry-level homes has risen more quickly than that of premium properties in most major cities since 2022.
The data reveals that houses in the 25th percentile – typically sought by first-home buyers – have experienced sharper price increases than those in the 75th percentile. The cumulative difference in price growth between entry-level and premium homes stands at 4.1 percentage points in Sydney, 6.9 in Melbourne, 13.6 in Brisbane, 18.7 in Adelaide, and 19.8 in Perth.
The time required to save for a 20% deposit has now stretched beyond eight years for a median-income household, up from six years in the early 2000s. At the same time, mortgage repayments for new buyers have climbed to 54% of household income, marking the highest level in two decades.
“Nationally, over 68% of the population born between 1947-51 owned a home by the age of 30-34,” said Nicola Powell, chief of research and economics at Domain. “Today only 50% of those aged 30-34 own a home. In New South Wales, the difference is even starker at only 45%.
“More needs to be done to tackle this crisis in home ownership. A shift from stamp duty to a land tax should be the immediate first step – this would remove a major barrier for prospective buyers.”
The analysis also points to structural factors driving these trends. Prolonged periods of low interest rates have fuelled property price growth, increasing deposit requirements. Meanwhile, stamp duty brackets have not kept pace with rising property values, pushing more buyers into higher tax bands and adding to the overall burden.
Research from the Reserve Bank of Australia suggests that declining interest rates have accounted for much of the drop in home ownership rates, with the benefits largely accruing to existing property owners. The decline in home ownership among young people is not unique to Australia, with similar patterns observed in the UK, US, and Europe.
Changing buyer behaviour is also evident. More affordable and higher-density housing options, such as dual occupancies and granny flats, have become increasingly popular, as reflected in recent search trends.
Policy experts argue that addressing Australia’s affordability challenge will require coordinated reforms. Suggestions include replacing stamp duty with a broad-based land tax, expanding shared-equity and low-deposit schemes, and reviewing lending standards to balance financial stability with access to credit.
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.
