Industry reports second consecutive quarter of gains as borrowing costs fall
Housing affordability in Australia has improved for the second straight quarter, according to a new report from the Real Estate Institute of Australia (REIA), indicating a shift from the record lows seen late last year.
“It’s encouraging to see housing affordability improving for Australian families, particularly after the challenges we reported just six months ago,” said Leanne Pilkington (pictured top), president of REIA. She added that while challenges remain, recent measures have contributed to positive outcomes, especially for first home buyers who are returning to the market in greater numbers.
The proportion of median family income required to meet average loan repayments dropped to 47.7% in the June quarter. This marks an improvement of 0.3 percentage points over the quarter and 0.5 percentage points compared to the same period last year.
According to REIA’s Housing Affordability Report for June 2025, most states and territories experienced better affordability, with the exception of Western Australia, where affordability declined by 0.4 percentage points. Tasmania recorded the largest improvement, with a 1.8 percentage point gain, while Queensland saw a slight increase of 0.1 points.
Rental affordability also improved for the third consecutive quarter, with the share of income needed for median rent nationally falling to 24.4%. New South Wales, Victoria, Queensland, Tasmania, and the ACT all saw improvements, while South Australia, Western Australia, and the Northern Territory recorded declines.
The central bank’s cash rate reduction in May – a decrease of 0.25 percentage points to 3.85% – contributed to lower borrowing costs. The average standard variable rate eased to 8.3%, and the average three-year fixed rate fell to 5.9%.
First-home buyer activity increased, with 30,047 new loan commitments nationally in the June quarter, up 15.8% from March. All states and territories reported growth, led by Victoria with 10,188 commitments. The Northern Territory had the smallest number at 258. The average loan size for first home buyers rose to $544,961.
Overall, owner-occupiers made 83,416 new loan commitments during the quarter, a 14.5% rise from the previous quarter. The average loan size increased by 2.7% to $678,011, representing a 7.5% annual increase.
Looking ahead, Pilkington suggested further improvements may be possible. “With another rate cut possible later this year and affordability now showing two consecutive quarters of improvement, the outlook for buyers is brighter than it has been in some time,” she said.
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