FHBs struggle to enter the market as house prices rise 70% in 5 years

Domain’s First Home Buyer Report showed that, in the last five years, national entry-level house prices rose 68 per cent, while units have increased by 30 per cent, as wages have only grown 21 per cent.

The data also found that, over the past year, saving a 20 per cent deposit for an entry-level house increased by an average of five months to five years, while the time for units increased by three months to three years and six months.

According to the report, rising prices and tight supply have offset the benefits of government schemes and are now the primary barrier to ownership, rather than interest rates.

Domain’s chief of research and economics, Dr Nicola Powell, said first home buyers were being locked out of the property market more than ever.

“Interest rate cuts in 2025 offered some relief, but they weren’t enough to undo years of strong price growth and rising household debt,” she said.

“In many markets, affordability actually worsened even as rates fell.”

Houses in comparatively affordable cities now less accessible

While Sydney continued to lead the unaffordability rankings, entry-level houses in Perth, Darwin, Brisbane and Adelaide saw the strongest price rises over the past year, exceeding 20 per cent.

Once considered relatively affordable, the report showed that Brisbane now has the second-longest saving time for houses, overtaking Melbourne at 4 years and 11 months.

Adelaide shifted from being the quickest city to save a deposit to the third-longest, at five years and even months, while Perth was also among the longest at five years and four months.

Meanwhile, the report showed that Sydney remained the only capital city where an entry-priced house exceeded $1 million

In the past year, the Harbour City recorded 15 per cent price growth, with buyers taking 7 years and 7 months to save for a deposit.

In Melbourne and Canberra, house price rises were comparatively moderate, increasing 6.7 per cent and 4 per cent respectively, with buyers taking just over five years in each to save for a deposit.

According to the data, Hobart shifted slightly to become the second-best city to save for a house deposit, reflecting more moderate price growth.

Powell said the deposit hurdle was no longer a short-term issue but a structural change affecting property prices.

“That is because we've ultimately had many years of inflation that significantly outpaced wage growth.”

Entry-level unit prices rise nationally

Despite units usually being seen as a faster way into home ownership, the data showed entry-level prices rose across all capitals in the past year, except for Canberra.

Brisbane’s rapid growth saw prices grow 24 per cent over the past year, with the city seeing the longest time to save for a deposit, at four years and 11 months, overtaking Sydney.

Adelaide units now take the third-longest time to save for a deposit at four years, after prices grew 13 per cent in the past year.

Hobart and Perth now share fourth place for the time to save for a deposit, at three years and 10 months.

Contrastingly, Melbourne and Sydney both recorded the lowest unit price growth over the past year, at 1.3 per cent and 4.0 per cent, respectively, with Melbourne’s prices falling slightly over the last five years.

Similar to Sydney houses, the report showed the city’s entry-level units took the longest to save a deposit for out of the capital cities, at four years and five months.

According to Powell, the data showed that the affordability crisis was no longer just a Sydney problem, now extending to cities once considered more accessible.

“Brisbane, Adelaide and Perth, once seen as more attainable, have seen rapid growth in entry-level prices, pushing them much closer to the least affordable markets.”

“Units have traditionally been the stepping stone into home ownership, but even that pathway is narrowing. In several capitals, unit buyers are now stretching themselves into mortgage stress.”

Property type differences

According to the data, property type remained a key factor in accessibility for first home buyers, with units continuing to require smaller deposits, therefore shorter saving periods than houses.

It said that first home buyers can now enter the market 20 months sooner by purchasing an entry-priced unit rather than a house.

However, it said that in several fast-growing capitals, the traditional unit advantage was eroded as entry-level unit prices rose faster.

The report also noted the difference between unit and house saving times was largest in Sydney and Canberra, but substantially smaller in regional markets where the property prices were more closely aligned.

According to Powell, the outlook was now vastly different for first home buyers, and entering the market depended largely on their earnings and whether they had family support.

Without sustained action to increase supply and tackle upfront and ongoing costs, there’s a real risk home ownership could slip permanently out of reach for many young Australians,” she concluded.