Affordability has hit a record low, with only one in eight properties within reach of the average Australian, leaving agents with a smaller demographic of buyers for their listings.
As property prices continue to decline nationally, the number of affordable properties for everyday Australians has hit a record low in FY2026.
According to realestate.com.au’s latest Housing Affordability Report, a median annual household income of $125,000 could afford only 12 per cent of properties available nationwide, or approximately one in eight.
The data showed that current affordability has shifted significantly over the past five years: in 2021, median household income could purchase 43 per cent of homes sold nationwide, the largest share since FY2002.
Realestate.com.au senior economist Angus Moore said the combination of elevated home prices, higher mortgage rates and three rate hikes had significantly reduced borrowing power.
“While home prices have fallen this year, they have grown much faster than incomes in recent years,” Moore said.
“That, coupled with rate hikes, has pushed affordability to its lowest since at least 1995.”
Data showed that low-income households earning a median annual income of $76,000 could afford to purchase just two per cent of dwellings across the country, effectively locking them out of the property market.
Additionally, the report said that the affordability of homes for lower-income households was further eroded by the five per cent deposit scheme, with demand surging at that price point.
South Australia becomes the least affordable state
According to the data, housing affordability declined nationwide in FY2026, with South Australia becoming the least affordable state.
“With a median home value of $940,000 in Adelaide, it is no surprise that South Australia is the least affordable state, as the state’s typically lower incomes mean the median-income household can afford just 7 per cent of homes,” the report said.
“This has been the sharpest deterioration in affordability of any state over the past six years.”
NSW was overtaken as the least affordable state in the country, with just 9 per cent of homes considered affordable.
With prices in Sydney deteriorating more significantly than in other capitals, affordability was not eroded as quickly across the state.
Western Australia, previously considered the most affordable state, suffered the largest drop in affordable homes over the year, declining from 17 per cent to just 10 per cent.
Despite still recording a fall, Victoria surpassed Western Australia as the most affordable state, with 16 per cent of homes within reach of median-income buyers, compared to 19 per cent a year ago.
According to the report, 2026 was the first time Victoria had achieved this result since 1995, with the slow performance of Melbourne’s property market helping protect it from a sharp decline.
Moore said the evolving market conditions would likely see affordability climb slightly, but not enough to make a major difference at lower ends of the market.
“Looking ahead, affordability may improve marginally if home prices continue to soften, but this is unlikely to be a turning point for many buyers.”
“Without a meaningful increase in housing supply, affordability will remain a significant challenge, particularly for lower-income households.”
Want to see more stories from trusted news sources?Make Real Estate Business a preferred news source on Google.
