The PropTrack Housing Affordability Report shows housing affordability improved in 2025, although conditions remain challenging.
The findings are based on the PropTrack Housing Affordability Index – the most comprehensive measure of housing affordability in Australia – which assesses the share of homes that households across the whole income distribution can afford to purchase.
Higher incomes and lower mortgage rates, following the Reserve Bank’s interest rate cuts in February and May, boosted borrowing capacity enough to offset the increase in home prices in 2024-25. As a result, housing affordability eased slightly across the country.
Despite easing conditions, a typical household could afford to buy just 15% of homes sold across the country – close to the record low. Buyers in New South Wales and South Australia are facing the worst affordability, while Victoria and Western Australia are the most affordable states.
It is particularly challenging for low-income households. Low-income households at the 30th income percentile could afford to buy just 3% of homes sold in the past year, essentially locking these households out of the market.
With home prices still growing and set to rise further, and additional interest rate cuts looking less likely, housing affordability will remain stretched over the coming year.
For full analysis, see the PropTrack Housing Affordability Report 2025
The PropTrack Housing Affordability Index shows that conditions improved modestly in 2024/25 but remain near record lows.
Lower interest rates, following the RBA’s interest rate cuts in February and May, eased borrowing costs in FY25. With an additional cut in August, borrowing costs will have eased further. Coupled with income growth, those rate cuts have seen borrowing capacity for households increase by just under 10% on average. That increase has been enough to, just, offset the increase in home prices between 2023/24 and 2024/25.
Nonetheless, affordability remains challenged by historical standards and only marginally ahead of 2023/24 and the 2007/08 trough.
The past three years of very challenging housing affordability were driven by the rapid increase in interest rates in 2022 and 2023, coupled with strong home price growth in many markets.
The current state of affordability is a marked change from that in the decade following the Global Financial Crisis, when affordability gradually improved, and particularly so relative to 2020 and 2021 – the most affordable conditions since the late 1990s and early 2000s – due to interest rates falling to record lows.
Households in New South Wales face the most challenging affordability in the country, with South Australia, Queensland and Tasmania following closely behind.
With a median home value of $1.23 million in Sydney, it is no surprise New South Wales is the least affordable state, with a median-income household able to afford just 11% of homes.
South Australia has moved to the second-least-affordable state in Australia, overtaking Tasmania and Victoria over the past year. South Australia has seen the sharpest deterioration in affordability over the past five years, driven by rapid price growth combined with the state’s relatively low household incomes.
Victoria is now the second-most affordable state in the country, behind only Western Australia, which has seen affordability tighten rapidly in recent years. Victoria is slightly more affordable than all other states, with a median-income household able to afford 18% of homes sold. In WA, 17% of homes are affordable.
While Western Australia remains the most affordable state, the gap to the rest of Australia has narrowed significantly, driven by rapid home price growth in recent years. Since early 2020, home prices in Perth have more than doubled.
For detailed state-by-state analysis, see the full PropTrack Housing Affordability Report 2025
The PropTrack Housing Affordability Index assesses the ability for households of different incomes to purchase homes. Regardless of income level, affordability remains significantly challenging for most.
A median (or typical) income household, which represents those earning about $118,000 a year nationally, could afford just 15% of all homes sold across the country. This is only marginally higher than the low seen in 2008-09.
This share represents a sizeable change from as recently as four years ago, when mortgage rates were at record lows in 2020-21. At that time, a median-income household could afford 43% of homes sold, the highest share since 2001/02.
For higher-income households, affordability has improved marginally. Home prices at the more expensive end of the market have not increased by as much as more-affordable homes. Lower mortgage rates and higher incomes mean, for higher-income households, borrowing capacity has increased by more than home prices in market segments relevant for them.
Yet the same is not true for middle- and lower-income households. Low-income households are effectively locked out, as a household at the 30th income percentile could afford to buy just 3% of homes.
