The Australian housing market is facing a full-blown crisis, with affordability reaching record lows. According to a new report from property research firm Cotality, servicing a new mortgage now eats up a whopping 45% of a median household's pre-tax income, up from 26% in September 2020. This alarming trend shows no signs of slowing down, with the average Australian household needing to dedicate nearly twice as much of their income to paying their mortgage than they did just five years ago.
The State of Play
The numbers are stark. Australian home values have climbed by about 50% since the start of the pandemic, fueled by pandemic-era monetary stimulus and record-low interest rates. However, this surge in demand has crashed into supply-side limitations, with builders struggling to cope with building costs and planning bottlenecks. As a result, the median home price has climbed at two-and-a-half times the pace of an average Australian household's income.
Key Stats:
- Median home price: $860,529 (up 54% since September 2020)
- Median pre-tax household income: $104,390 (up 20% since September 2020)
- National home value-to-income ratio: 8.2 (up from 6.5 in March 2020)
- Average weekly rents: up 53% since September 2020
Regional Disparities
The crisis is particularly acute in regional areas, with Queensland having the most unaffordable rents. Households on average incomes outside Brisbane are dedicating 39% of their pre-tax pay to lease a home. Sydney is also struggling, with the average household needing to dedicate 68% of their income to paying an average new mortgage for a house.
What's Driving the Crisis?
So, what's behind this crisis? According to Cotality's head of research, Eliza Owen, it's a combination of factors, including pandemic-era monetary stimulus, record-low interest rates, and supply-side limitations. The National Housing Supply and Affordability Council also points to labor and building material shortages, high costs, and limited land as major contributors [2
Solutions on the Horizon?
So, what can be done? The National Housing Supply and Affordability Council suggests five strategies to improve the situation:
- Increase investment in social and affordable housing
- Improve construction sector capacity and productivity
- Overhaul planning systems and ensure developable land is made available
- Support better outcomes for renters
- Ensure the tax system supports housing supply and affordability
The Albanese government is under pressure to act, with calls to accelerate the supply of new homes to ease price pressures. It's time for policymakers to get creative and find solutions to this crisis before it's too late.
Take Action:
If you're struggling with housing affordability, it's time to make your voice heard. Contact your local representatives and demand action on this issue. For more information on the housing crisis and potential solutions, check out the National Housing Supply and Affordability Council's report and the Australian Housing and Urban Research Institute's research.
Sources:
- [1'War on homelessness': rental crisis hits record low, hurts economy
- [2Crisis: The state of Australia’s housing system in 2025
[Crisis: The state of Australia’s housing system in 2025](https://australianpropertyupdate.com.au/apu/crisis-the-state-of-australias-housing-system-in-2025)
[‘War on homelessness': rental crisis hits record low, hurts economy](https://www.realestate.com.au/news/war-on-homelessness-rental-crisis-hits-record-low-hurts-economy/)
Image Credit: theguardian.com
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