Recent rate cut and first-home buyer schemes have done little to improve affordability

Despite a recent interest rate cut and new housing policies aimed at first home buyers, average wage earners in Australia are still unable to afford the median house price in most major cities, new data analysis has shown.
According to research by financial comparison platform Canstar, a full-time worker earning the average annual salary of $103,024 would only be able to borrow $425,000. With a 20% deposit, this would give them a purchasing budget of $531,250 — well below the median house prices across Australia’s largest cities.
Property prices remain significantly higher than what a single average income can support. Recently published Domain data showed the median house price in Sydney is approaching $1.7 million, with Melbourne at over $1.035 million, Brisbane at $1.022 million, and Perth at $917,000.
If property prices continue to rise at this pace — gradually increasing while wages see only minimal growth — some suggest Australia may not see truly affordable housing again until 2095.
“Thirty years ago, the average buyer looked more like the median income earner,” said Johnathan McMenamin (pictured above), head of economic forecasts at Barrenjoey. “But over time, we’ve seen that shift [to] households that are in the top two income quintiles, so top 40% of income earners, and shift from being single income earning households to dual income households.”
He attributed the trend to a long-term mismatch between population growth and housing supply. While current interest rates have made borrowing more expensive, McMenamin emphasised that the fundamental issue lies in the persistent underbuilding of homes. “On the median income, it takes a lot longer to buy a house now,” he said.
Canstar’s figures show that a dual-income household, with both partners earning the average wage, could borrow around $1.1 million. If one partner worked part-time, borrowing capacity would fall to $800,000.
Recent election campaign announcements from both major parties have included extensions to a scheme allowing first-home buyers to purchase with just a 5% deposit. Originally intended for modest properties, the scheme now covers a wider segment of the market.
While McMenamin acknowledged that such schemes could help some buyers enter the market sooner, he cautioned that they might push prices higher. He supported proposals that would expand housing supply, such as Labor’s plan to build an additional 100,000 homes for first-time buyers.
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