The quintessential Australian dream of homeownership is rapidly becoming an unattainable fantasy for a new generation, as a comprehensive analysis reveals a dramatic and worsening affordability crisis. A severe contraction in the number of accessible properties has effectively locked the door to the market for most first-time buyers. The situation has deteriorated at an alarming pace since the 2019-20 period, a time when a prospective buyer with an average income could reasonably access about 30 percent of the available housing. Today, that figure has plummeted to a fraction of its former self, creating a landscape where aspiring homeowners are forced to earn substantially more than the average household income just to gain a foothold. This isn’t merely a market fluctuation; it represents a fundamental structural barrier that threatens to create a permanent divide between those who own property and those who are left behind, perpetually renting in an increasingly expensive market. The challenge is no longer just about saving a deposit but about confronting a market that has moved far beyond the reach of ordinary wages.
A Nationwide Affordability Collapse
The housing affordability crisis has cast a long shadow across the entire nation, though its intensity varies from one state to another, creating a grim mosaic of financial strain. New South Wales remains the epicenter of this challenge, a market experts have labeled as having reached “the limit of unaffordability,” where a mere 5 percent of homes are considered accessible to first-time buyers—a statistic that has shown no improvement over the last five years. Even in states once considered bastions of affordability, the situation has eroded sharply. South Australia has experienced a shocking decline, with its share of affordable housing stock plummeting from a healthy 75 percent in 2019-20 to just 25 percent today. This steep downward trend is mirrored in Western Australia and Queensland, which have both seen their accessible housing markets contract from 60 percent to 25 percent over the same period. In Victoria, a market already known for its high barriers to entry, the situation has worsened, with the proportion of accessible homes shrinking from an already low 15 percent to a mere 10 percent, tightening the squeeze on aspiring homeowners.
This widespread erosion of affordability is directly tethered to the substantial and relentless surges in median home prices that have characterized the last five years. According to data from the Australian Bureau of Statistics (ABS), the price escalations have fundamentally reshaped markets that were once within reach for average earners. Queensland and South Australia, for instance, witnessed staggering price increases of approximately 80 percent, a rapid inflation that has priced out countless local buyers. Western Australia followed closely behind, with property values jumping by a remarkable 75 percent. Even in the nation’s most notoriously unaffordable markets, the pressure did not relent. New South Wales, already the most challenging state, saw prices climb by a further 40 percent, while Victoria experienced a more moderate yet still significant increase of 20 percent. These figures are not just statistics; they represent the growing chasm between wages and property values, making the goal of saving a sufficient deposit an ever-receding target for first-time buyers across the country.
The Supply Side Squeeze
Compounding the problem of soaring prices for existing homes is a critical and troubling shift in the composition of new housing supply, which has failed to provide relief for those trying to enter the market. The development of affordable new dwellings has dwindled to a near standstill, with a significant pivot toward high-end construction. The proportion of new builds priced at $800,000 or lower has collapsed, falling from roughly one-third of all new projects in 2022-23 to only 12 percent in the 2024-25 period. According to KPMG’s analysis, this strategic shift by developers is a direct response to rising construction costs and higher interest rates. These economic pressures have made lower-priced projects financially riskier, pushing the industry toward the relative safety of premium, high-margin developments. While these luxury projects may satisfy a different segment of the market, they are entirely inaccessible to most first-time buyers, leaving a critical gap at the entry level and ensuring that new supply does little to alleviate the affordability crisis for those who need it most.
In the final analysis, it became evident that the prevailing strategies to address the housing shortfall were fundamentally misaligned with the needs of aspiring homeowners. Although general housing supply had begun to show signs of increasing, driven by an easing of construction costs and the implementation of various planning reforms, these broad efforts were insufficient to tackle the core affordability issue. The expert consensus pointed toward the necessity of a much more targeted approach, one that moved beyond the simple metric of total housing completions. The crucial insight was that the crisis was not merely a matter of quantity but of accessibility. It was concluded that without a deliberate and focused policy shift to incentivize the construction of homes at price points that genuinely serve first-time buyers, the market would continue to fail a significant portion of the population. The challenge was to ensure that new supply did more than just add numbers; it had to create real opportunities for entry into a market that had become increasingly exclusive.
