Just 10 per cent of homes now affordable for average worker, new ANZ CoreLogic report finds

Prospective homebuyers have been dealt another blow with a new report showing house prices to income has returned to a record high.

The ANZ CoreLogic Housing Affordability Report has found that the median dwelling value to income ratio has hit eight times, well above the 20-year average of 6.7 times, and back to the record level last seen in early 2022.

For someone on an median income of $101,000 a year, and saving 15 per cent, the time to amass a 20 per cent deposit has hit a record 10.6 years.

Only 10 per cent of the housing stock is now available to someone on a median income, under the long-held rule of thumb they spend no more than 30 per cent of their income servicing a loan. In 2022, 40 per cent of houses were still affordable.

For lower income households (those in the bottom 25 per cent of earners) there are no dwellings available in terms of affordability.

The research comes hot on the heels of the Reserve Bank’s November interest rate minutes that revealed inflation concerns had not sufficiently subsided. The minutes prompted market economists to shift their projections for rate cuts from February to May and possibly not at all in 2025. Higher interest rates reduce the borrowing power of a prospective buyer.

Rental inflation is also making it harder to save for a home with the percentage of income required to pay rent also hitting a record high of 33 per cent, up from 25 per cent in 2019.

Sydney remains the most expensive market in terms of affordability, with almost 10 times the median income required to purchase a property.

Adelaide has leapt into the second least affordable market with the dwelling value to income ratio jumping from 5.9 to 8.9 times. It is now also the least affordable market to rent in, with more than 34 per cent of income required to service median rent.

Melbourne is now one of the most affordable cities, dropping from second-least affordable in 2019 to third-most affordable ahead of Canberra and Darwin.

House prices in Melbourne have dropped 5 per cent from a peak in March 2022, with the dwelling to income ratio dropping from 8.2 to seven times.

The report revealed that Perth, Brisbane and Adelaide have soared since the pandemic, up 65 per cent in aggregate from March 2020 to October 2024, buoyed by strong interstate migration and jobs growth.