The REIA’s Housing Affordability Report for the September 2025 quarter shows the proportion of median family income required to meet average home loan repayments fell to 47.0 per cent, an improvement of 0.5 percentage points over the quarter and 1.6 percentage points over the year.
REIA President Jacob Caine said that while recent months have provided some relief, affordability pressures are expected to continue in 2026.
“It’s encouraging to see housing becoming a bit more affordable for Australian families for the third quarter in a row,” Mr Caine said.
But with first home buyer activity slightly contracting and higher than anticipated inflation affecting interest rates, many households will still face challenges in the months ahead.”
State and territory trends showed affordability strengthening in all regions except Queensland, which experienced a marginal decline of 0.1 percentage points.
Rental affordability remained stable nationally at 24.3 per cent, up 0.5 points over the past year.
Improvements were seen in New South Wales, Victoria, South Australia, and the ACT, while affordability tightened slightly in Queensland, Western Australia, Tasmania, and the Northern Territory.
First home buyer activity has softened, with 29,252 new loan commitments, down 3 per cent from the previous quarter and 0.9 per cent lower than September 2024.
Activity decreased across all states except Tasmania, which saw a modest increase of 1.7 per cent.
Victoria had the largest number of first home buyers at 9,835, while the Northern Territory recorded the smallest at 299.
The average loan size to first home buyers increased to $560,249, rising 1.0 per cent over the quarter and 4.4 per cent over the year.
Overall lending for owner-occupiers remained relatively steady, with 84,687 new loan commitments, slightly down 0.2 per cent from the June quarter but 1.9 per cent higher than September 2024.
The average loan size for owner-occupiers grew 2.3 per cent over the quarter to $693,802, marking an 8.1 per cent annual increase, indicating that while affordability has improved, property prices continue to rise.
Despite the positive trend in affordability, the softening in first home buyer activity suggests that entering the housing market remains challenging for many Australians, particularly as loan sizes continue to grow.
The report highlights that while progress has been made, sustained efforts are needed to ensure housing remains accessible to all Australians, especially in regions where rental affordability is tightening.
Mr Caine said that this year’s affordability gains are encouraging but fragile, requiring continued attention from policymakers and industry stakeholders.
“This report demonstrates that steady progress is possible, but sustaining affordability for Australians requires ongoing action from government, industry, and the wider housing sector,” he said.
