According to KPMG, this marks a dramatic decline from 2019-20, when first home buyers with an average income of $150,000 could access about 30 per cent of available housing.
The analysis reveals that today’s first home buyers must earn significantly more than the average Australian household income of $145,000 to enter the property market.
New South Wales continues to be the most challenging market for first home buyers, with only 5 per cent of homes affordable to them.
This figure has remained unchanged since 2019-20, suggesting the state has reached what KPMG Urban Economist Terry Rawnsley calls “the limit of unaffordability.”
“In just five years, the face of first-home buyers has changed dramatically. Median home prices continue to soar, but average first home buyers aren’t targeting median priced homes,” Mr Rawnsley said.
South Australia emerges as the most accessible state for first home buyers, with approximately 25 per cent of housing stock within reach.
However, this represents a significant drop from 2019-20, when over 75 per cent of homes were affordable to first home buyers in the state.
Western Australia and Queensland have experienced similar declines, with the share of affordable homes falling from 60 per cent to just 25 per cent over the five-year period. Victoria has seen its share of affordable homes decrease from 15 per cent to 10 per cent.
The dramatic reduction in affordable housing options coincides with substantial price increases across the country.
According to ABS data, median home prices have surged approximately 80 per cent in Queensland and South Australia, and 75 per cent in Western Australia between 2019-20 and 2024-25.
New South Wales saw increases of about 40 per cent, while Victoria experienced a 20 per cent rise.
“The sharp rise in house prices across WA, QLD, and SA over the past five years has significantly reduced the share of the market accessible to first-home buyers and meant these regions now face the same challenges as traditionally unaffordable markets of NSW and Victoria,” Mr Rawnsley said.
Adding to the challenge is the declining supply of affordable new housing. The proportion of new dwellings priced at $800,000 or lower has fallen from approximately one-third in 2022-23 to just 12 per cent in 2024-25.
This shift in the market is attributed to rising construction costs and higher interest rates, which have pushed developers toward premium, high-end projects that carry lower financial risk but are out of reach for most first home buyers.
While recent easing of construction costs and changes to planning regulations at state and federal levels are helping to boost overall housing supply, Mr Rawnsley said that more targeted measures are needed.
“Housing supply needs to be considered not just in terms of absolute numbers of new homes being delivered, but also at what price point they are being delivered,” he said.
“Easing of construction costs and cheaper capital combined with the raft of planning changes occurring at the state and federal level are now helping boost housing supply. But more work is needed to target the supply of affordable housing to really help first home buyers.”
