Australia’s housing affordability metrics are at their weakest levels on record – but that’s only part of the picture, according to Ray White Group Chief Economist Nerida Conisbee.
The latest Cotality Housing Affordability Report shows the national dwelling value to income ratio hit 8.2 in September 2025, well above the 20-year average of 6.8.
It now takes 11 years to save a 20 per cent deposit, and 45 per cent of gross household income is required to service a new mortgage.
Yet the market keeps transacting, first home buyers remain active and prices stay resilient.
“The issue is not that affordability has improved, but that access has become more conditional,” Ms Conisbee said.
She said price-to-income ratios compare median dwelling values to median incomes, implying the typical household is buying the typical home.
But half of all homes sell below the median, and that’s exactly where first home buyers are shopping.
The data shows a significant shift in where buyers are landing.
Over the past decade, houses selling under $750,000 nationally have dropped from around 248,000 in 2015 to roughly 153,000 in 2025.
Meanwhile, unit sales under $750,000 have grown from approximately 77,000 to close to 96,000 over the same period.
“Buyers substitute land for location, size for access and houses for apartments,” Ms Conisbee said.
Government schemes are also changing the maths.
ABS data shows first home buyer owner-occupier loan commitments rose 6.8 per cent in the December quarter to 31,783 loans, coinciding with the expansion of the 5 per cent Deposit Scheme and introduction of the Help to Buy shared equity program.
While saving a 20 per cent deposit may take 11 years, entry with 5 per cent dramatically shortens that timeline.
Shared equity arrangements lower initial loan sizes, easing serviceability thresholds.
“These programs do not make housing inexpensive, but they change the structure of entry by redistributing risk and bringing forward demand,” Ms Conisbee said.
Then there’s the Bank of Mum and Dad.
Parents who’ve benefited from decades of capital growth can gift deposits, provide guarantees against existing equity, or bring forward inheritance through early transfers.
In markets where housing wealth has outpaced incomes for a generation, this accumulated equity is being recycled to help younger buyers enter.
Credit conditions add another layer with thirty-year loan terms now standard.
Borrowers refinance over time and high loan-to-valuation lending supported by lenders mortgage insurance or government guarantees allows entry with smaller deposits.
The average first home buyer loan size rose to $607,624 in the December quarter, reflecting both higher dwelling values and increased reliance on borrowing capacity.
Ms Conisbee said that none of this means affordability has improved.
“The ratio tells us housing is expensive relative to income,” Ms Conisbee said.
“The broader data tells us how households are still finding ways to transact.”
