Just one in seven homes are affordable for the typical Aussie household, a new report shows, a damning sign of just how unaffordable home ownership has become.  

The latest PropTrack Housing Affordability Index found a household with a median-income of about $112,000 a year could afford just 14% of homes sold during the 2023-24 financial year.  

It marked the smallest share of homes affordable for typical income earners since records began in 1995, and declined from 43% in just three years.  

PropTrack senior economist Paul Ryan said housing affordability was a critical issue affecting Australians in 2024.  

“National home prices rose for the 20th consecutive month in August to be 6.6% higher over the 2023-2024 financial year, the equivalent to around a $50,000 increase of the national median price,” he said.  

“In this time, income growth has been insufficient to offset rapidly rising home prices and mortgage rates, meaning the typical Australian household can now afford only 14% of all homes sold across the country. 

“Above average increases in home prices, along with interest rates at the highest level in the past decade, have resulted in the worst housing affordability conditions since our records began. 

“First-home buyers, or renters looking to buy, who often rely on significant borrowing to enter the housing market are facing incredibly stretched affordability.”  

It now takes 5.6 years for the typical first-home buyer to save for a home deposit, which is 20% of a median priced home in Australia, according to the index. Borrowers can use smaller deposits, but will have to pay lenders mortgage insurance (LMI) on deposits less than 20% of the purchase price.  

A median-income household can afford just 14% of the homes sold during the 2023-24 financial year. Picture: Getty

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In Queensland, typical households now needed 5.4 years to save for a deposit, the longest period to date due to home prices growing at a faster pace than incomes in the state. 

Brisbane-based real estate agent and principal at REMAX Results – Morningside Hayley Van de Ven said first-home buyers were hesitant but still active.  

“We’ve got more first-time buyers in the market than I’ve probably ever seen, I feel like they are buying up all of our investment stock,” she said.  

“But the bank of mum and dad has really come into force to help them.” 

Ms Van de Ven said she was seeing a return of “100% loans” – where parents shared some of their home equity with their children to use as the 20% deposit needed to secure a home loan and avoid LMI.  

She said parents were choosing to share their home equity with their kids to help them get into the property market rather than using money so that they could keep a cash buffer. 

“It’s the first time in years that I’ve seen 100% loans, they haven't been around for such a long time but they’re back,” she said. 

It comes as mortgage costs are now as high as they were around the Global Financial Crisis in 2008 and only just below the historical peaks reached in 1989-1990.  

Mortgage costs are so high that an average-income household would need to spend a third of their income on repayments just to buy a median-priced home. 

The national median home price rose more than 6% year-on-year to $790,000 in August. Picture: Getty

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This would tip many households into mortgage stress territory, where homeowners spend more than 30% of their pre-tax income on home loan repayments.  

Mortgage Choice broker David Thurmond said first-home buyers were borrowing less than they could just a few years ago.  

“The biggest realisation for first-home buyers is that their borrowing capacity isn't as strong as it was two or three years ago when interest rates were at 2%,” Mr Thurmond said.  

“With interest rates now sitting at 6%, they're having to lower the size of their purchase price.  

“In the past, we had a lot of clients buying house and land packages for $700,000 and above for their first home but that's now changed. 

"A lot of first-home buyers are now looking at townhouses and units between the $400,000 to $600,000 range because their borrowing capacity doesn't allow them to purchase above that, so it's changing the type of property and the amount they can borrow.” 

Mr Thurmond said all eyes were fixed on interest rates and the timing of when the Reserve Bank finally decides to cut rates. 

Housing affordability is expected to ease when interest rates fall, Mr Ryan said, which could be as soon as within the next six months. 

“But meaningful improvement – returning to a period where a typical household could afford half of homes – requires change on many fronts to build more homes across the country,” Mr Ryan said.