Twelve percent of homes in Australia affordable for the average first home buyer

9 December 2025

According to KPMG analysis the share of homes within budget for an average first-home buyer has fallen dramatically across the country. Today, first home buyers with an average annual household income of $180,000 can only afford to buy 12 percent of the housing stock, in 2019-20, first home buyers had an average income of $150,000 but had access to about 30 percent of housing stock.

KPMG Urban Economist Terry Rawnsley said, “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.”

“Instead, they’re seeking more affordable options, focusing on regional markets or competing for a shrinking pool of apartments and greenfield homes in major cities.”

Home loan data shows first home buyers also must be earning more than the average Australian to get into the market. They now need household incomes of around $180,000 to service a typical home loan, which is well above the average household income of about $145,000 for two full time workers. Using that $180,000 benchmark, the situation is worse for NSW first home buyers, who can only afford 5 percent of the housing stock. This remains the same as it was in 2019-20.

“The fact the pool of affordable properties in NSW remains unchanged over 5 years despite house price increases suggests it may have reached the limit of unaffordability,” Rawnsley said. 

South Australia is the best state for first home buyers with around 25 percent of housing stock within reach. However, in 2019-20 that same first home buyer on the household income of $150,000 could have purchased over 75 percent of homes on the market.

Western Australia and Queensland each have a quarter of homes affordable to the average first home buyer household while Victoria has 10 percent. Compare that to 2019-20, when the average home buyer household on $150,000 could have purchased 60 percent of homes in Queensland and Western Australia and 15 percent of homes in Victoria.

According to the ABS¹, median home prices in New South Wales are up about 40 percent and Victoria 20 percent, while Queensland and South Australia are up around 80 percent and Western Australia around 75 percent between 2019-20 and 2024-25.

"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,” Rawnsley said.

_{Note: value rounded}

_{Source: KPMG analysis of ABS SA2 Building Approvals, ABS Household Balance Sheet and Residential Land data, UDIA State of the Land data. ABS Lending indicators data First Home Buyer for Owner Occupier, ABS Housing Occupancy and Costs, Australia, 2019–20 (most recent data available). ABS Total Value of Dwellings}

More supply is the answer, but at the right price point

“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,” Rawnsley said.

Over the past three years, the amount of new housing supply priced at $800,000 or lower has steadily fallen. In 2024-25, approximately 12 percent of new dwellings were within this price range, compared to about one-third in 2022-23.

“Rising construction costs and higher interest rates have reshaped the housing market. Since 2022, a wave of builder insolvencies has pushed developers to pivot toward premium, high-end projects. These dwellings may be fewer in number, but they’re easier to sell and carry lower financial risk, marking a clear shift away from affordable housing supply,” Rawnsley 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,” added Rawnsley.

_{Source: KPMG analysis of ABS SA2 Building Approvals, ABS Household Balance Sheet and Residential Land data, UDIA State of the Land data. ABS Lending indicators data First Home Buyer for Owner Occupier, ABS Housing Occupancy and Costs, Australia, 2019–20 (most recent data available). ABS Total Value of Dwellings. KPMG assumed interest rate and loan term.}

Method Note: Estimating Property Value Distribution

Sales data for residential properties represent only a subset of the total housing stock. These sales are used to construct a Median Property Price Index, which is based on stratification of the housing market. This index helps identify underlying movements in property prices, independent of compositional changes in sales data. For example, if a higher proportion of expensive homes are sold in a given period, the raw median price would be inflated, but the stratified index adjusts for this compositional change.

Estimated sale prices for building approvals, based on SA2-level averages, provide a more detailed breakdown of property types. However, these approvals also represent a subset of total sales and may underrepresent properties at the lower end of the market, such as older homes in regional areas, which rarely come to market.

To address this gap, Census rental data combined with estimated yields offers insight into segments of the market that are less frequently transacted. By integrating these varied data sources, we can estimate a distribution of property values and compare it against the purchasing power of first home buyers.

The purchasing power of first home buyers is based on loan values and a high level financial assessment of the income regular to service (from a lending perspective) such as loan.

This approach reflects average values, but home buyers with lower incomes can still secure a property for their purposes under the right market conditions. That should be considered when reviewing the approximate share of homes within average first home budget by state estimates.