Higher repayments shrink the share of suburbs affordable to average-income buyers

Falling property values have not produced the improvement in home-buying affordability that many aspiring owners might have expected.

New Compare the Market analysis, reported by realestate.com.au on Sunday, found buyers earning two average salaries could afford at least one property type in 38.61 per cent of the 3,363 Australian suburbs examined. That was down from 53.63 per cent a year earlier.

The result was considerably tougher for a buyer relying on one average income. Just 2.83 per cent of suburbs met the study’s affordability test for a single buyer, compared with 6.24 per cent in 2025.

The findings underline the difference between a home’s sale price and the ongoing cost of buying it. Prices may be lower in many markets, but higher interest rates mean each borrowed dollar requires a larger monthly repayment.

How the study measured affordability

The analysis classified a suburb as affordable when repayments on a median-priced property did not exceed 30 per cent of household income. It assumed an 80 per cent loan-to-value ratio, meaning the buyer supplied a 20 per cent deposit.

That provides a consistent way to compare suburbs, but it is not a borrowing assessment. A lender will also consider expenses, existing debts, dependants, credit limits and its own repayment buffer.

The assumed deposit is another important qualification. A buyer using a smaller deposit would need a larger loan and could face lenders mortgage insurance or other costs. Stamp duty, conveyancing, inspections and ongoing ownership expenses may also affect the amount a household can safely spend.

Even with those limitations, the change from a year ago shows how repayment capacity has become a bigger barrier.

Brisbane becomes particularly difficult for couples

Greater Brisbane had the smallest share of affordable suburbs for buyers earning two average salaries, at 12.76 per cent. The equivalent figure was 43.43 per cent a year earlier, according to the study.

Adelaide followed at 14.95 per cent, with Sydney at 16.88 per cent and Perth at 22.11 per cent.

The Brisbane calculation used a combined median income of about $149,000 and treated monthly repayments of roughly $3,741 as the maximum affordable amount. No Greater Brisbane suburb met the study’s test for a buyer on one average income.

Most of the remaining options for couples were units or houses well outside the inner city. That means buyers may need to compromise on dwelling type, location or both, even when their household has two incomes.

This can concentrate demand at the less expensive end of the market. Couples priced out of detached houses may compete for units with single buyers, while buyers seeking houses are pushed towards outer suburbs and regional locations.

Sydney singles face no median-priced options

The analysis found no Sydney suburb where a median-priced house or unit met its affordability threshold for a single buyer on an average salary. A year earlier, the figure was already extremely low at 0.16 per cent.

Couples had more choices, but affordability still covered only 16.88 per cent of Sydney suburbs, down from 21.39 per cent in 2025.

These figures do not mean every property in a suburb is unaffordable. Individual homes can sell below the median, while some buyers have above-average deposits or incomes. They do, however, show that a buyer relying on ordinary earnings can no longer expect the typical property in most suburbs to fit a conventional affordability measure.

For buyers, the practical response is to set a repayment limit before choosing a location. Searching from a bank’s maximum approval can leave little room for rates, income or household costs to change.

What it means for you

• Buyers should compare monthly repayments, not just falling sale prices.
• A 20 per cent deposit does not guarantee that a median-priced home will be affordable on ordinary earnings.
• Single buyers may need to consider smaller properties, a broader search area or a larger deposit.
• Leave room in the budget for rates, insurance, maintenance and possible repayment increases.