By Amit Aggarwal | FCPA · Life Beyond Numbers · April 2026
Homeowners have never had more equity. First-home buyers have never had a harder path. Both statements are true — and understanding why is the key to making sense of where Australian property goes from here. Understanding Australian property affordability is the first step.
Property conversations in Australia tend to run in one of two directions. Either someone is celebrating what their home is worth, or lamenting that they can never afford one. What rarely happens is a clear-eyed look at both sides of the ledger simultaneously — and at the two-decade story behind the numbers we’re all living with today.
That’s what this article attempts. By examining Australian property affordability through Cotality data tracking housing from 2005 to 2026, here is what the history actually shows — and what it means for the decisions you’re weighing right now.
Twenty years of equity: the homeowner story
For anyone who purchased property before 2020, the past five years have been extraordinary. Across every capital city, dwelling values surged in a way that added hundreds of thousands of dollars to household balance sheets — almost entirely passively.
The pattern is striking. Perth, Brisbane and Adelaide led the nation with growth above 80% over five years. Sydney grew a more modest 31%. And Melbourne sits at the bottom of the capital city table with just 11.8% growth over the same period.
This divergence matters enormously. It tells us that “the Australian property market” is not one market — it is eight quite different markets, each responding to its own local supply, demand, and economic conditions.
Cumulative 5-year dwelling value growth by capital city (Feb 2021 – Feb 2026)
| City | 5yr Growth | Dollar Gain |
|---|---|---|
| Perth | 90.3% | +$469K |
| Brisbane | 86.1% | +$500K |
| Adelaide | 79.9% | — |
| Darwin | 35.2% | — |
| Sydney | 31.1% | — |
| Hobart | 25.5% | — |
| Canberra | 25.2% | — |
| Melbourne | 11.8% | +$87K |
Source: Cotality. Feb 2021 base. Dollar gains are absolute median value increases.
Australian property affordability: what the income ratios actually say
Every dollar of capital growth for an existing homeowner is a dollar of additional barrier for a buyer who doesn’t yet own. And the Cotality data on dwelling-value-to-income ratios makes the arithmetic very clear.
Dwelling value-to-income ratios by capital city
| City | Income Ratio | Affordability |
|---|---|---|
| Sydney | 10.1x | Severely stretched |
| Adelaide | 9.5x | Severely stretched |
| Brisbane | 9.1x | Severely stretched |
| Perth | 8.2x | Stretched |
| Melbourne | 7.1x | Most affordable major city |
| Darwin | 4.4x | Below average |
Sydney now requires over 10 times the median annual household income to purchase a median dwelling. A decade ago, that ratio was closer to six. The distance between wages and property prices has not merely grown — it has structurally shifted.
“The past five years created wealth for those already in the market — and a steeper climb for everyone still trying to enter it.”
The serviceability squeeze: where Australian property affordability stands today
The most revealing metric in the Cotality dataset is serviceability — what percentage of your household income goes to servicing a new mortgage at today’s rates, on today’s prices.
Nationally, that figure currently sits at 45.9% — nearly 12 percentage points above the long-run average of 34.3%. Australians buying today are committing to mortgage repayments that consume nearly half their gross household income before any other expense is considered.
Percentage of household income required to service a new mortgage — by capital city (2025–26)
| City | Serviceability % | vs Long-run Avg (34.3%) |
|---|---|---|
| Sydney | 54.7% | +20.4pp above |
| Adelaide | 51.7% | +17.4pp above |
| Brisbane | 49.8% | +15.5pp above |
| Perth | 44.8% | +10.5pp above |
| Hobart | 41.4% | +7.1pp above |
| Melbourne | 38.6% | +4.3pp above |
| ACT | 33.4% | Below average |
| Darwin | 23.9% | Well below average |
Source: Cotality. Assumes 80% LVR on median dwelling value, average discounted variable rate, 30-year term.
Sydney buyers are now allocating 54.7% of household income to mortgage repayments. Adelaide — still perceived as “affordable” — sits at 51.7%. Brisbane at 49.8%. The only cities materially below the long-run average are Melbourne (38.6%), ACT (33.4%), and Darwin (23.9%) — also the markets with the least price appreciation over the past five years.
What this means as rates move higher
With three RBA rate rises now forecast — May, June, and August — on the back of oil-supply disruptions driving persistent inflation, every percentage point of serviceability is about to be tested harder. Australian property affordability will be squeezed further. Three forces operate simultaneously.
A practical question every mortgage holder should ask right now
Should you review your rate — and consider fixing?
If rates rise in May, June, and August as forecast, variable mortgage holders will feel each increase almost immediately. For most households, that is an additional $300–$600 per month in repayments per $500K of outstanding loan by the end of the cycle — compounding on a serviceability position that is already stretched.
This makes right now one of the more important windows in recent years to review your mortgage structure. There are two broad paths worth considering:
The right answer depends entirely on your loan size, income stability, investment strategy, and how long you plan to hold the property. What is clear is that doing nothing and assuming rates will quickly reverse is not a strategy — it is a hope.
This is general information only and does not constitute personal financial or credit advice. Speak with a qualified mortgage broker or financial adviser before making any changes to your loan structure.
The Australian property affordability read-through for buyers and investors
Markets where serviceability is still below or near the long-run average have the most rate-rise resilience. Markets where five years of growth has driven income ratios above 9x face the most headwind. The cities that look most exciting on a five-year growth chart are often the ones with the least runway from here.
Melbourne, which many investors have written off after its relative underperformance, is now simultaneously the most affordable major city on a serviceability basis, the city with the most room to recover relative to its economic weight, and one of the strongest net overseas migration destinations in the country. That combination does not stay unnoticed forever.
For more on building wealth through property, read our guide to SMSF property investment and our take on property investment strategies. Understanding where we are in this cycle — not just what prices are today, but how we got here and what the structural forces look like — is the difference between reacting to headlines and making decisions with a genuine edge. Australian property affordability is not a single number — it is a story told differently in every capital city.
Frequently Asked Questions
What is the current dwelling-value-to-income ratio in Australia?
It varies significantly by city. Sydney leads at 10.1x median household income, followed by Adelaide (9.5x) and Brisbane (9.1x). Melbourne is the most affordable major city at 7.1x. A decade ago, Sydney’s ratio was closer to 6x — the shift has been structural, not cyclical.
How much of my income should go to mortgage repayments?
The long-run national average is 34.3% of household income. Currently, the national figure sits at 45.9% — nearly 12 percentage points above average. Sydney is the most stretched at 54.7%. Melbourne (38.6%) and ACT (33.4%) remain closest to the historical norm.
Should I fix my mortgage rate before the RBA raises rates?
With three rate rises forecast for May, June, and August 2026, variable rate holders face an additional $300–$600 per month per $500K of outstanding loan. Fixing all or part of your loan — or a split structure — are worth considering. Fixed rates have already begun pricing in expected hikes, so the window to act is now. Speak with a qualified mortgage broker before making changes.
Which Australian city has the best property investment outlook right now?
Melbourne stands out as simultaneously the most affordable major city on a serviceability basis, the city with the most room to recover relative to its economic weight, and one of the strongest net overseas migration destinations. Cities that grew fastest over five years (Perth 90.3%, Brisbane 86.1%) now face the most affordability headwinds going forward.
What happens to Australian property prices when interest rates rise?
Three forces operate simultaneously: demand compresses downward as borrowing capacity falls, new housing supply slows as construction costs rise, and existing owners sit tight rather than selling into weakness. The net effect is typically softer price growth rather than sharp falls — thin listings put a floor under prices even as sentiment weakens.
Is Adelaide still an affordable property market?
Despite its reputation, Adelaide now has a dwelling-value-to-income ratio of 9.5x and a mortgage serviceability rate of 51.7% — making it one of the most stretched markets in the country. It was one of the top growth markets over five years (79.9%), but that growth has significantly eroded its affordability advantage.
How does Perth’s property growth compare to other cities?
Perth led the nation with 90.3% dwelling value growth over five years (Feb 2021 – Feb 2026), adding approximately $469K to the median dwelling value. Brisbane followed closely at 86.1% (+$500K). By contrast, Melbourne grew just 11.8% (+$87K) over the same period — highlighting how different each capital city market truly is.
Want to talk through what this means for you?
Whether you’re an existing investor, considering your first property, or reviewing your mortgage structure — I’m happy to have that conversation.
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