Housing affordability

Access to good quality, affordable housing is fundamental to wellbeing. It can help reduce poverty and enhance equality of opportunity, social inclusion and mobility (Gurran et al. 2021; Maclennan et al. 2019). Housing affordability is an ongoing challenge for many Australians who are renting, seeking to purchase a home, or managing mortgage repayments. A range of factors influence the supply, demand and cost of housing, including Australia’s growing and ageing population, as well as government policy settings (AIHW 2023; Burke et al. 2020; Gurran et al. 2021; NHSAC 2025).

Housing affordability generally refers to the relationship between housing costs – such as dwelling prices, mortgage payments or rents – and household income (Thomas and Hall 2016). It is linked to patterns of Home ownership and housing tenure and the provision of Housing assistance provided by governments when people do not have enough income for housing.

The cost of housing

Purchasing a home

House prices have risen across Australia over the decade to the last quarter of 2024. The median transfer price for established houses in capital cities increased substantially, with the median house transfer price in Sydney increasing from around $680,000 in the first quarter of 2014 to around $1.4 million at the end of 2024 (ABS 2025b). Median transfer house prices in Canberra ($980,000) were the second highest among the capital cities at the end of 2024, followed by Brisbane ($925,000), whilst Darwin ($555,000) was the lowest. 

The median transfer price of attached dwellings (such as units and apartments) in capital cities also generally increased since 2014, though not to the same extent as established houses. Sydney prices increased from $592,000 at the start of 2014 to $815,000 at the end of 2024 (ABS 2025b). Brisbane ($652,000) was the second most expensive for units/apartments at the end of 2024, followed by Adelaide ($635,000) and Melbourne ($605,000).

While housing prices in non-capital city areas have also risen, they generally remain lower than those in capital cities. 

Rising house prices have not been the only factor driving up the cost of purchasing a home in recent years. Rising interest rates in more recent times have emerged as a key contributor to higher housing costs. Between May 2022 and November 2023, the Reserve Bank of Australia increased the cash rate 13 times – from a historic low of 0.1% to 4.35% – substantially increasing mortgage repayments and the financial burden on homebuyers.

Cost of rental accommodation

Almost one-third (31%) of households in Australia were estimated to be renting in 2021 (ABS 2022b). While private rental costs surged in the period following the COVID-19 pandemic, the rate of rental price growth has slowed more recently (ABS 2025a).

Over the ten years to March 2025, median advertised rents in Australia rose by approximately 48% for both houses and units (CoreLogic 2025). The strongest increases in advertised rents for houses were recorded in Hobart (64%), Adelaide (57%), and Perth (50%).

Over the 12 months to March 2025, median advertised rents for all dwellings in capital city areas rose by 3.1%. The strongest increases were recorded in Perth (6.3%), Adelaide (5.5%), and Hobart (4.6%). Notably, median advertised rents did not decline in any capital city during this period (CoreLogic 2025).

Advertised rents provide insight into the potential barriers faced by people seeking a new rental lease. However, rental affordability extends beyond advertised prices. To better understand housing affordability – particularly in the context of broader cost of living pressures – it is important to consider the rents paid by both new and existing tenants. 

Over the ten years to March 2025, rents paid in Australia rose by 22% – less than half the increase seen in median advertised rents over the same period. Between the first quarters of 2024 and 2025, rents paid in Australia increased by 5.5% . During this period, all capital cities recorded rent increases except Hobart which experienced a 1.3% decline. Perth saw the largest rise at 8.9%, while Canberra had the smallest increase at 0.6% (ABS 2025a). 

How is housing affordability measured?

Measuring housing affordability is not straightforward. A household’s financial situation, the overall demand in the housing market and housing tenure type (whether a household is seeking to rent, is renting, is looking to buy or is a home owner with or without a mortgage) all influence individual housing affordability (Senate Standing Committees on Economics 2015). The simplest measure of housing affordability compares housing costs to gross household income.

How much do households spend on housing?

In 2019–20, 10.5% of households allocated between 30% to 50% of their gross income to housing costs, while 5.7% spent 50% or more. These proportions have increased from 10.2% and 5.2%, respectively, since 2007–08 (ABS 2022b).

The proportion of household income spent on housing costs does not consider that high-income households may choose to spend more than 30% of their income to housing. Their higher income means they have sufficient income after housing costs to avoid financial stress (AHURI 2019; Rowley et al. 2015).

By contrast, low-income households (a household with equivalised disposable income falling between 3rd to 20th percentile of households) are more likely to lack the resources to deal with financial impacts arising from critical life events and/or housing market factors, often leading them to need additional housing assistance (ABS 2022c; AIHW 2023).

The ABS’s Survey of Income and Housing (SIH) is the main source of income and housing cost data in Australia. However, the most recent data available is from 2019–20. To address this gap, the Australian National University’s (ANU’s) PolicyMod microsimulation model provides insights into recent housing affordability trends. Building on the 2019–20 SIH data, the model estimates outcomes through to 2024–25, factoring in changes to the population, rents, the labour market, and government settings related to income and social security payments. The following sections of this article present the results from the PolicyMod model.

Housing costs relative to income

In 2024–25, an estimated 1.26 million low-income households were in financial housing stress, spending more than 30% of their disposable income on housing (ANU CSPR, 2025). One in five (20.5%) households in the rental market were low-income households in financial stress, compared with home-owners with a mortgage (14.7%) and home-owners without a mortgage (0.3%).

Across all households–regardless of income level–more than 1 in 4 (26%) were spending more than 30% of their disposable income on housing related costs (ANU CSPR 2025).

By tenure type, mortgage holders were the group most likely to spend more than 30% of their disposable income on housing in recent years. In 2024–25, almost half (44.5%) of households with a mortgage spent above this threshold, compared with 28% of renting households and 0.3% of homeowners without a mortgage (Figure 1).

The recent trend represents a notable departure from the period between 2013–14 and 2021–22, when renters were moderately more likely than mortgage holders to spend more than 30% of their disposable income on housing.  The share of mortgage-holding households exceeding this threshold increased markedly – from 24% in 2021 to over 40% in 2022–23, 2023–24 and 2024–25 – coinciding with the sharp rise in interest rates in 2022 (see Mortgage-holding households).

In addition to differences by tenure type, households spending more than 30% of their disposable income were more commonly headed by younger people, were first-home buyers, couples and single-parent households with dependents, and households in the lowest income quintile (Figure 1).

Figure 1: Proportion of households spending more than 30% of disposable income on housing, by household type, 1984 to 2024–25

Notes

1. Figure 1 uses data from PolicyMod, a microsimulation model based on the ABS Survey of Income and Housing (2019–20). The data has been updated to 2024–25 to reflect changes in income, rents, population, and the labour market. All projections for 2020–21 to 2024–25 are based on this updated dataset.
2. 2. The figure presents data from calendar years for 1984 and 1986. From 1988 to 2019, the data represent financial years (e.g., 1988–89 to 2019–20). Results for subsequent years are based on simulations, referencing the December point of each year, but are also presented in financial year format for consistency.

Source: Unpublished, AIHW analysis of PolicyMod data from Australian National University’s Centre for Social Policy Research (ANU CSPR 2025).

Mortgage-holding households

In recent years, the proportion of mortgage-holding households spending more than 30% of their disposable income on housing has reached historically high levels, largely driven by the sharp increase in interest rates from 2022 onwards (RBA 2022). 

The effect of rising interest rates has been compounded by high loan values, which reflect the substantial growth in house prices over the past two decades (ABS 2025b). As a result, many households have become more financially exposed to changes in borrowing costs. This section examines mortgage-holding households to identify which groups have been most affected and to compare their experiences with those of similar cohorts in the past.

In 2024–25, mortgage-holding households in the two lowest income quintiles were the most likely to spend more than 30% of their disposable income on housing (approximately 55%). High proportions were also observed among households with a reference person aged under 50 (over half), single-parent families with dependents (51%), and lone-person households (66%) (Figure 2).

Figure 2: Proportion of mortgage-holding households spending more than 30% of disposable income on housing, by household type, 1984 to 2024–25

Notes

1. Figure 2 uses data from PolicyMod, a microsimulation model based on the ABS Survey of Income and Housing (2019–20). The data has been updated to 2024–25 to reflect changes in income, rents, population, and the labour market. All projections for 2020–21 to 2024–25 are based on this updated dataset.
2. The figure presents data from calendar years for 1984 and 1986. From 1988 to 2019, the data represent financial years (e.g., 1988–89 to 2019–20). Results for subsequent years are based on simulations, referencing the December point of each year, but are also presented in financial year format for consistency.

Source: Unpublished, AIHW analysis of PolicyMod data from Australian National University’s Centre for Social Policy Research (ANU CSPR 2025).

Geographic variation of housing affordability

Housing costs and incomes vary across Australia, resulting in differences in housing affordability both within and between states and territories, as well as across different housing tenure types.

Housing costs

Housing costs include rent payments, mortgage payments, and rate payments (such as water and general rates). Between 1994 and 2024–25, among all households, the median proportion of disposable income allocated to housing costs varied across Australia’s regions.

• Among capital cities, the median proportion spent on housing costs increased the most in Sydney (from 13.4% to 22.2%) and Perth (from 14.3% to 21.2%).
• Outside the capital cities, the median proportion spent on housing costs increased the most in Queensland (from 12.1% to 18.2%) and Tasmania (from 8.8% to 14.8%) (Figure 3).

Figure 3: Median housing costs as a proportion of household disposable income, by location, 1994–95 to 2024–25

Notes

1.  Figure 3 uses data from PolicyMod, a microsimulation model based on the ABS Survey of Income and Housing (2019–20). The data has been updated to 2024–25 to reflect changes in income, rents, population, and the labour market. All projections for 2020–21 to 2024–25 are based on this updated dataset.
2. The figure presents data for the financial years 1994–95 and 2009–10. Results for 2024–25 are based on simulations referencing the December point of that year, but are presented in financial year format for consistency.
3. Data for the Northern Territory and ACT were unavailable separately and are excluded from the figure.

Source: Unpublished, AIHW analysis of PolicyMod data from Australian National University’s Centre for Social Policy Research (ANU CSPR 2025).

Rental affordability index

The SGS Rental Affordability Index (RAI) is a measure of rental affordability that assesses the proportion of household income spent on rent across different household types and regions. The RAI is based on the average weekly household income in each region and the median rent of dwellings for which new rental bonds were lodged in a given quarter.

A score of 100 on the RAI reflects the threshold for rental stress, where a household is allocating 30% of its income to rent. Scores below 100 indicate increasing levels of rental stress, while higher scores reflect greater affordability (see Table 1 for more details).

The RAI helps identify which regions are under the most rental pressure and can be used to track trends in rental affordability over time (SGS Economics and Planning 2024).

As at June 2024:

• Perth and Sydney were the least affordable metropolitan areas, with affordability index scores of 98 and 99, respectively – a decline from 112 and 104 one year earlier, and from 124 and 120 two years ago.
• The ACT was the most affordable metropolitan area in Australia (128).
• Affordability declined in all metropolitan areas compared with 2022 and 2023, except in the ACT and Hobart, where conditions improved.
• Regional Queensland and regional NSW were the least affordable of the rest of state areas, with index scores of 102 and 101 respectively.
• Regional South Australia was the most affordable of the rest of state areas (125).

Where do I go for more information?

For more information on housing affordability, see:

• Housing assistance in Australia
• Housing data dashboard
• Australian Bureau of Statistics (ABS) Housing Occupancy and Costs, financial year 2019-20
• State of the Housing System 2025

For more on this topic, see Housing assistance.