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Surging prices leave first home buyers’ options limited
First home buyers face scarce property options nationwide, as rapidly-increasing house prices leave almost 90 per cent of properties outside of their budgets.
A new KPMG analysis of Australian Bureau of Statistics (ABS) data found that buyers with a household income of around $180,000 can afford to purchase approximately 12 per cent of the available housing stock nationwide.
The new data marked a sharp decline from 2019–2020, when buyers earning around $150,000 could access roughly 30 per cent of the nation’s housing stock.
The report found that market value increased by $200,000, with an average purchase price of $760,000, from the $560,000 mark set in 2019-2020.
KPMG urban economist Terry Rawnsley said the data paints a bleak outlook for the wave of first home buyers entering the market under the 5 per cent deposit scheme.
“In just five years, the face of first home buyers has changed dramatically,” Rawnsley said.
“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.”
The data showed that even with an income significantly higher than the average two full-time worker household income of $145,000, first home buyers would still struggle to enter the housing market.
Nationwide, the percentage of homes available to first home buyers in NSW has remained unchanged over the past five years, with just five per cent within reach.
Rawnsley said that the lack of affordable options across NSW suggests that the state’s property market may have reached its affordability limit.
Despite being the state of choice for first home buyers, Victoria has seen the stock of affordable properties drop by a third, with only 10 per cent of dwellings within their price range.
Queensland recorded the steepest drop, with affordable homes for first home buyers plunging from 60 per cent in 2019–2020 to just 15 per cent last financial year, as the state surges ahead of the Olympics-fuelled boom.
Five years ago, South Australian buyers earning $150,000 could access nearly a quarter of the housing market; today, even with a $180,000 income, only a quarter of homes are within reach.
Similarly, first home buyers in Western Australia currently have access to around a quarter of their available housing stock, compared to 60 per cent five years ago.
“The sharp rise in house prices across Western Australia, Queensland, and South Australia 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 the traditionally unaffordable markets of NSW and Victoria.”
With data showing that only 12 per cent of new builds were coming in at under $800,000 compared to around 33 per cent in 2022-2023, Rawnsley said that rising construction costs and higher interest rates had reshaped the housing market.
“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 concluded.