First-home affordability is no longer just a Sydney problem; it’s creeping across Australia's capital cities as prices climb.
The Australian dream of owning a home is slipping further out of reach for many young people, a trend highlighted by Domain’s 2026 First Home Buyer Report. Across capital cities, the typical monthly repayments on an entry-level house now consume about 48.9% of a couple’s income—up 24% over the last five years. For units, repayments take roughly 30.9% of a household’s earnings, a tougher hurdle but not as severe as detached houses.
The findings show affordability has worsened over the past year, even with government programs for first-time buyers and three interest-rate cuts in the prior year. Entry-level home prices have surged much faster than wages, the time needed to save a 20% deposit has lengthened in every capital, and the traditional entry point into the market—home units—has narrowed.
An entry-level home is defined by the 25th percentile price point. Sydney remains the priciest city, with a couple aged 25–34 needing to dedicate 61.8% of their income to service a mortgage for an entry-level house, and 34.7% for a unit. But other capitals—Brisbane, Adelaide, and Perth—are closing the gap as prices rise rapidly in those markets.
“What’s most alarming is that this isn’t just a Sydney problem anymore,” noted Domain’s chief of research and economics, Nicola Powell. “Brisbane, Adelaide, and Perth, once viewed as more attainable, have seen swift increases in entry-level prices, pushing them toward the least affordable markets.”
The idea that units offer an accessible pathway for first-time buyers has faltered. The time required to save a 20% deposit for a unit has climbed, and the so-called unit safety valve is failing in several capitals. Nationally, it takes about three years and six months to accumulate a 20% unit deposit, with only a one-month shorter saving period in regional Australia.
“Units used to be the stepping stone into home ownership, but that route is narrowing,” Powell said, adding that some unit buyers are now edging into mortgage stress.
Despite Brisbane overtaking Sydney as the city with longer unit-deposit saving times, Sydney remains the most expensive overall for houses. A young couple in Sydney would need to save for roughly seven years and seven months to reach a 20% deposit on an entry-level house—over a year longer than Brisbane and at least two years longer than every other capital city, with the national average at around five years.
Brisbane, Adelaide, and Perth have all surpassed Melbourne in deposit-saving time, while Canberra and Melbourne show more moderate price increases, helping higher incomes offset rising costs.
National initiatives like the 5% deposit scheme, introduced last October, have helped some buyers shorten saving times, though concerns persist about potentially fueling demand.
Domain emphasizes that broader affordability challenges remain, particularly in pricier markets where loan serviceability remains a major hurdle for many would-be buyers. Powell argues that units should act as the affordability valve, but achieving this requires shorter saving times, lower repayment burdens, and adequate housing supply—conditions that aren’t uniformly present across cities.
Prices for entry-level homes and units have outpaced wage growth, adding another layer of difficulty for younger Australians aiming to break into the market. Over the past five years, wages rose about 21% (adjusted for inflation), while real estate prices surged more steeply: entry-level houses up 68% and units up 30%. States such as Adelaide, Brisbane, and Perth recorded especially large gains in entry-level house prices.
Even with 2025 interest-rate cuts offering some relief, they didn’t fully reverse years of strong price growth and rising household debt; affordability in many markets worsened even as rates fell.
The Domain report aligns with broader concerns from other studies about young Australians, especially women, who face higher barriers to ownership due to deposits, stamp duties, and other upfront costs. Many young women report lower prioritization of property ownership than men, compounded by loanqualification challenges and the prospect of higher upfront costs.
Among Australia’s capital cities, Darwin currently offers the shortest saving timelines for both houses and units, keeping it at the top for first-home buyers for the fourth year running. For those willing to trade proximity for feasibility, outer suburbs and peri-urban areas appear more accessible. In Sydney’s outskirts—Mount Druitt, Fairfield, and Liverpool—three to four years suffices for a unit deposit, while Melbourne’s Essendon and Stonnington-West emerge as relatively affordable spots within the city. Caboolture in the Brisbane region is near the three-year-four-month mark for a unit deposit.
Even so, fast-rising prices remain a challenge across all states and territories—a sign of a fundamental shift toward mortgage stress that isn’t easy to reverse. Experts advocate a multi-pronged approach: stamp-duty reform, incentives to boost affordable housing supply, enhanced deposit assistance, and broader changes to tax, retirement, and pension settings. Without sustained action to increase supply and reduce upfront and ongoing costs, home ownership could become permanently out of reach for many young Australians.
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