Australian Housing Affordability in 2026: Trends & Analysis

The State of Australian Housing Prices¶

Australian housing affordability remains one of the most pressing financial concerns for households in 2026. After a brief correction in 2022–2023, national dwelling values have resumed their upward trajectory, driven by persistent supply shortages, strong population growth, and constrained new construction activity.

CoreLogic data for January 2026 shows the national median dwelling value at $872,000, representing a 4.8% increase over the prior twelve months. The divergence between capital cities and regional markets has narrowed somewhat, but significant variation persists.

Median House Prices by Capital (January 2026)¶

Perth and Adelaide have led growth, buoyed by mining sector strength and relative affordability attracting interstate migration. Sydney and Melbourne have seen more modest gains as higher price points and borrowing constraints dampen demand.

The Deposit Gap¶

For a typical first home buyer targeting the national median, a 20% deposit equates to approximately $174,400 — a figure that has grown far faster than wages over the past decade. Even a 10% deposit with Lenders Mortgage Insurance (LMI) requires $87,200 plus LMI premiums that can add $15,000–$30,000 to the cost of entry.

At current average full-time earnings of approximately $98,000 per annum, saving a 20% deposit on the national median would take a single income earner roughly 6.5 years assuming a 20% savings rate — and considerably longer in Sydney, where the equivalent figure stretches beyond 10 years.

Serviceability Buffers and Borrowing Capacity¶

APRA's 3 percentage point serviceability buffer continues to play a significant role in constraining borrowing capacity. With the average variable rate at 6.45%, lenders must assess a borrower's ability to repay at approximately 9.45% — a rate that substantially reduces the maximum loan size.

For a household earning $150,000 in combined gross income with no other debts, the indicative maximum borrowing capacity sits around $680,000–$720,000 depending on the lender. This creates a stark mismatch in Sydney and increasingly in Brisbane and Canberra, where even unit prices exceed comfortable borrowing limits for median-income households.

Apex Bank applies the APRA buffer responsibly while offering tools like our Borrowing Power Calculator to help customers understand their position before they begin searching for property.

Government Schemes and Support¶

Several government initiatives aim to ease the burden for first home buyers and lower-income purchasers:

• First Home Guarantee (FHBG): Allows eligible buyers to purchase with as little as 5% deposit without paying LMI, with the government guaranteeing the shortfall. Limited to 35,000 places per financial year.
• Regional First Home Buyer Guarantee: Similar to the FHBG but targeted at regional purchasers, with 10,000 places annually.
• Family Home Guarantee: Supports single parents with children to buy with a 2% deposit.
• First Home Super Saver Scheme (FHSSS): Permits voluntary super contributions (up to $50,000) to be withdrawn for a home deposit, offering tax advantages during the savings phase.
• State-based stamp duty concessions: Most states offer exemptions or concessions for first home buyers below certain thresholds. For instance, NSW provides a full exemption on properties up to $800,000 and a concession up to $1,000,000.

Renting vs Buying: The 2026 Calculus¶

With national vacancy rates sitting at 1.2% — well below the balanced market benchmark of 3% — rental costs have surged. The national median weekly rent for a house is now $620, up 7.4% year-on-year. In this environment, the traditional "renting is dead money" argument carries more weight, although the high upfront costs of purchasing still favour renting for those with shorter time horizons or unstable income.

A break-even analysis suggests that in most capital cities, buying becomes financially advantageous over renting after a holding period of approximately 5–7 years, factoring in transaction costs, maintenance, and opportunity cost of the deposit.

What This Means for Apex Bank Customers¶

Housing affordability challenges underscore the importance of early planning, disciplined saving, and understanding the full landscape of support available. Apex Bank's home lending team can help you model different scenarios — from leveraging the First Home Guarantee to structuring a split loan that balances repayment certainty with rate flexibility.

This analysis is general in nature and does not constitute financial advice. Property markets carry inherent risk and past performance is not indicative of future results.