Affordability is no longer only changing what Australians can pay. It is changing how people live, how families make decisions, and what buyers now expect from a property.
Across Australia, buyers are no longer looking for a home that simply puts a roof over their head. They are looking for a property that can also act as a wealth creation vehicle, provide flexibility, and support the family’s financial future.
Australia’s affordability problem did not happen overnight, and it is not an issue affecting Australians alone. Housing affordability has become a global challenge.
Across the OECD, housing costs have risen sharply over the past decade. The IMF reported that home prices across mostly high-income OECD countries rose by 37% in real terms over the past decade, while prices increased 16% relative to incomes on average. That means the gap between wages and property prices is not just an Australian story. It is happening across advanced economies.
But Australia, and particularly Sydney, now sits near the most severe end of that global affordability problem.
The global affordability squeeze
Around the world, the same pressures keep appearing.
Population growth has increased demand. Planning systems have struggled to deliver enough housing in the right places. Construction costs have risen. Interest rates moved sharply higher after years of cheap debt. Investors, families and first-home buyers have all competed for limited housing stock.
The OECD says housing affordability is now a major policy issue across member countries, especially for lower-income renters. On average, one in three low-income tenant households across the OECD is considered overburdened by housing costs, spending more than 40% of disposable income on rent. In countries such as the United States, Spain, Chile, Costa Rica and Colombia, more than half of low-income tenant households are overburdened.
That tells us something important.
Housing affordability is no longer a fringe issue. It is now central to how people live, where they work, whether they have children, whether they can retire comfortably, and whether younger generations can build wealth.
Where Australia ranks
Australia is not the only country with a housing problem, but it ranks very poorly by international standards.
The 2025 Demographia International Housing Affordability report ranked Hong Kong as the least affordable major housing market, with a median house price 14.4 times median household income. Sydney followed at 13.8 times income, making it the second least affordable major market in that report.
That comparison is confronting.
Hong Kong is a dense, land-constrained global city with a very different geography. Sydney is not Hong Kong. Australia has land. Yet Sydney is still sitting near the top of the world’s unaffordability rankings.
That tells us the issue is not simply land availability. It is how land is zoned, approved, serviced, taxed, financed and delivered.
Housing affordability comparison
| Country / market | Affordability pressure | What the data shows |
|---|---|---|
| Hong Kong | Worst among major markets | Median house price around 14.4 times household income |
| Sydney, Australia | Second worst among major markets | Median house price around 13.8 times household income |
| Australia overall | Severe pressure | Housing affordability sank to new lows in 2025, with the median house price around 8.9 times annual income |
| OECD average | Worsening | Home prices across OECD economies rose 37% in real terms over the past decade |
| Low-income OECD renters | High rental stress | One in three low-income tenant households spends more than 40% of income on rent |
| Australia low-income households | Significant housing stress | Around 1.26 million low-income households spent more than 30% of disposable income on housing in 2024–25 |
Australia’s national affordability problem is serious, but Sydney is the extreme case. Forbes reported that Australia’s median house price reached 8.9 times annual income in 2025, while Sydney’s median home price was almost $1.3 million by March 2026, around 40% above the national median.
Australia’s pressure is both rental and mortgage based
The affordability issue is not just about buying.
It is also about renting.
AIHW reported that in 2024–25, an estimated 1.26 million low-income households in Australia were in financial housing stress, spending more than 30% of disposable income on housing costs. Among low-income households, renters were the most exposed, but mortgage holders were also under pressure.
This is why affordability is now affecting nearly every part of the market.
First-home buyers are struggling to enter. Renters are struggling to save. Mortgage holders are dealing with higher repayments. Downsizers are nervous about selling and buying back in. Families are helping adult children. Older Australians are trying to preserve wealth while managing lifestyle and care needs.
The result is a very different buyer.
The property now needs to do more
In the past, buyers often looked at a property as a home first and an investment second.
That has changed.
Today, more buyers are asking whether the property can support multiple stages of life. Can it house an adult child? Can it provide a separate area for an ageing parent? Can it produce income? Can it be adapted later? Can it hold value if the market becomes more selective?
That is why features such as granny flats, studios, dual living, separate entries, parking, storage and flexible floor plans are becoming more important.
They are not just lifestyle features.
They are affordability features.
Why Sydney feels the pressure more sharply
Sydney’s affordability problem is sharper because it combines high incomes, high prices, limited inner-city land, planning restrictions, strong migration, lifestyle demand and global capital.
In the Eastern Suburbs, the issue becomes even more specific.
Buyers still want the location, the schools, the beaches, the village lifestyle, the transport and the long-term security of owning in the East. But they are more cautious than they were during the boom. They are looking harder at value, building quality, strata costs, parking, storage, future supply and resale appeal.
That is why not all apartments are equal.
A one-bedroom apartment with parking and a proper study can appeal to a very different buyer from a basic one-bedroom apartment with no flexibility. A two-bedroom apartment with a second bathroom, good storage and a practical floor plan can attract downsizers, investors, sharers and young families.
In an unaffordable market, functionality becomes value.
The warning for buyers and sellers
The global affordability crisis has created a more cautious buyer.
That means sellers cannot rely on the same conditions that existed during the boom. Cheap money, rising prices and fear of missing out covered a lot of weak selling processes. In that market, many agents looked better than they really were because the market was carrying the result.
Today, buyers are online, informed and selective. They compare properties on realestate.com.au and Domain. They study photos, floor plans, price guides, strata levies, building quality, comparable sales and suburb trends before they speak to the agent.
The platforms are largely the same.
The difference is not the agency logo.
The difference is strategy, follow-up, pricing judgement and negotiation.
For buyers, the risk is also higher. Buying before selling, overpaying for an off-market property, or committing to an off-the-plan apartment without understanding future supply can create serious financial pressure.
The real message
Australia’s housing affordability crisis is part of a wider global problem, but that does not make it less serious.
In fact, it makes the local decision even more important.
When housing becomes expensive relative to income, every property decision carries more weight. Buyers need to think beyond the brochure. Sellers need to think beyond the listing. Families need to think about timing, debt, flexibility, risk and long-term value.
Housing affordability is no longer just about the price of property.
It is about how people live, how families plan, and how carefully they need to move in a market where the cost of getting it wrong has become much higher.
