By Michael Yardney June 24, 2026

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Do Australians really want more affordable housing?

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Do Australians really want more affordable housing?

Key takeaways

Housing affordability means different things to different people. It's not just about house prices. Deposits, borrowing power, repayments and living costs all play a role.

The biggest challenge for many Australians is getting into the market. Saving a deposit and qualifying for a loan are often bigger hurdles than making mortgage repayments.

The Bank of Mum and Dad is reshaping housing outcomes. Family wealth is increasingly determining who can buy property and who gets left behind.

Governments talk about affordability but can't really allow house prices to fall. Most voters already own property, making it politically difficult to implement policies that would significantly reduce home values.

The real solution is increasing housing supply. Without more homes being built, affordability pressures are likely to persist regardless of grants, incentives or tax changes.

Everyone says they want more affordable housing.

Politicians promise it at every election. Media commentators demand it. Young Australians tell pollsters they're worried they'll never own a home.

Yet if property values in any of our capital cities suddenly fell by 10% or 20%, most Australians would be horrified.

That's because housing affordability has become one of the most misunderstood topics in Australia.

The reality is that we're trying to achieve two goals that often work against each other.

On the one hand we want younger Australians to enter the property market more easily, but at the same time, we want our own homes and investment properties to keep increasing in value.

And that's where the tension begins.

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We're talking about affordability without defining it

One of the biggest problems in the housing debate is that people use the term "affordability" as though everyone means the same thing.

They don't - for some Australians, affordability means lower property prices. For others, it means saving a deposit.

Some define it as being able to qualify for a mortgage, while others focus on the ability to comfortably meet repayments after buying a home.

Demographer Simon Kuestenmacher believes this lack of clarity sits at the heart of the problem.

As he explains:

"Usually when we start talking about affordability, we don't define what affordability means.

We just kind of have this vague sense that housing should be affordable to purchase or rent and not leave you broke afterwards."

It's a simple observation, but an important one, because if we don't properly define the problem, we're unlikely to find meaningful solutions.

Why the traditional affordability measures only tell part of the story

Housing affordability is often measured using the house price-to-income ratio.

In simple terms, this compares the median house price with the median household income.

It's easy to understand and useful for comparing markets over time and across geographies, but the problem is that nobody buys a property based on income alone.

Interest rates matter. Deposits matter. Borrowing capacity matters. Living costs matter.

A home can appear expensive based on a price-to-income ratio but be relatively manageable if borrowing costs are low.

Likewise, a property can appear affordable but become difficult to own when interest rates rise sharply.

This is why comparing today's buyers with previous generations is often misleading.

Baby Boomers paid much lower income multiples for their homes, but many also endured mortgage rates of well above 10%.

Today's buyers face record prices but have experienced long periods of comparatively low interest rates.

The truth is that every generation has faced different challenges.

Note: Creating a "suffering Olympics" between generations may generate headlines, but it does little to improve housing outcomes.

Housing affordability isn't one hurdle - it's three

Simon breaks affordability into three separate challenges.

The first hurdle is saving the deposit. For many aspiring homeowners, this is the most difficult obstacle.

Research regularly shows it can take more than a decade to save a deposit for a median-priced property in Australia's major capitals.

But there is another demographic shift that's often overlooked.

Previous generations typically purchased their first property in their twenties. It wasn't their dream home. It wasn't their forever home. It was simply their first step onto the property ladder.

Today's first-home buyers are increasingly entering the market in their thirties. That changes everything.

As Simon explains:

"If you push first-home buying back into the mid-thirties, all of a sudden you need a dwelling for your family. In a sense, you skip the entry house and move straight into the forever home."

This creates a structural challenge, but the traditional housing ladder only works if people can access the lower rungs.

When those rungs disappear, buyers are forced to enter the market at a much higher level.

The second hurdle: qualifying for finance

Even after saving a deposit, buyers face another challenge: convincing the bank.

Many households believe they can comfortably service a mortgage, but the bank may disagree.

Australian lending standards remain among the most conservative in the world.

Tip: Borrowers are assessed against interest rates significantly higher than current rates - often 3% higher.

This buffer, which has been put in place by APRA, protects both borrowers and the banking system.

However, it also means many aspiring homeowners can't borrow enough to purchase the property they want.

As prices rise, the gap between aspirations and borrowing capacity continues to widen.

This often forces buyers to make difficult compromises.

They can purchase smaller homes, or move further from employment hubs and accept longer commutes. Or they delay buying altogether.

None of these options is particularly attractive.

The third hurdle: living with the mortgage

Buying the property is only the beginning - the ongoing challenge is servicing the debt.

Traditionally, housing costs consuming more than 30 per cent of household income were considered a sign of housing stress.

Today, that threshold looks increasingly outdated as many Australians are spending 40, 50 or even 60 per cent of their income on housing.

Note: This is where affordability becomes less about property values and more about household cash flow.

A mortgage may be technically affordable according to the bank, but that doesn't mean it leaves enough money for the rest of life.

The affordability measure politicians rarely discuss

One concept Simon highlighted deserves much more attention: Residual income.

It sounds like an economic term, but it's actually quite practical.

The question is simple - after paying your mortgage or rent, how much money do you have left?

As Simon puts it:

"Residual income simply asks one practical question. After you've paid your housing costs, how much money do you have left?"

This approach recognises that affordability varies dramatically between households.

A dual-income professional couple with no children may comfortably afford a mortgage that would overwhelm a family with three children.

That's why housing affordability can never be reduced to a single statistic.

The rise of the Bank of Mum and Dad

One of the most significant developments in Australian housing over the past decade has been the emergence of the Bank of Mum and Dad.

Parental assistance has become one of the most important pathways to home ownership and the consequences are profound.

Historically, hard work, saving and income were the primary determinants of housing success, but today, family wealth is increasingly important.

Note: Two households with identical incomes can experience vastly different outcomes depending on whether parents can contribute to a deposit.

This trend is creating a new form of inequality. Not income inequality - asset inequality.

And unlike wages, asset inequality compounds across generations.

The result is that wealth is becoming increasingly inherited rather than created. That should concern policymakers.

Why first-home buyer grants don't solve the problem

Governments frequently announce first-home buyer assistance schemes.

They're politically popular, generate positive headlines yet tend to have limited long-term impact.

The reason is simple - when you increase the purchasing power of buyers without increasing housing supply, much of the benefit gets capitalised into higher prices.

In other words, buyers receive assistance, but sellers often capture part of the gain.

Simon describes many of these measures as attempts to appear as though affordability is being addressed without fundamentally changing the market.

The intention may be good. The outcomes are often less impressive.

The uncomfortable truth politicians rarely admit

So, here's the reality. If governments genuinely wanted housing to become dramatically more affordable, they would need to implement policies that reduce housing values or significantly slow price growth.

Of course, that's politically dangerous.

Around three-quarters of Australians either own their home outright or have a mortgage, meaning most voters have a vested interest in rising property values.

A government that deliberately reduced housing wealth would quickly discover how unpopular that strategy can be.

As Simon observed:

"It's easy to call for affordable housing. But when policies actually make housing cheaper, that's when the pushback begins."

This political reality explains why most housing policies focus on demand-side incentives rather than structural reform.

The real problem remains supply

Ultimately, Australia's affordability challenge comes back to a simple imbalance.

We have more people wanting homes than homes being built.

Population growth has been strong. Construction has struggled to keep pace. Planning systems remain cumbersome. Infrastructure often lags development. Building costs have risen sharply. Labour shortages continue. Many approved projects no longer stack up financially.

In some cities, large numbers of approved apartment projects remain unbuilt because developers just can't make the numbers work.

And that's why Australia's housing shortage is unlikely to disappear anytime soon.

Note: Supply constraints that have taken decades to create won't be resolved in a few budget cycles.

What happens next?

I don't believe Australia faces a housing crash, nor do I believe policymakers want one.

Property remains too important to household wealth, consumer confidence and economic stability.

The more likely outcome is what Simon describes as a series of gradual adjustments.

Incremental changes. Planning reforms. Infrastructure investment. Additional housing supply. Slower price growth. Faster wage growth.

None of these measures make for exciting headlines, but collectively they may improve affordability over time without destabilising the housing market.

The challenge is that many Australians want a solution that doesn't exist.

They want housing to be dramatically more affordable while preserving the wealth created by rising property values.

Unfortunately, economics doesn't always allow us to have both.

The sooner we acknowledge that reality, the sooner we can have a more honest conversation about the future of housing in Australia.

About Michael Yardney Michael is the founder of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media.