Key takeaways
According to Domain’s First Home Buyer Report 2025, the road to homeownership remains steep, despite some marginal improvements in affordability.
Time required to save a deposit for units has dropped by two months across the combined capitals, while time required to save for entry-priced houses has increased by one month.
Across the combined capitals, it takes around 20 months less to save for an entry-priced unit than a house. This difference is even greater in Sydney and Canberra, at 2 years and 5 months and 2 years and 4 months faster, respectively.
Mortgage stress is more widespread in our combined capitals and among entry-priced houses, with regional Australia offering the best affordability. In regional Australia, entry-priced units take up 25.9% of household income, below the 30% benchmark, while entry-priced houses exceed this at 33%.
In the combined capitals, affordability remains a struggle. Entry priced houses take up 47.1% share of household income, while units require 30.7%
For decades, Australians have been told that owning a home is the ultimate financial milestone—the cornerstone of wealth creation and security.
But in today’s market, is that dream becoming unattainable for a growing number of first-home buyers?
According to Domain’s First Home Buyer Report 2025, the road to homeownership remains steep, despite some marginal improvements in affordability.
The latest data reveals that while saving for a deposit has become slightly easier in select locations, mortgage stress has become more widespread across the country.
So, where does that leave aspiring buyers?
Is there still a viable path onto the property ladder, or are we witnessing a fundamental shift in what homeownership looks like in Australia?
The gap between wages and property prices is growing
One of the most striking findings from the report is how rapidly property prices have outpaced wage growth.
Domain’s Chief of Research and Economics, Dr. Nicola Powell, summarised it best:
“In the past five years, entry house prices have increased 58%, while unit prices have risen by 27%.
Meanwhile, inflation surged 20%, and wages only grew by 15%.
This shows the growing gap between earnings and property costs, making it harder for first-home buyers to get into the market.”
In other words, property values have skyrocketed, while incomes have barely kept up with inflation.
The result?
Many first-home buyers are finding it increasingly difficult to save for a deposit, let alone afford mortgage repayments.
For instance:
- The time to save for a 20% deposit on an entry-priced house in Sydney is now 6 years and 9 months—the longest in the country.
- In Melbourne, it takes 5 years and 1 month, while Brisbane and Adelaide have both seen their saving times increase due to rising property prices outpacing wage growth.
- Darwin remains the fastest path to homeownership, requiring just 3 years and 5 months for a house and 2 years and 1 month for a unit.
Table 1. The time to save for a 20% deposit on an entry-priced home for a couple aged 25-34.
|
Area |
Time to save - Entry house | Time to save - Entry unit | ||
|
Entry house |
Annual Change (months) |
Entry unit |
Annual Change (months) | |
| Sydney | 6y 9m | +1m | 4y 4m | -2m |
| Melbourne | 5y 1m | -3m | 3y 5m | -2m |
| Brisbane | 5y 6m | +4m | 4y 2m | +5m |
| Adelaide | 5y 6m | +5m | 3y 9m | +4m |
| Perth | 4y 6m | +8m | 2y 11m | +6m |
| Hobart | 4y 11m | +2m | 3y 7m | -3m |
| Darwin | 3y 5m | -2m | 2y 1m | -3m |
| Canberra | 5y 7m | -1m | 3y 3m | -3m |
| Combined capitals |
5y 1m |
+1m |
3y 5m |
-2m |
| Combined regionals |
4y |
+2m |
3y 2m |
+1m |
| Australia | 4y 10m | +1m | 3y 4m | -1m |
| y = year, m = month. | ||||
So, while some cities remain more accessible, the trend is clear: first-home buyers need to save longer and borrow more to secure their place in the market.
Units: a faster (but not stress-free) path to homeownership
One of the report’s more optimistic takeaways is that units continue to offer a much faster route to homeownership compared to houses.
On average, buying an entry-level unit shaves almost two years off the time required to save for a deposit.
Table 2. Entry house and unit prices
|
Area |
Entry houses | Entry units | ||||
|
Entry price |
Annual change | 5-year change |
Entry price |
Annual change | 5-year change | |
|
Sydney |
$990,000 |
7.6%
($70,000) |
44.9%
($307,000) |
$615,000 |
2.5%
($15,000) |
3.4%
($20,000) |
|
Melbourne |
$670,000 |
0% ($0) |
11.7%
($70,000) |
$437,500 |
-1.2%
(-$5500) |
-2.8%
(-$12,500) |
|
Brisbane |
$735,000 |
14.8%
($95,000) |
69.0%
($300,000) |
$545,000 |
19.8%
($90,000) |
58.9%
($202,000) |
|
Adelaide |
$689,000 |
15.0%
($89,875) |
82.5%
($311,500) |
$463,000 |
16.7%
($66,250) |
78.1%
($203,000) |
|
Perth |
$645,000 |
26.0%
($133,000) |
74.3%
($275,000) |
$410,000 |
30.2%
($95,000) |
54.7%
($145,000) |
|
Hobart |
$580,000 |
9.4%
($50,000) |
56.8%
($210,000) |
$415,000 |
-1.2%
(-$5000) |
25.5%
($84,375) |
|
Darwin |
$465,000 |
1.1%
($5000) |
21.9%
($83,500) |
$285,000 |
-3.2%
(-$9500) |
31.6%
($68,500) |
|
Canberra |
$815,000 |
3.2%
($25,125) |
39.3%
($230,000) |
$462,000 |
-1.7%
(-$8000) |
18.6%
($72,462) |
|
Australia |
$617,500 |
12.5%
($68,500) |
58.3%
($227,500) |
$481,000 |
7.1%
($32,000) |
26.6%
($101,000) |
For example, in Sydney, opting for a unit instead of a house cuts saving time by two years and five months.
Meanwhile, Melbourne, Canberra, and Perth also offer notable time savings for unit buyers.
But there’s a catch.
While units are often more affordable upfront, mortgage stress is now creeping into this segment of the market, particularly in Sydney, Brisbane, and Adelaide, where repayments on entry-priced units now exceed 30% of household income.
For example:
- In Sydney, mortgage repayments on an entry-level unit now consume 35.8% of household income, a significant jump from just five years ago.
- In Brisbane, it’s 34.4%, while Adelaide sits at 30.8%, marking the first time units in these cities have breached the mortgage stress threshold.
So, while units remain a faster and often more achievable entry point into the property market, they no longer guarantee financial comfort.
Mortgage stress: a nationwide problem
Perhaps the most concerning finding from the report is just how widespread mortgage stress has become.
Back in 2019, only Sydney and Melbourne had mortgage stress for entry-priced houses.
Today, every capital city except Darwin is affected.
Here’s how the numbers break down for entry-level houses:
- Sydney is still the toughest city, with mortgage repayments swallowing 57.6% of household income—a staggering figure.
- Canberra follows closely behind at 46.7%, while Brisbane (46.4%) and Adelaide (45.9%) are also struggling.
- Perth (37.3%) and Darwin (27.7%) remain the most affordable capitals, though even Perth has now surpassed the 30% stress threshold.
For entry-level units, the situation is slightly better:
- Darwin remains the most affordable city, with unit repayments requiring just 17% of income.
- Perth (23.7%), Canberra (26.5%), and Melbourne (27.5%) are all below the 30% mortgage stress benchmark.
- Sydney (35.8%), Brisbane (34.4%), and Adelaide (30.8%) have now crossed into mortgage stress territory for units as well.
Dr. Powell explained how this shift has come about:
“The proportion of income needed for an entry-priced house across the combined capitals is 19 percentage points higher than five years ago, with units rising by about 8 percentage points.”
This means that while house prices have surged, rising interest rates and mortgage repayments are what’s really driving affordability concerns.
Even as prices stabilise in some areas, higher debt levels mean buyers are still feeling the squeeze.
The future: will relief come anytime soon?
The big question is: where do first-home buyers go from here?
There are a few signs of potential relief:
- Government Intervention – The National Housing Accord aims to build 1.2 million new homes in the next five years, which could help increase supply and ease affordability pressures.
- Potential Interest Rate Cuts – If the Reserve Bank lowers rates further, that could reduce mortgage stress—but it could also fuel higher property prices as borrowing power increases.
- Shifts in Housing Demand – The affordability gap between houses and units may drive more buyers towards smaller dwellings, which could in turn stabilise house price
But Dr. Powell warns that without coordinated action, affordability will remain a critical issue:
“These differences highlight the huge gap in affordability across cities, making it clear that coordinated government action is needed to tackle Australia’s housing shortage.”
For first-home buyers, the key takeaway is that the market has changed.
The traditional path to homeownership—saving for a house, taking on a mortgage, and gradually paying it off—is no longer as straightforward as it once was.
Final thoughts
So, is the Great Australian Dream slipping away?
Not entirely, but it is evolving.
Units are emerging as the best starting point for many buyers, though mortgage stress is creeping into this segment too.
Darwin and Perth remain the most affordable cities, while Sydney and Brisbane present the biggest financial hurdles.
Mortgage serviceability is now just as critical as property prices, meaning buyers need to be strategic about their borrowing capacity and long-term financial planning.
Ultimately, homeownership is still possible, but today’s first-home buyers need to be savvier than ever.
As I always say, keeping an eye on market trends, interest rates, and alternative entry points, such as units or different cities, will be essential for navigating this new reality.
