Is home affordability at breaking point?

Owning a home has long been the foundation of the Australian dream, but for younger generations, that dream continues to slip further out of reach.

Today, the path to ownership is defined by record deposit hurdles, high mortgage repayments and the sharpest generational divide in housing access in modern history.

According to Domain’s latest report, The home ownership puzzle, the biggest hurdle for first-home buyers is the deposit gap.

The median-income household now needs over eight years to save a 20 per cent deposit – up from six years in the early 2000s.

Once over that hurdle, buyers face much higher mortgage repayments than in the past.

The report reveals that a typical new loan now consumes around 54 per cent of household disposable income, the highest level in at least 20 years, leading to fewer younger Australians being able to own a home than in previous generations.

Home ownership rates for under-34s have dropped across every state. In the ACT, the data shows that home ownership rates were as high as 72 per cent for 30-34 year olds who were born between 1947 and 1951, but this has dropped by as much as 53 per cent for those born between 1987 and 1991.

Affordability pressure is also reshaping demand patterns. Lower-priced homes have outperformed premium properties in price growth since 2022 in most cities.

The report found that search trends reflect this shift. “Dual”, “granny” and “duplex” are now breaking into the top 10 most-searched terms. None of which featured just a few years ago, reflecting rising interest in affordable and higher-density housing.