It’s no secret that Australia is in the grip of a housing affordability crisis. After decades of fast-rising prices, tightening supply and shifting policy settings, buying a home now costs a larger share of household income than it has ever before — with the barrier to entry feeling especially high for first-time buyers.
House prices have climbed, rents are up, and our incomes haven’t kept pace. To top it off, any well-intentioned government support introduced to help buyers has paradoxically added fuel to demand and resulted in even higher property prices.
For buyers trying to understand how to enter the market despite affordability pressure, working with a home buyers agent can help clarify budget, suburb choice, buying strategy, and whether purchasing or rentvesting makes more sense.
How Bad Is Housing Affordability Right Now?
Multiple recent industry and government reports show that housing affordability deteriorated across the country through 2024 and into 2025, with housing expenses now taking up a significant slice of household income.
When comparing affordability, we compare median house prices and median household incomes, which have shown that incomes have not increased alongside the rising home values and the sustained rental pressure.
There has been constrained supply of new land and dwellings and increased migration which have been large contributors to the affordability crisis.
A recent snapshot of housing affordability as of September 2025 by Cotality and ANU shows that median dwelling values Australia-wide, $860,529, are almost eight and a half times the median household annual pre-tax income of $104,390.
Why Does Affordability Matter So Much for First-Time Buyers?
First-time buyers face the hardest challenge. In order to buy their first property, they need a deposit, lenders’ approval, and the ability to service repayments — all of which are harder when house prices are high relative to wages.
First-time buyers lack leverage from other properties, like access to equity or profiting from capital growth of a property.
Why Is the Deposit Gap So Difficult?
With prices elevated, the deposit required for a conventional 20% down payment is larger than ever, so saving this will take much longer.
Since house prices are rising faster than incomes, it can feel like an uphill battle for buyers.
The demand for property is the highest ever, with demand from both homeowners and investors which pushes prices up further.
Why Are Higher Borrowing and Repayments a Risk?
Higher prices means larger loans. Even when interest rates fall or stabilise, debt servicing is a long-term commitment meaning a lot of sacrifices for families.
A first home buyers agent can help buyers understand what they can realistically afford before entering a competitive market where emotional decisions can lead to overcommitting.
Why Are Buyers Forced to Compromise on Suburbs?
To afford a property, many first-timers are forced to look further from their desired suburbs.
They might need to sacrifice their desired lifestyle and increase their travel times because they are now living further from the city centre, employment hubs or café-lined suburbs.
Why Don’t Government Subsidies and Schemes Always Help?
Governments are always trying to solve the housing affordability problem, with a focus on assisting first-home buyers into the market.
However, when the Government introduces a range of schemes to help people buy their first home — grants, stamp-duty concessions, and guarantee schemes — although they are motivated by good intentions, they fuel the markets to result in worsened affordability.
These schemes need to have an overhaul because the results are obvious. The schemes interact with markets in predictable economic ways, with simple supply and demand.
For example, when the State Government reduces the effective down-payment a buyer needs to purchase a property, such as allowing purchases with a 5% deposit under a government guarantee, suddenly there will be more people being able to qualify for mortgages and enter the property buying market.
This results in increased demand without instantly increasing supply. In a market already tight on listings and new land, extra demand tends to translate into higher prices rather than more homes.
Therefore, the only way to assist first-time home buyers is by significantly increasing housing supply so demand and supply can come to a lower price equilibrium.
Don’t get us wrong, we aren’t saying that all the Government support schemes are bad. They are designed with good intentions to help households who would otherwise be locked out of the markets.
But it is the trade-off that policymakers face to help buyers now and risk increasing prices or tighten financial support and risk consigning a generation to longer renting.
Why Has Rentvesting Become More Common?
Faced with unaffordable housing in their ideal suburbs, many Australians are choosing “rentvesting”, which is a strategy to rent where you want to live while still getting a foothold on the property ladder by buying an investment property in an area they can afford.
The logic is simple — you get the benefit of the lifestyle that you want now, while also starting to build property wealth through an investment located in a more affordable area.
Why Is Rentvesting Attractive?
- Faster entry to the market: You can start investing with a smaller deposit in a cheaper area, rather than waiting years to save for a home in an expensive inner-city suburb.
- Lifestyle flexibility: You live where you want without being constrained by the affordability of ownership in that area.
- Potential cashflow: If the investment property produces positive cashflow or is tax-efficient, it can help subsidise your rent in an expensive suburb and cover the mortgage costs.
- Exposure to capital growth: Over time, the investment property can appreciate, creating equity you may later use to buy in your preferred area.
A home buyers agent Brisbane can help buyers compare whether purchasing in a more affordable market, rentvesting, or waiting longer to buy is the most suitable pathway based on their budget and goals.
What Does This Mean for Buyers?
Australia’s housing affordability challenge matters because housing is where people store most of their wealth and where they will spend the largest portion of their income.
It is also the vehicle for generational wealth with future generations benefiting from smart property decisions that are made now.
For first-time buyers, there are a few choices they need to make in order to get onto the property ladder.
Government schemes that lower deposit barriers can help individual households into homes, but at scale they risk adding to competition and pushing prices up unless paired with stronger supply.
Rentvesting might be a smart strategy, but this also means you are tied to a landlord.
There is no golden solution, but one thing is for sure — prices will continue rising for as long as Australians love property and this is going to continue for the foreseeable future until supply issues can be resolved.
Working with a home buyers agent can help buyers approach this affordability challenge with clearer research, stronger budgeting discipline, and a more realistic strategy for getting into the market.
Disclaimer:
Aus Property Professionals Pty Ltd retains the copyright in relation to all the information contained on its website and in this guide. This guide, and any content provided in addition, or linked to resources, is general information only and not investment advice. As everyone’s individual situation is different, we advise individuals to always seek advice from relevant professionals such as legal, financial, accounting, and investing experts.
The intention of this guide is to be used for general information purposes only, in addition to your personal research and due diligence. We do not take any responsibility for any actions taken as a result of this guide as any actions should always be taken with consultation with relevant professionals who take individual circumstances to account.
Past performance doesn’t guarantee future results.
We have compiled the information contained in this guide from online resources, our research, and consultations, and we cannot guarantee the complete accuracy of this information, and we will always reference the resources where the data and information was derived.
