Housing affordability hits 26-year low — broker reality check

AFR analysis shows median price-to-income ratio at its highest since 2000. What this means in practical terms for borrowing capacity and buyer behaviour.

Australian Financial Review analysis of CoreLogic + ABS data shows the median dwelling price-to-household income ratio has hit 8.4× — the highest since 2000. Capital city ratios are higher still: Sydney at 12.1×, Melbourne at 9.8×, Brisbane at 8.7×.

For prospective buyers, this is the reality the calculators don't soften. For existing borrowers, it's actually a quiet positive — rising prices have rebuilt equity that opens up refinance and rate-renegotiation options.

What this means for first-home buyers

The traditional rule-of-thumb that you can borrow 4-5× your income is now insufficient to buy a median-priced home in Sydney or Melbourne. Most FHBs we work with in those markets are either: (a) buying further out than they planned, (b) buying smaller (1-2 bedrooms vs 3), (c) using the [First Home Guarantee Scheme](/news/first-home-guarantee-2026-eligibility-changes) to get in with a 5% deposit, or (d) bringing a parent in as a guarantor.

The math is unforgiving. A household on $150,000 combined income can typically borrow around $750,000 (depending on expenses, debts, etc — use our [borrowing power calculator](/calculators/borrowing-power) for your number). Sydney's median dwelling price is well over $1.1m. The gap is real.

What this means for existing borrowers

If you bought before 2023, your property has likely appreciated 12-25% since then depending on location. That equity is doing two things: it's pushed your loan-to-value ratio (LVR) below 80% (which means no LMI on a refinance), and it's opened up the option to redraw equity for renovations, investment, or debt consolidation.

For most existing borrowers, the conversation we have isn't "how do I buy" — it's "how do I make my existing loan work harder." Often that means a refinance to a better rate, sometimes a debt consolidation, sometimes equity release for a deposit on an investment property.

What you should do now

If you're an FHB: don't let the headline numbers paralyse you. The combination of FHG scheme + a full borrowing power assessment + targeted property search (lower price brackets, different suburbs) often yields workable options. The first conversation a broker has with most FHBs is "let's actually see what you qualify for" — that's where surprises usually live.

If you're an existing borrower: get your current LVR re-valued. A formal valuation often comes back higher than you'd expect, and if it puts you under 80% LVR, you instantly have access to a wider set of better-priced products and the option to remove LMI if you'd previously paid it.

This article references reporting from the [Australian Financial Review's housing market coverage](https://www.afr.com/property/residential).