Housing Affordability Holds Steady as Borrowing Costs Rise
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Housing Affordability Holds Steady as Borrowing Costs Rise
Australia’s housing affordability was broadly stable in the June quarter of 2026, but the apparent calm masks competing pressures for households. Softer house prices and slightly smaller average loans offered some relief, while higher borrowing costs absorbed much of that benefit. The latest REIA Housing Affordability Report shows how closely affordability remains tied to rates, incomes, loan sizes, rents and housing supply. [1]
Home-loan affordability edges higher
The proportion of median family income required to meet average home-loan repayments increased marginally to 50.9%. That represented a 0.1 percentage-point increase over the quarter and a 3.3 percentage-point increase over the year. [1]
| Indicator | June quarter 2026 result |
|---|---|
| Income required for average loan repayments | 50.9% |
| Quarterly change | +0.1 percentage points |
| Annual change | +3.3 percentage points |
| Average owner-occupier loan | $730,719 |
| Average monthly loan repayment | $6,018 |
The report’s broader media release noted that the average owner-occupier loan declined by 0.6% during the quarter and the national weighted-average median house price fell by 1.2%. However, a May cash-rate increase lifted the quarterly-average standard variable interest rate to 8.8%, meaning the average monthly loan repayment rose 1.5% over the quarter and 12.4% over the year. [1]
“The June quarter highlights the competing forces shaping housing affordability,” REIA President Jacob Caine said. “Without the decline in house prices and average loan amounts, affordability would likely have deteriorated more significantly following the May interest rate increase.” [1]
Outcomes varied across jurisdictions
The national movement did not tell the whole story. Housing affordability improved in New South Wales and Victoria, remained stable in Tasmania, and declined in every other state and territory. [1]
Western Australia recorded the largest quarterly decline, with the share of median family income needed for average loan repayments increasing by 1.6 percentage points to 47.5%. New South Wales remained the least affordable jurisdiction for home buyers, where repayments required 57.7% of median family income. The Australian Capital Territory remained the most affordable, supported by the nation’s highest median family income. [1]
Rental affordability remains unchanged nationally
Rental affordability held steady at the national level. The proportion of median family income required to meet the median rent remained at 23.9% over both the quarter and the year. [1]
| Rental trend | June quarter 2026 outcome |
|---|---|
| National share of income required for median rent | 23.9% |
| Jurisdictions with modest improvement | NSW, QLD and ACT |
| Jurisdictions with declines | All other states and territories |
| Largest quarterly decline | Northern Territory, +3.0 percentage points |
The Northern Territory became the least affordable rental jurisdiction after median rent required 28.8% of median family income. The ACT remained the most affordable for renters, with the median rent requiring 18.5% of median family income. [1]
First-home buyer activity increased
First-home buyers made 30,129 new loan commitments in the quarter, up 11.0% from March and broadly unchanged from the June quarter a year earlier. They represented 36.3% of all owner-occupier commitments. [1]
Their average loan eased slightly to $610,063, although it remained 10.0% higher than a year earlier. For investors, this is an important reminder that first-home buyer activity can remain resilient even when broader affordability remains under pressure; rates, repayments, prices and available supply are moving together rather than in isolation. [1]
The investor takeaway
The June-quarter results reinforce the value of looking beyond one headline measure. Falling prices or smaller loan sizes may create some room for buyers, but higher interest costs can quickly offset that relief. At the same time, national rental stability can conceal materially different conditions between jurisdictions.
For property investors, the practical focus is on fundamentals: financing costs, serviceability buffers, local rent trends, supply pipelines and the policy settings that influence new construction. The report’s results point to a market in which local conditions and the cost of debt remain just as relevant as national price movements. [1]
References
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