Housing affordability shock: typical Victorian priced out of most homes

A typical household could afford just 18 per cent of the homes on the market in Victoria in 2025, the PropTrack Housing Affordability Index shows.

A median-income household could afford less than 20 per cent of homes sold in Victoria during the 2024-25 financial year despite housing affordability improving, a new report found.

PropTrack’s Housing Affordability Report, released today, shows a household earning a $120,000 median income could comfortably buy 18 per cent of the homes which changed hands in the time frame.

That’s an increase on the 13 per cent figure reported last year, with Victoria’s median home price reaching $715,000 in June.

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Mortgage repayments on a typical new loan have eased to 32 per cent of a household’s average income, down from a 35.5 per cent peak.

However a household saving 20 per cent of their earnings would take 5.6 years to put away enough for a typical $143,000 deposit on a home.

The report found that while this was less than the nearly-7 year saving period recorded in 2021, it still represented a significant barrier for many aspiring homeowners.

The state’s improved housing affordability in the last financial year reflected falling interest rates, growing wages and “stagnant” home prices.

PropTrack economist Angus Moore said the trajectory of future housing affordability in the state depended on price trends and whether interest rates would continue to fall.

Geelong home prices have been growing in 2025, with the region’s median house value reaching $792,000, a 2.99 per cent rise in 12 months, in October.

Victoria’s improved affordability rate is sitting above the last two years’ record lows with the state remaining Australia’s second-most affordable behind WA.

REA Group senior economist Angus Moore said Victoria’s housing affordability would likely become marginally better or worse in 2026, depending on any further rate cuts and how fast house prices grew.

“If it worsens, we’re not expecting to see massive home price growth next year,” Mr Moore said.

He said the high number of people who had left Victoria during the Covid pandemic and the Victorian government building more homes per person than other states had played a role in property prices remaining stagnant since 2022.

Geelong house prices grew almost 3 per cent in the past year.

The Jacinta Allan-led state government has set a target of 800,000 homes to be built across the state by 2034.

However, ABS figures showing just 60,000 new Victorian dwellings were delivered in 2024 means the government’s target is not on track – with 80,000 new dwellings per year needed to realise the goal.

Housing Industry Association last week revealed it believed surging population growth and demand could derail the federal government’s plan to build 1.2m new homes by 2029.

Mr Moore added that constructing more homes in places where people wanted to live would help to keep housing affordable but would not completely solve the problem.

The pace of new housing construction could help ease pressure on house prices.

“And clearly the government has a role there, that is mostly a state and local government issue,” he said.

But he said the federal government could assist by supporting infrastructure programs and incentives around building homes.

Property Investment Professionals of Australia board chair and Victoria buyers advocate Cate Bakos said the federal government’s expanded 5 per cent scheme for first-home buyers, introduced in October, as an affordability “game-changer” – although she said more needed to be done to help low-income earners afford a home.

Ms Bakos said most first-time buyers opted to pay mortgage insurance rather than waiting more than five years to save a 20 per cent deposit.

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