Shock truth about NSW housing affordability for average workers

Interest rate cuts have done little to boost the buying power of home purchases because prices have been rising.

Home seekers earning the average NSW income can only afford 11 per cent of the state’s properties, with experts warning interest rate cuts have been counteracted by rising property prices.

PropTrack’s latest Housing Affordability Index, released today, shows that NSW remains the country’s least affordable housing market.

Conditions remain particularly challenging for lower income buyers, who could only afford about 3 per cent of all the homes sold nationally in the past year and require longer to save for a deposit.

For those who already own a home, NSW families are paying more on their mortgage repayments than anywhere else in the country.

While rate cuts and growing incomes over the last year have actually marginally improved affordability, PropTrack economist Angus Moore said this has largely been offset by the fact home prices have been growing as well.

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Increased housing supply is needed to moderate prices.

A median-income household, on an income of about $120,000 per year, can afford just 11 per cent of homes sold across NSW, according to the report.

Mr Moore said it was rare for NSW to be eclipsed in terms of unaffordability.

“NSW is obviously driven by Sydney – a very expensive housing market – and so it is the least affordable state in Australia as a result,” he said.

“It may not be every single year, but New South Wales is usually the least affordable state in Australia.”

Aussies are continuing to do it tough financially, with the consumer price index rising to 3.8 per cent in October, an inflationary high not seen since June 2024.

PropTrack’s report found that NSW was the second hardest state for first-home buyers in terms of saving a deposit, having been overtaken by South Australia.

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In the 2024-25 financial year, an average-income NSW household, saving 20 per cent of their income for a 20 per cent deposit on a median-priced home, would need to save for the equivalent of 6.8 years, compared to 6.5 years in 2023-24, according to PropTrack.

While first home buyers can enter the market with a five per cent deposit under the first home guarantee, this leaves young people paying more on their mortgages.

Mortgage repayments for a median-priced home in NSW, relative to incomes, remain higher than at any time since the 1990s, according to PropTrack.

For a median priced home in NSW, mortgage repayments sit at just under 38 per cent – over one third – of the average income.

For the first time since 2021, NSW is not the least-affordable state in this measure, with South Australians spending a higher proportion of their income on mortgage repayments.

PropTrack economist Angus Moore said many Aussies were doing it tough.

Inaffordability is pushing more families out of Sydney, or even NSW as a whole.

According to Mr Moore, this is not a new trend.

“For decades, more people have left NSW for other states than come from other states to NSW,” he said.

“We see younger families moving out of metropolitan Sydney towards more affordable markets like Central Coast, or south to Wollongong, or, perhaps more in recent years up to the Sunshine Coast, because Sydney is such an expensive housing market.

“That obviously has implications for the demographics and labour markets in Sydney.”

Mr Moore said Sydney continues to grow because it attracts a lot of overseas migration, which more than offsets the people leaving Sydney for other parts of the country.

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