‘There is hope’: Housing affordability in Australia’s two biggest cities eases

As affordability in Sydney and Melbourne starts to soften, prices are heating up in Queensland. 

After years of housing pain for homebuyers in Australia’s two largest capital cities, affordability is finally improving. 

Right now, 12.1 per cent of suburbs in Sydney are affordable for house buyers on below-median budgets, according to PRD Real Estate’s Affordable Liveable Property Guides for the second half of 2024. 

The figure may sound dire, but it’s an improvement on the first half of 2024, when just 11.1 per cent of Sydney houses were affordable. 

Melbourne’s turnaround has been far more pronounced. In the first half of this year, just 24.4 per cent of Melbourne suburbs were affordable, but just six months later, that figure has skyrocketed to 34.5 per cent. 

“In each capital city, particularly Sydney and Melbourne, we’re seeing less of the deep red,” says Dr Diaswati ‘Asti’ Mardiasmo, chief economist at PRD Real Estate. 

“That gives hope for buyers, especially in these two places which have been known as the more expensive capital cities. There’s more hope to be able to enter the Sydney market, more so than before. There’s more hope to enter the Melbourne market.” 

However, not all cities fared so well. In a surprising twist, Brisbane was revealed as the second least affordable capital city in Australia, behind Sydney. 

Off the back of a steep 14.9 per cent annual house price increase, affordability in Brisbane suffered. Now, just 29.7 per cent of suburbs in Brisbane are affordable for buyers looking for a freestanding house. 

“Most people would think that living in Brisbane is cheaper than living in Melbourne, but it’s no longer the case anymore,” says Dr Mardiasmo. 

The message for Australian homebuyers is clear: it’s time to act quickly, and to say goodbye to freestanding houses. 

“Now is definitely the time to get in there before anything else happens,” says Dr Mardiasmo. 

“A lot of the time, with less supply, if you do see a red area the likelihood of the suburb next to it becoming unaffordable is also high.” 

And with far more units affordable for buyers on a budget than detached houses, she believes the move to purchasing units is inevitable – for both investors and first-home buyers. 

“Beforehand it was both houses and units, whereas now it’s definitely more the unit market that is still an investor honeypot.”