1995 was the year Michael Jackson sang You are not Alone, Elton John asked us to Believe and Mariah Carey admitted it was all just a Fantasy. 

It was also the last time the average Australian household could buy an affordable home. 

A PropTrack report released late last week confirms housing affordability is now at its worst level in more than 30 years, with rising mortgage rates and increasing home prices crippling the average Australian household. 

Families in NSW, Tasmania and Victoria are being hit the hardest. 

Households earning the median income, which is currently $121,000, can afford the smallest share of homes since 1995. 

That’s when housing affordability records began, that’s when the average Australian household could afford just 13% of homes on the market. 

In August 2023, the typical-income household in NSW could afford just 7% of homes sold statewide. 

PropTrack senior economist and report co-author Angus Moore says several factors are to blame. 

“Surging home prices throughout the pandemic and rapidly rising interest rates over the past year have brought housing affordability to its worst level in at least three decades,” he states.  

“The situation is especially challenging for lower-income households and first-home buyers.  

“Mortgage interest rates have increased extremely rapidly from the record lows in 2020 and 2021, following RBA rate hikes that began in May 2022.  

“This has caused the sharpest increase in mortgage rates since the mid-1980s and has reduced borrowing capacities by as much as 30% for new borrowers.  

“At the same time, existing borrowers, which make up around a third of Australian households, have faced sharp increases in mortgage repayments.  

“A typical recent borrower now faces repayments as much as 50% higher than in early 2022.  

“In August, home prices rose for the eighth consecutive month.  

This means there are now far fewer homes for which mortgage repayments are affordable than was the case over the past few years.

A household earning $64,000 per year can afford just 3% of homes in Australia as it currently stands. 

In NSW that means the average income household could purchase just 7% of of available homes.

Servicing a mortgage is close to as hard as it has ever been, only just below the peak reached in 1989.  

A household earning average income would need to spend a third of their income on mortgage repayments to buy a median-priced home. 

And, while incomes have risen, particularly in the private sector, it is still not comparable to mortgage rates. 

“This has been insufficient to offset higher home prices and, critically, the surge in mortgage rates,” says Mr Moore. 

For more stories like this:

• Suburb profile: New Lambton
• Speers Point bottleneck to become a thing of the past
• Birubi set to light up the night sky

Get all the latest Newcastle news, sport, real estate, entertainment, lifestyle and more delivered straight to your inbox with the Newcastle Weekly Daily Newsletter. Sign up here.