Australians are facing growing challenges when it comes to buying property, with affordability slipping further out of reach for many. However, when viewed from a global perspective, Australia’s housing market is not as dire as it may appear.
Australia currently ranks as having the fifth-highest property price per square metre worldwide, placing increasing pressure on local buyers. Housing affordability has fallen to record lows, with the share of median family income required to meet average mortgage repayments now sitting at 48.6 per cent.
For the average wage earner, purchasing a median-priced home, now valued at approximately $814,000, requires the equivalent of 147 monthly pay packets.
While it is undeniably more difficult for today’s buyers to achieve home ownership, international comparisons suggest Australians are still comparatively well positioned.
A global affordability study covering 62 countries found that Australia remains a relatively “lucky country” when it comes to housing affordability. The research, conducted by UK-based firm BestBrokers, ranked Australia 12th overall, placing it just behind New Zealand.
Global Affordability Ranking
South Africa topped the list, with buyers needing only 71 net monthly salaries to purchase a home. Although the average monthly income is significantly lower at $2,165 (compared to Australia’s $6,898), property prices are far more accessible at around $1,456 per square metre. By contrast, Australia’s average price sits at $9,847 per square metre, with apartment prices reaching $12,477/m² and houses averaging $4,505/m².
Other countries rounding out the top ten included the United States (76 monthly salaries), Bahrain (99), Denmark (114), Ireland (123), Sweden (129), Spain and Belgium (132), Cyprus (139), and Norway (140).
At the opposite end of the spectrum was Nepal, where it takes an estimated 684 monthly salaries, around 57 years of income, to afford an average home. Turkey (631), India (578), and Indonesia (563) also ranked among the least affordable markets.
Mortgage Rates Worldwide
Paul Hoffman, a financial expert at BestBrokers, noted that while inflation eased throughout 2024 and many central banks began reducing interest rates, mortgage costs remain a major barrier for buyers.
“Home buyers in some countries benefit from low-interest rates on house loans in combination with relatively high average income, whereas in struggling economies, purchasing a home is now nearly impossible for most.”
Many analysts now look beyond CPI and instead focus on real mortgage interest rates, which account for inflation.
“Using projected inflation rates for the third quarter of 2024, we calculated the ex-ante real interest rates of mortgage loans in 62 countries around the world.”
“When the effect of inflation is removed, countries such as Sweden, Switzerland, and Spain end up with negative mortgage interest rates.”
“Hyperinflation, however, leads to even more abnormal results, with Turkey now having a negative interest rate for mortgages of -10.84 per cent, while the triple-digit annual inflation in Argentina has caused real mortgage interest of -175.89 per cent.”
Australian Buyer Outlook
Despite Australia’s relatively strong global position, the reality remains difficult for many local buyers. A recent Canstar report found that only 28 per cent of Australians feel optimistic about their financial outlook for 2025, as ongoing cost-of-living pressures continue to strain household budgets.
Housing costs remain Australians’ biggest financial concern, followed closely by rising food prices.
Expectations of continued price growth also weigh on buyers. The API Magazine Property Sentiment Report Q4 2024 found that 69 per cent of respondents expect property prices to rise over the next year and into 2026.
One positive takeaway for prospective buyers is growing confidence that the Reserve Bank of Australia and the government may ease inflation and cost-of-living pressures during 2025.
When viewed globally, Australia’s requirement of 147 monthly pay packets to purchase a home still compares favourably with many other countries.