Introduction
New findings from Domain’s First Home Buyer Report 2026 show home ownership is becoming harder to reach for young Australians, even after recent interest rate cuts and the rollout of government support schemes. Across Australia’s capital cities, a young couple now needs an average of about five years to save a 20% deposit for an entry-level house, while mortgage repayments on those homes are absorbing close to half of household income. The report highlights a widening gap between housing costs and wages, alongside signs that units are no longer providing the easier entry point they once did.
Repayments Take a Larger Share of Income
Across the combined capital city markets, repayments on an entry-level house now average 48.9% of a couple’s income aged 25 to 34, an increase of 24% over the past five years. For entry-level units, repayments account for 30.9% of household earnings. Domain defines an entry-level home as a property priced at the 25th percentile, meaning the affordability squeeze is being measured at what should typically be the lower end of each market.
The report indicates affordability worsened over the past year despite multiple interest rate cuts in 2025, suggesting that price growth and household debt pressures have outweighed the relief from lower borrowing costs in many areas.
Sydney Still Leads, But Other Capitals Are Catching Up
Sydney remains the least affordable capital. Servicing an entry-level house mortgage requires 61.8% of income for a couple aged 25 to 34, while units require 34.7%. The saving task is also steep, with a couple needing about seven years and seven months to build a 20% deposit for an entry-level house.
However, the report stresses that the affordability challenge is no longer concentrated in Sydney alone. Entry-level house prices have climbed quickly in markets once viewed as more attainable. Saving times for a 20% deposit now place Brisbane, Adelaide, and Perth closer to the least affordable tier, reflecting rapid price increases that have outpaced household income growth.
Units Are No Longer a Reliable Entry Point
Units have traditionally served as a pathway into ownership, helping first-time buyers reduce deposit sizes and repayments. Domain’s findings suggest this “safety valve” is weakening. The national average time to save a 20% deposit for an entry-level unit in capital cities is about three years and six months, with regional Australia only about one month quicker.
The report also shows that in some capitals, saving times for units have risen sharply and repayments are pushing buyers closer to mortgage stress. In one notable comparison, the time needed to save a 20% deposit for a unit in Brisbane is reported as four years and eleven months, exceeding Sydney’s four years and five months for the same measure, highlighting how fast conditions have tightened outside the traditionally most expensive market.
Prices Outpace Wages Across the Board
The report points to a structural affordability issue: housing prices have risen much faster than wages over the past five years. Wages increased by about 21% since 2020, while entry-level houses rose by 68% nationally and entry-level units rose by 30%. Some capitals saw especially sharp increases in entry-level house prices, including Adelaide at 159.2%, Brisbane at 106.3%, and Perth at 105.8%.
Over the past year alone, entry-level houses increased 12.3% nationally and entry-level units rose 7.3%. This pace of growth helps explain why affordability can worsen even when borrowing rates ease.
Policy Options and the Trade-Offs Ahead
Domain’s chief of research and economics, Nicola Powell, argues the solution set must be broad rather than a single policy lever. The report points to measures such as stamp duty reform, incentives to increase the supply of affordable housing, and expanded forms of deposit assistance. National initiatives like the 5% deposit scheme introduced last October may reduce saving time for some buyers, but concerns remain about demand-side support adding pressure in already tight markets.
On-the-ground affordability also increasingly depends on location trade-offs. Domain notes that outer-metro and peri-urban areas tend to offer more feasible entry points, but at the cost of distance from major employment and amenity hubs. In this environment, affordability is becoming less about choosing between house and unit, and more about balancing proximity, repayments, and deposit requirements.
Conclusion
Domain’s 2026 findings show first-home affordability has deteriorated across Australian capitals as entry-level prices outpace wages and repayments absorb a larger share of income. Sydney remains the most expensive market, but faster price growth in Brisbane, Adelaide, and Perth has narrowed the gap. With units also becoming harder to access, the report suggests home ownership is at risk of moving further out of reach unless policy reform and housing supply measures materially change the trajectory.
