For many young Australians, owning a home feels further away than it did for their parents. Here’s why house prices have climbed so high, and what could bring them down.
Australian homes are among the most expensive in the world compared with what people earn.
According to property data firm Cotality, the median value of an Australian dwelling was about $899,000 in September 2026. In Sydney it was close to $1.2 million, in Brisbane above $1 million and in Melbourne about $780,000.
In the 1990s, a typical home cost about four times the average household income. Today, it’s far higher, and in Sydney a deposit alone can take many years to save.
The main reasons
The biggest factor is supply. For years, Australia hasn’t built enough homes in the places people want to live, near jobs and transport in the major cities. Planning rules, the cost of land, construction costs and a shortage of tradespeople all slow down building.
Demand has kept rising. Australia’s population has grown quickly, driven in large part by immigration, and the number of people living in each home has fallen, so more homes are needed for the same number of people.
Borrowing costs matter too. Interest rates fell for most of the three decades to 2022, letting people borrow more, and much of that extra borrowing went into higher prices.
Tax settings have also encouraged investment in property. Negative gearing and the capital gains tax discount made buying investment properties more attractive, although changes announced in the 2026 Budget limit negative gearing to newly built homes and replace the CGT discount from July 2027.
And Australians have long seen property as a safe way to build wealth, while homeowners, who make up a majority of voters, often resist changes that could lower prices.
What’s being done
Federal and state governments have agreed to a target of building 1.2 million new homes in the five years from July 2024, although building has been running behind that pace.
Governments are also changing planning rules to allow more homes near transport, offering help such as the 5% Deposit Scheme for first home buyers, and funding social and affordable housing.
In the short term, interest rates are the biggest influence on prices. After the Reserve Bank raised rates several times in 2026, values fell in Sydney and Melbourne, while cities such as Perth, Adelaide and Brisbane kept rising.
