Australian house prices have dropped across several capital cities, with major banks forecasting declines of 2% to 3% by the end of the year. However, these recent falls do little to improve housing affordability after a decade of soaring values.
Median Dwelling Price Peaked at $944,000
Monthly data from Cotality shows the median dwelling price in Australia peaked at $944,000 in March before retreating to $937,000 by the end of June – a 0.7% drop. Over the past ten years, the median home price has risen by more than $400,000, meaning prices are still almost double what they were a decade ago.
House Prices Relative to Income
Another measure of affordability is how many years of household disposable income it takes to buy an average dwelling. In 2016, the average dwelling price equated to 13 years and four months of a typical household’s disposable income, according to calculations by Guardian Australia columnist Greg Jericho. By March this year, that figure had risen to more than 17 years. Even with a 10% drop from the March peak, the median dwelling would still cost more than 15 years of household disposable income.
Outlook and Impact
The recent declines, while notable, are modest compared to the cumulative growth over the past decade. Housing affordability remains a significant challenge for Australian households, particularly in major cities where prices have risen most sharply. The data underscores the persistent gap between income growth and housing costs.
