Housing affordability in Australia has improved for the second consecutive quarter, according to the Real Estate Institute of Australia’s (REIA) Housing Affordability Report for June 2025.
REIA President Leanne Pilkington said the latest results signal a much-needed shift after affordability hit record lows late last year.
“It’s encouraging to see housing affordability improving for Australian families, particularly after the challenges we reported just six months ago”, Pilkington said.
“While we’re not out of the woods, these results highlight that the measures taken so far are having a positive impact, especially for first home buyers who are re-entering the market in greater numbers.”
The report found that the proportion of the median family income required to meet average loan repayments fell to 47.7%in the June quarter. This represents an improvement of 0.3 percentage points over the quarter and 0.5 percentage points compared with a year ago.
Affordability improved across nearly all states and territories, with the exception of Western Australia, where it declined by 0.4 percentage points. Tasmania recorded the most significant improvement, with affordability strengthening by 1.8 percentage points, while Queensland saw a modest gain of 0.1 points.
Renters also benefited, with rental affordability improving for the third successive quarter. The proportion of income required to meet median rent nationally edged down to 24.4%. Improvements were recorded in New South Wales, Victoria, Queensland, Tasmania, and the ACT, though affordability worsened in South Australia, Western Australia, and the Northern Territory.
The Reserve Bank of Australia supported this trend by cutting the official cash rate by 0.25 percentage points in May, lowering it to 3.85%. This fed into borrowing costs, with the average standard variable rate easing to 8.3% and the average three-year fixed rate dipping to 5.9%.
First home buyers surged back into the market, with 30,047 new loan commitments recorded nationally in the June quarter—up 15.8% from March. Every state and territory saw an increase, with Victoria leading at 10,188 commitments and the Northern Territory recording the smallest number at 258. Loan sizes also rose, with the national average for first home buyers climbing to $544,961.
Overall lending activity reflected the more positive environment. Owner-occupiers made 83,416 new loan commitments during the quarter, up 14.5% from the previous three months. Loan sizes increased 2.7% over the quarter to an average of $678,011, marking a 7.5% rise over the year.
Looking ahead, Pilkington noted that further relief may be on the horizon.
“With another rate cut possible later this year and affordability now showing two consecutive quarters of improvement, the outlook for buyers is brighter than it has been in some time,” she said.
The REIA report underscores cautious optimism for the housing market, with improving affordability, easing borrowing costs, and renewed activity from first home buyers signalling positive momentum as Australia moves into the second half of 2025.