Key takeaways
Australia's dwelling value-to-income ratio was 8.2 in September 2025, according to Cotality.
The house price-to-income ratio compares home prices with household income, rather than a buyer's loan.
Global comparisons need context: city rankings, national figures and indexes measure different things.
Your deposit, expenses, and loan repayments deserve a closer look when planning your next step towards a home.
When you’re planning to buy a home, the price tag is only part of the picture. How that price compares with household income matters too. The house price-to-income ratio helps put that relationship into perspective.
So, how does Australia compare? Sydney ranked second behind Hong Kong in Demographia’s 2026 affordability comparison, using third-quarter 2025 data.
We’ll unpack the rankings, explain why different measures produce different results, and explore what the figures mean for your own home search.
What is the house price-to-income ratio?
The house price-to-income ratio divides the median home price by median annual household income. Demographia calls this the median multiple.
For an illustrative market:
Measure | Illustrative amount |
|---|---|
Median home price | $800,000 |
Median annual household income before tax | $100,000 |
Price-to-income ratio | 8.0 |
The calculation is $800,000 ÷ $100,000 = 8. A typical home in this example costs eight years of gross household income.
That doesn’t mean you could save for the whole home in eight years. The calculation leaves out tax, living expenses and borrowing costs.
Demographia’s 2026 bands classify multiples of 3.0 or below as affordable, 5.1–8.9 as severely unaffordable and 9.0 or above as “impossibly unaffordable”. These are the report’s market classifications.
Price-to-income vs debt-to-income vs housing stress
These measures answer different questions: how expensive a market is, how much debt a borrower has, and how much income goes towards housing.
Measure | What it measures | Who uses it | Illustrative example |
|---|---|---|---|
Price-to-income ratio | Median home price relative to median annual household income | Housing researchers | $800,000 ÷ $100,000 = 8 |
Debt-to-income ratio | A borrower’s total debt relative to annual income before tax | Lenders and APRA | $500,000 debt ÷ $100,000 income = 5 |
30/40 housing stress measure | Housing costs above 30% of gross income for households whose equivalent disposable household income is in the bottom 40% of the distribution | Housing researchers and policymakers | A qualifying lower-income household spends 35% on housing |
Sources: Demographia’s 2026 methodology, APRA’s debt-to-income framework and ABS Survey of Income and Housing methodology, 2019–20. Examples are illustrative.
You might also be interested in: Why median house prices can be misleading when buying a home
Which country has the highest house price-to-income ratio?
The answer depends on the dataset. Demographia compares metropolitan markets, while the OECD’s price-to-income index tracks price movements relative to income over time.
Neither provides a complete, directly comparable ranking of affordability levels across every country.
Least affordable major housing markets
The following are the ten highest median multiples in Demographia’s 2026 report, using third quarter 2025 data:
Position, least affordable first | Market | Country or territory | Median multiple |
|---|---|---|---|
1 | Hong Kong | Hong Kong, China | 14.1 |
2 | Sydney | Australia | 14.0 |
3 | San Jose | United States | 11.3 |
4 | Adelaide | Australia | 11.2 |
5 | Vancouver | Canada | 10.8 |
6 | Los Angeles | United States | 10.7 |
7 | Honolulu | United States | 10.4 |
8 | Brisbane | Australia | 9.9 |
9 | Melbourne | Australia | 9.5 |
10 | San Francisco | United States | 9.4 |
Source: Demographia International Housing Affordability, 2026 edition, third-quarter 2025 data. Positions are presented from least affordable to more affordable.
Why do the rankings disagree?
Different rankings can produce different answers because they measure different places, properties, and incomes.
Before comparing a housing-to-income ratio by country, check:
Geographic coverage: Demographia covers selected markets across eight countries, rather than every country worldwide.
Levels versus change: The OECD divides a nominal house price index by nominal disposable income per head, with its published series indexed to 2015. An index value is not a number of years of household income.
Housing systems: Singapore’s Demographia figure covers resale HDB flats. Hong Kong also has public rental and subsidised ownership options, so a purchase ratio cannot describe every household’s housing experience.
Data and assumptions: Numbeo combines crowdsourced information with other collection methods and uses its own apartment-size and income assumptions. Its figures should not be treated as interchangeable with Demographia’s.
The useful question is: “What does this particular comparison tell me?”
You might also be interested in: How a rate rise could change what home buyers can afford
How does Australia compare?
Australian cities feature prominently in Demographia’s comparison. Its 2026 report says Sydney ranked among the three least affordable markets in 16 of the past 17 years.
For a domestic comparison, Cotality recorded national houses at 8.9 times income, with all-dwelling ratios of 10.0 in Sydney and 7.1 in Melbourne in September 2025.
Australian capital city value-to-income ratios
Capital city | Houses | Units |
|---|---|---|
Sydney | 12.5 | 7.1 |
Melbourne | 8.4 | 5.5 |
Brisbane | 9.7 | 6.9 |
Adelaide | 9.8 | 6.7 |
Perth | 8.1 | 5.8 |
Hobart | 7.9 | 6.0 |
Darwin | 5.1 | 3.1 |
Canberra | 7.1 | 4.2 |
Source: Cotality Housing Affordability Report, November 2025, September 2025 data. These value-based measures differ from Demographia’s price-based series.
Why cheaper homes aren’t always more affordable
A lower price tag can help, but affordability also depends on how that price compares with household income.
A home in a cheaper market can still stretch a local household’s budget if incomes are lower too.
Cotality’s September 2025 figures show how closely regional and capital city affordability can align: the combined regional dwelling value-to-income ratio was 8.1, compared with 8.2 across the capitals.
Those averages suggest that looking beyond a capital city does not automatically mean finding a home that costs fewer years of local household income.
The reverse can also apply. Cotality identified Canberra as the second-most affordable capital across its purchasing measures in September 2025, despite a median house value of about $1.01 million.
The report attributed this partly to higher household incomes and a larger supply of lower-priced units.
There’s also a difference between a cheaper home and cheaper repayments.
A lower purchase price may mean you need a smaller loan, but whether the repayments fit your budget also depends on your deposit, interest rate, loan term, income, expenses and the lender’s assessment.
The RBA explains that mortgage serviceability depends on interest rates as well as home prices and income, so a price fall alone does not establish whether repayments have become more manageable.
Tom Gallagher, an Aussie Broker at Aussie The Junction in NSW says buyers also need to consider the trade-offs that come with a different location.
“Some will accept a longer commute, less walkability or fewer nearby services to get more land. That can be a sensible choice if it suits their priorities, and they have considered the ongoing costs," he said.
Andrew McKay, an Aussie Broker at Aussie Bundaberg, says buyers should also consider a property’s “ability to expand or modify the property over time to make it more suitable for them and their family”.
He says a home that can accommodate changing needs may help buyers avoid another move and its associated transaction costs. That makes the longer-term suitability of a property another consideration alongside its purchase price.
When comparing properties, consider how the location would affect your everyday budget as well as the purchase price.
You might also be interested in: What happens if rates rise during your property purchase
How has affordability changed over time?
Housing affordability in Australia has worsened as home values have outpaced incomes. Cotality’s national house ratio rose from 6.6 in September 2020 to 8.9 in September 2025.
The RBA identifies interest rates, household income, population, and housing supply as important influences on the market.
Lower interest rates can support buyers’ spending capacity; demand growth can add pressure when supply cannot respond quickly.
These influences interact, rather than providing one explanation for every price movement.
What the ratio doesn't tell you
The ratio compares prices with income. Whether a particular purchase is manageable also depends on your deposit, repayments, expenses and lender assessment.
Cotality’s modelled new mortgage consumed 45% of gross household income in September 2025, assuming a 20% deposit, a 30-year term, and the prevailing average new owner-occupier rate.
Consider two households earning the same amount. One has existing loan repayments and higher living expenses; the other has fewer commitments.
Their borrowing power may differ because lenders assess income alongside expenses and debts.
Andrew says some customers he has worked with have changed their approach to car ownership to reduce existing repayment commitments.
“I've had a couple of customers downgrade their cars, so they pay the finance off on the big car, and buy a cheaper runaround vehicle for cash, thereby removing one repayment from their situation.”
The example highlights why existing debts belong in the affordability conversation alongside income and the deposit. The appropriate approach will depend on the buyer’s circumstances.
Tom adds the most useful next step depends on the buyer’s circumstances.
“The most useful adjustment depends on what is holding that particular buyer back. Paying out debt or closing a credit card can improve borrowing capacity, but using the same cash towards the deposit may be more valuable for someone else."
Two incomes also need to be considered alongside the household’s combined commitments. A household income measure should not be read as an individual salary benchmark.
Interest rates matter because they change the cost of servicing a loan, even when its balance stays the same.
Try our calculator to estimate your repayments, then consider how that amount fits alongside everyday spending and savings.
You might also be interested in: Could your household budget handle higher costs?
What this means if you're buying in Australia
A practical next step is to work through your own budget before using a market ranking to decide what is possible.
How lenders assess your income
Serviceability means assessing whether your income can cover repayments and other commitments. Lenders consider the reliability of income, living expenses, and existing debts.
From 1 February 2026, APRA limits the share of higher debt-to-income loans that banks and other authorised deposit-taking institutions can issue.
Each institution can have no more than 20% of its new owner-occupier loans, and separately 20% of its new investor loans, to borrowers whose debt is six or more times their gross annual income.
This is a lender-level limit, not a cap on how much an individual can borrow. Certain owner-occupier bridging loans and loans to buy or build a new dwelling are exempt.
Specified exemptions apply. The rule limits a share of lending, rather than setting every borrower’s maximum loan.
When announcing the measure in November 2025, APRA said it was unlikely to restrict owner-occupier or first-home buyer lending in the near term.
In its May 2026 review, APRA said high-DTI lending remained below the limits overall. Neither statement guarantees an individual application’s outcome.
You can estimate your borrowing power, then ask an Aussie Broker to explain how different lender criteria may apply.
Ways Australian buyers are getting into the market
These options involve different costs, obligations, and risks. Treat them as starting points for a conversation:
A smaller deposit through a government guarantee: The Australian Government 5% Deposit Scheme supports eligible first-home buyers with a minimum 5% deposit without lenders mortgage insurance.
A unit or townhouse: Compare these with houses in your preferred area when setting a budget. Include any strata levies, shared-property obligations and maintenance costs in that comparison.
A different location: Explore properties in other suburbs or regional areas within your budget. Weigh the purchase price against transport costs, work opportunities, and access to services.
A family guarantee: A guarantor may offer home equity as security. If the borrower defaults, the guarantor may need to repay the guaranteed amount; if they can’t, the secured property could be at risk. The borrower must still meet lender criteria.
Buying with others: Co-buying involves sharing ownership and purchase costs with someone else. Seek independent legal guidance on contributions, repayments, and what happens if someone wants to leave.
Rentvesting: Explore what rentvesting involves: renting where you live while owning a rental property elsewhere. You’ll need to account for your own rent, investment costs, vacancies, and tax obligations.
For the scheme, check the official property price caps for your intended location and confirm them with a participating lender before proceeding.
Tom says his conversations with buyers focus on their individual goals: “My focus is on helping them understand what is achievable now and what would need to change to reach their goal rather than just looking at how to get as much as possible as soon as possible.”
To explore your own position, book a chat with an Aussie Broker about your deposit, borrowing power and next steps.
Take the next step with local support
You don’t need to work through the numbers alone. Explore our first-home buyer guide or book a free^ chat with an Aussie Broker to discuss your deposit, borrowing power and next steps.
