Key takeaways:
Australia isn't alone: New Zealand and Canada face many of the same affordability, population growth and housing supply challenges.
Housing supply matters: New Zealand's planning reforms highlight how increasing supply may help improve affordability over time.
Buyers are adapting: Many Australians are becoming more flexible on location while prioritising the type of home they want.
Focus on what you can control: Understanding your borrowing power may be more valuable than trying to predict the market.
For many Australians, buying a home can feel like an increasingly difficult balancing act.
Rising property prices, higher borrowing costs and limited housing supply are prompting many buyers to rethink where they buy, what they buy and how much they're prepared to compromise.
While these challenges can feel uniquely Australian, they're playing out in several comparable housing markets around the world, particularly New Zealand and Canada.
Affordability may be reshaping how Australians buy property, but it's not necessarily changing why they want to buy.
Looking at those markets won't predict what Australia's housing market will do next. But it can help explain why affordability has become such a persistent challenge and why many buyers are adapting their expectations rather than reconsidering how they’ll achieve their home ownership goals.
That similarity is reflected in international affordability research, which places Sydney, Vancouver and Auckland among the world's least affordable housing markets.
Sydney ranked as the second least affordable major market surveyed in the 2025 Demographia International Housing Affordability Report, while Vancouver also ranked among the least affordable globally and Auckland remained in the report's severely unaffordable category.
Independent economist Saul Eslake says Australia shares many of the same structural characteristics as New Zealand and Canada, helping explain why affordability pressures have emerged across all three countries.
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Buyers are adapting rather than giving up
Brent Compton, an Aussie Buyers Agent, said one of the biggest shifts he's seeing is buyers becoming more flexible about location while remaining committed to finding the type of home that suits their lifestyle.
“If I had to say the biggest compromise they're prepared to make, it would be location,” he said.
“Most people are more likely to compromise on location than on the property itself.”
Rather than settling for a home that doesn't suit their needs in their preferred suburb, many buyers are widening their search to surrounding suburbs where their budget may stretch further.
“So, if someone can get the house they're looking for, with the right backyard, the right configuration and everything else they need, they're generally willing to buy it in a different suburb from where they originally wanted to be,” Compton added.
For some buyers, being flexible on location may create more options without compromising on the type of home they want.
Compton said that while affordability is influencing buying decisions, life events continue to drive many purchases.
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“Buyers who need to buy because they're upgrading, moving for school, family or work don't need any extra motivation,” he said. “Their decisions are driven by life circumstances.”
Compton added that others believe current market conditions may better suit their circumstances than they did six or 12 months ago.
“They're thinking that if conditions improve, the market could become very competitive again, and they don't want to be caught up in that race,” he said.
Whether that's the right approach will depend on each buyer's circumstances, including their budget, borrowing capacity and long-term plans.
Why these challenges aren't unique to Australia
Eslake says Australia's housing market shares many characteristics with New Zealand and Canada, making them useful comparisons for understanding today's affordability pressures.
He believes New Zealand is Australia's closest housing equivalent.
“They're geographically close, the banking system is similar, the legal system is similar, and the culture around property ownership is similar,” he said.
“Many New Zealand banks are subsidiaries of Australian banks, so they operate in similar ways. For all those reasons, it's not surprising that we've had similar outcomes.”
Like Australia, both countries have experienced strong population growth, expensive major cities and ongoing challenges increasing housing supply.
OECD data from 2021 also shows Australia, New Zealand and Canada have relatively high house price-to-income ratios and comparatively large mortgage markets, meaning housing plays a significant role in household finances.
However, Eslake said there are important differences in how those countries have responded.
He points to planning reforms introduced in Auckland around a decade ago that made it easier for new housing developments to proceed.
“In Auckland, they turned that around and put the onus on those who wanted to stop development to prove why it should be stopped,” he said.
While New Zealand continues to face affordability challenges, the reforms are widely seen as having helped increase housing supply over time.
Canada highlights another important difference for borrowers: how mortgages are structured.
Although it faces many of the same affordability pressures, its mortgage market operates differently. Canadian borrowers typically have longer mortgage terms with interest rates fixed for five-year periods, meaning central bank decisions generally take longer to affect household budgets than they do in Australia.
For buyers, this suggests affordability challenges are driven by long-term factors, rather than any single interest rate decision.
“One thing that's unusual about Australia, and to a degree New Zealand, is that what the central bank does matters much more broadly than it does in most other countries,” Eslake said.
For Australian borrowers, that means changes to the Reserve Bank's cash rate can flow through to repayments more quickly, making it particularly important to understand how different loan structures may affect borrowing costs over time.
What this means for buyers
Looking overseas doesn't provide a blueprint for Australia's housing market, but it does reinforce an important point: housing affordability is shaped by a range of long-term factors rather than any single policy or interest rate decision.
Those are forces that typically play out over many years, making them difficult for individual buyers to predict or control. While they may influence the direction of the housing market over time, they don't necessarily determine when the "right" time to buy will be for every person.
That's why many buyers may benefit more from understanding their borrowing power, budget and long-term goals than trying to predict the next market cycle.
“If you're thinking about buying your own home, and you find a place where you can genuinely imagine yourself living, and you can afford it, then you should buy it,” Eslake said.
“You should buy it because it's where you want to live your life, not because you expect to make money.”
Whether you're broadening your search area, weighing up different property types or simply trying to understand your borrowing power, having a clear picture of your options can help you make more informed decisions.
An Aussie Broker can help you compare loan options, understand how interest rate changes may affect your repayments and determine what may be achievable based on your financial circumstances.