Can Millennials Afford to Buy a House in Australia?

Between 2014 and 2024, New South Wales saw a staggering 99% increase in property values, while wages grew by just 26% in the same period. And it’s not just a Sydney issue—similar trends have emerged in Queensland, South Australia, and Tasmania, demonstrating that affordability concerns are now a national challenge. 

Housing Affordability: What Do the Numbers Say? 

To understand what it takes to afford a home today, let’s break down the figures using Western Australia as an example. 

A median-priced home in WA is approximately $800,000. Assuming a buyer has saved the recommended 20% deposit ($160,000), their loan amount would be $640,000. Based on a 30-year loan term at an interest rate of 6.44%, monthly repayments would be $4,020 or $48,240 annually. 

Financial advisors typically recommend that housing costs should not exceed 30% of pre-tax income. By this measure, an individual would need to earn $160,800 per year to comfortably afford a home at this price point. 

However, the median annual income in Perth is $78,000, meaning there is a significant gap of $82,800 between what the average individual earns and what is required to purchase a median-priced home.

The Power of Two Incomes 

While homeownership may be out of reach for an individual on a median salary, the numbers shift when looking at combined household incomes. 

For Millennials aged 25–34, the combined median income for a full-time working couple is $161,000 per year, which is just enough to afford a median-priced home in WA while staying within the recommended 30% income allocation for mortgage repayments. 

However, this scenario assumes that the couple has already saved a 20% deposit, which remains one of the biggest barriers to entry. Without it, additional costs such as Lenders Mortgage Insurance (LMI) can make the process even more expensive. 

Do You Need to Own a Home? 

The financial benefits of homeownership are well documented, but is it the only path to long-term financial security? 

A growing number of young Australians are considering renvesting—renting in their preferred location while investing in property elsewhere—or opting for alternative investment strategies, such as shares, ETFs, or managed funds to build wealth without the burden of a mortgage. 

Homeownership also has its challenges. Studies suggest that while owning a home can provide stability and security, it can also lead to financial stress, particularly when mortgage repayments strain household budgets. The key is to weigh up the financial opportunity cost—could investing elsewhere provide better long-term outcomes without the constraints of a mortgage? 

Housing Affordability: A National & Global Perspective 

Australia’s housing market is among the least affordable globally. In 2024, the median house price to income ratio in Australia was more than twice that of the US and nearly double that of the UK. 

What This Means for You 

For Millennials considering homeownership, the key takeaway is financial preparation and strategy. The process requires: 

✅ Careful budgeting to save for a sufficient deposit. 

✅ Exploring alternative strategies such as rentvesting or co-buying with family ie the bank of Mum and Dad. 

✅ Understanding borrowing power and aligning homeownership goals with long-term financial stability. 

✅ Seeking professional financial advice to navigate lending options and investment opportunities. 

At Poole Advisory, we specialise in financial strategies tailored to your goals. Whether you’re looking to enter the housing market or explore alternative pathways to wealth creation, we can help you create a plan that works for you. 

📞 Get in touch today to discuss your financial future. 

Compliance Disclaimer: 

This information contains general advice only, that is, advice which does not take into account your needs, objectives, or financial situation. You need to consider the appropriateness of that general advice in light of your personal circumstances before acting on the advice. You should obtain and consider the Product Disclosure Statement for any product discussed before making a decision to acquire that product. You should obtain financial or credit advice that addresses your specific needs and situation before making investment or borrowing decisions. Taxation information is based on our interpretation of the relevant laws as at 1 July 2018. While every care has been taken in the preparation of this information, Prosperitas Partners Pty Ltd does not guarantee the accuracy or completeness of the information. The case studies are hypothetical, for illustration purposes only and are not based on actual returns. 

Poole Advisory Pty Ltd ABN 15 642 040 604 is a Corporate Authorised Representative (No. 001282603) of Prosperitas Partners Pty Ltd ABN 30 662 654 453 AFSL 544 917.