Australian property market sixth most expensive in world - yet still relatively affordable
Australians trying to buy a home can quite rightly feel aggrieved at property prices that are among the highest in the world, but when income is factored in the picture is quite different.
In raw dollar terms, Australia has the sixth most expensive property prices in the world but the news isn’t quite as grim as it might sound.
Based on the cost of a 100-square-metre apartment, Australia’s US$590,376 places it behind only fifth-placed Norway, Austria, Luxembourg, South Korea and the most expensive, Switzerland, where the average price reaches a staggering $1,641,618 (all prices in US dollars for comparative purposes; the AUD bought 65.3 US cents at time of writing).
Data compiled for a BestBrokers report into global real estate finance and property costs found that when it came to factoring in real wealth within the 67 countries analysed, Australians were better off than it first seemed.
Aussies buying property were contending with a market that by world standards was at the high end of the affordability scale.
The median annual wage in Australia is currently US$45,740 (around $3,812 per month), while the average price per square metre is $5,904. This means annual earnings cover 7.75 per cent of the property cost. It is worth noting the average Australian income is markedly higher than the median, skewed by a small proportion of very high incomes.
When it came to overall property affordability with costs and income factored in, annual wages cover 18.2 per cent of property prices in South Africa and 16.9 per cent in the United States, making them the two countries leading the global ranking.
Rounding out the top five were Finland, Bahrain and Denmark, while New Zealand was the eighth most affordable for the average income earner. The remainder of the most affordable countries for home buyers are predominantly large economies or wealthy nations with high GDPs.
It was a far more sobering housing affordability picture in some of the world’s most populous and rapidly developing nations, where property prices have surged far ahead of wage growth.
Australia has the 13th highest salary in the world, according to CEOWORLD Magazine but that is offset by having the 10th highest cost of living. Rent alone consumes 43 per cent of a renters’ budget in Australia.
When housing affordability is measured against average income, a typical 100 square-metre apartment in Australia would cost around 155 monthly wages (around 13 years of earnings), placing the country 13th globally in affordability, just after Canada and Latvia.
The report also made the surprising revelation that the price per square metre in Australia appears to have declined from $6,193 to $5,904, a decrease of approximately 4.7 per cent compared to corresponding figures from 2024. The report authors noted, however, that this does not necessarily indicate improved housing affordability, as the figure represents an overall average and may vary significantly by location and property type.
Data analyst Paul Hoffman from BestBrokers.com said Australia’s housing market exhibits structural pressures that are unlikely to ease without targeted interventions.
“While initiatives like the First Home Guarantee may increase short-term access for first-time buyers, the broader dynamics, high property valuations, entrenched investor dominance, and regional price disparities, suggest that affordability gains will be limited.
“The modest decline in average prices per square metre may reflect shifts in transaction mix rather than a genuine easing of market conditions.
“Coupled with persistently high real mortgage rates, these factors indicate that housing costs relative to income will remain elevated, reinforcing Australia’s position near the top of global rankings for housing expense.
“Long-term improvement will likely require simultaneous measures to expand supply, moderate investment incentives, and address regional disparities.”
Affordability improvement looks unlikely
Australians can rightfully claim to be paying too much for their mortgages, when inflation is pitted against what borrowers end up paying the banks.
The average mortgage interest rate in Australia for July 2025 stood at 7.32 per cent, while inflation data from June was 2.4 per cent. This yields a ‘real’ mortgage interest rate, calculated as the nominal rate minus inflation, of 4.92 per cent, indicating that borrowing costs remain relatively high for homeowners even after accounting for inflation.
When it comes to affordable homes, Australia is still wrestling with supply issues that are seeing fewer homes prices under $750,000 hitting the market every day.
Nerida Conisbee, Chief Economist, Ray White, recently said Australian capital cities are collectively losing 24 affordable houses every single day.
While the unit market is adding 1.5 affordable properties daily, this growth falls far short of offsetting house losses - creating a net reduction of nearly 23 affordable homes daily.
Sydney leads the decline with 7.1 affordable properties disappearing daily, followed by Brisbane losing 5.0 and Melbourne 3.6.
Even smaller markets show significant losses - Gold Coast sheds 2.5 properties daily, Adelaide 2.1, while Canberra and Hobart each lose around 0.7 properties per day.
Darwin stands alone as the only capital showing growth, gaining 0.3 affordable properties daily.
