The Numbers Behind the Crisis

In Australia, the median house price in major cities like Sydney and Melbourne has climbed well above $1 million. Even in smaller cities such as Perth and Adelaide, prices have risen sharply over the past decade. According to CoreLogic, Australian house prices increased by over 30% between 2020 and 2022 alone, driven in part by low interest rates, government stimulus, and a post-COVID boom in property investment.

Meanwhile, real wages have barely kept pace. Young adults entering the workforce are often earning similar (or even lower) real incomes than those of previous generations, once inflation is accounted for. When combined with the rising cost of living and increasing HECS-HELP debts, saving for a deposit—typically 20% of a property’s value—has become a monumental task.

The Impact of Interest Rates and Lending Rules

In 2022 and 2023, the Reserve Bank of Australia (RBA) responded to surging inflation by lifting interest rates multiple times. While this was intended to slow inflation, it also pushed up mortgage rates, reducing the borrowing capacity of first-home buyers. Even with stable property prices, higher interest means steeper monthly repayments, making it harder for young people to secure loan approvals or afford ongoing costs.

Lenders have also tightened their criteria. Banks are now required to stress-test applicants against higher interest rates to ensure they could still meet repayments if rates rise further. While this is a sensible measure to prevent defaults, it makes it even harder for young people—especially those without financial support from family—to enter the market.

Renting Is No Easier

For those who can’t buy, renting was once the more affordable fallback. But that too has become harder. Across Australia, vacancy rates have fallen to record lows, and median rents in many cities have surged by over 10% in a single year. As competition for rentals increases, young renters face bidding wars, unstable tenancies, and the growing threat of eviction or displacement.

High rents also make it more difficult to save for a home deposit, trapping people in a cycle where they are spending a large portion of their income just to stay housed.

What’s Driving the Crisis?

Several long-term structural issues are fuelling the housing affordability problem:

• Limited supply: New housing construction has not kept up with population growth, particularly in high-demand urban areas. Planning delays, land zoning restrictions, and construction labour shortages all contribute to the bottleneck.

• Investor activity: Investors, who often have access to more capital and tax incentives like negative gearing and capital gains discounts, compete directly with first-home buyers in the same property markets.

• Generational wealth gaps: Baby Boomers and Gen Xers who bought property decades ago have seen their assets multiply in value, while Millennials and Gen Z face high barriers to entry. Many young buyers rely on family support—so-called “Bank of Mum and Dad”—further entrenching inequality.

Policy Responses and Hope for Change

Governments have introduced a range of policies to help address housing affordability, including:

• First Home Owner Grants and stamp duty concessions

• Shared equity schemes, where the government helps fund part of the home purchase in exchange for partial ownership

• Incentives for build-to-rent developments and increased funding for social housing

While these are helpful steps, critics argue they do little to address the underlying supply-demand imbalance and can sometimes inflate prices by stimulating more demand.

More systemic reforms—such as zoning changes to allow medium-density housing, stricter limits on speculative investment, and greater investment in public infrastructure—are needed to create a long-term solution.

The Road Ahead for Young Buyers

Despite the odds, many young adults are still finding ways into the market. Some are buying in regional areas or outer suburbs and commuting to cities. Others are purchasing with friends or siblings, or turning to rentvesting—renting where they want to live while owning an investment property elsewhere.

Ultimately, housing affordability is not just a financial issue; it’s a generational challenge with social consequences. A society where young people feel permanently shut out of homeownership risks deepening divisions and eroding faith in economic fairness.

Fixing the housing crisis will take time, political will, and a shift in how we think about property—not just as an investment, but as a basic need and a foundation for a stable life.