First published 14 Nov 2026, 4:00am
Home prices have fallen by an average of about $63,000 nationally since the start of the year. Picture: Gaye Gerard
Aussies who could afford a home at the start of the year have been pushed out of the market despite property prices falling by an average of nearly $63,000 nationally.
Analysis of lending figures has revealed a typical buyer who could afford the median Australian dwelling in January would no longer qualify for a loan on the same property if buying today.
This was because the RBA’s four interest rate hikes this year cut borrowing power faster than prices fell, according to the analysis of home value data by HomeLoanRates.com.au and Primara Research.
Prices have dropped by an average of 6.7 per cent nationally while the average buyer’s borrowing power has been reduced by 10.5 per cent.
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Treasurer Jim Chalmers’ budget reforms and rate hikes announced by RBA governor Michele Bullock have helped push down prices.
Primara Research head of data Peter Drennan said new buyers had yet to benefit from the price falls that had delivered a massive hit to homeowner wealth.
“A price fall normally has a trade-off: owners lose equity, but new buyers get a cheaper way in. This year that trade-off has gone,” Mr Drennan said.
“Owners are poorer on paper and buyers are no closer, so the market is falling with no one on the winning side.”
Mr Drennan explained that the median home had lost about $63,400 in value since the beginning of the year, but a new buyer who could just afford it in January would today be $45,000 short if on the same income.
“The price correction new buyers have been waiting for has already been taken back by rate rises,” Mr Drennan said.
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Prices have been falling but it has got harder for first-home buyers to get into the market. Picture: Sarah Wilson
Primara head of research Peter Drennan said first-home buyers had yet to benefit for the price falls that were eroding homeowners’ equity.
“A buyer on the same income as in January can’t reach the same home, and the shortfall grows with every (interest rate) rise.”
It comes as ABS data released this week showed lending to first-home buyers dropped by 8.6 per cent over the September quarter, one of the swiftest falls in buying activity since records began in 2022.
Compare the Market economic director David Koch said it wasn’t just higher loan costs contributing to reduced affordability – most Aussies simply had less money than last year because of rising living costs.
This included for often overlooked items that remain part of the costs of buying and keeping a home, such as the mandatory building insurance banks demand as a condition of their loans.
“Things like car insurance and home and contents quotes are up hundreds of dollars – all of this really hurts,” Mr Koch said.
Both Commonwealth Bank and ANZ have predicted home prices will begin to bottom out in late-2027. Mr Drennan said first-home buyers wouldn’t be able to fully capitalise unless interest rates fell at the same time.
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