Housing affordability has hit a record low. But what does that actually mean for you?

Housing affordability in Australia has deteriorated to its worst level since HIA began tracking it in 1994.

The HIA Affordability Index fell 3.1% in the June 2026 quarter. HIA says it now takes 1.9 average incomes to comfortably service a mortgage on a median-priced dwelling in Australia's capital cities, and 1.8 incomes in regional areas.

But what does that actually mean if you're trying to buy a home or already have a mortgage?

It depends on where you are in the home loan journey.

HIA uses 30% of the annual earnings of a single average income earner as its affordability benchmark.

Its latest data shows that a mortgage on a median-priced dwelling now requires the equivalent of 1.9 average incomes to comfortably service in Australia's capital cities. In regional areas, the figure is 1.8 incomes.

In other words, the income needed to comfortably service a median-priced home is now almost twice the income of an average full-time earner.

This is a national measure based on HIA's assumptions about dwelling prices, incomes and mortgage costs. It isn't a calculation of how much you personally can afford to borrow.

For that, your own income, expenses, debts, deposit and loan details matter.

Higher mortgage costs are a major part of the story.

The RBA increased the cash rate three times in 2026, taking it 75 basis points higher since the start of the year to 4.35%. It then held the cash rate at 4.35% at its August meeting.

Those increases have flowed through to mortgage rates. The RBA says variable mortgage rates increased by nearly 75 basis points between January and June 2026. Scheduled mortgage payments also increased relative to household disposable income.

At the same time, housing prices have not simply moved higher everywhere.

HIA says affordability deteriorated across every market in the June quarter. This included Sydney and Melbourne, where dwelling prices fell.

So a lower property price does not automatically make a home cheaper to finance.

Not necessarily.

Imagine two homes with different price tags.

The cheaper home might require a smaller mortgage. But if the interest rate and resulting repayments are higher, the difference in purchase price may not translate into the same improvement in affordability.

This is why it is important to look at both sides of the equation:

• The price of the property
• The cost of borrowing the money

Your deposit matters too. A larger deposit generally means you need to borrow less and may affect your LVR and whether lenders mortgage insurance applies.

But saving a deposit is only one part of being able to afford a home.

The amount you have saved is an important starting point. But it doesn't tell you how much you can comfortably borrow.

Lenders also look at your income, existing debts, living expenses and the repayments you would need to make on the proposed loan.

That means two people with the same deposit could have very different borrowing capacities.

Before deciding what property price to target, it can help to work backwards from a repayment you could realistically manage rather than starting with the maximum amount a lender might approve.

You also need to consider what happens if your circumstances change. A mortgage that looks manageable today can become harder to service if your income falls, expenses increase or interest rates rise.

This is where the HIA figure becomes less useful.

If you already own a home, you don't need to compare your mortgage with the national 1.9-income statistic.

A more useful question is: Has your own home loan become more expensive than it needs to be?

Start with your interest rate.

Check the rate on your latest home loan statement and compare it with current rates for similar loans. Look at the loan type, LVR and features such as an offset account rather than comparing advertised rates alone.

Even a small difference can add up.

For example, on a $600,000 mortgage, a rate that is 0.50 percentage points higher represents roughly $3,000 a year in additional interest before allowing for changes in your loan balance and repayment structure.

That doesn't automatically mean you should refinance. Switching costs, loan features and eligibility all matter.

But a meaningful gap can be a reason to ask your current lender for a better rate and compare your options.

Your interest rate is only part of the picture.

Check how your required repayments have changed since rates started rising. If you're paying more each month, look at what that means for your household budget.

Then consider your loan structure.

Your outstanding balance, remaining loan term, offset balance and any extra repayments can all affect how much interest you pay and how quickly you reduce the debt.

Two borrowers with the same balance and interest rate can have different repayment positions because their loan terms and features are different.

The latest HIA figures show that buying a median-priced home has become harder to afford relative to average incomes.

If you're trying to buy, don't look at the deposit or property price in isolation. Consider the mortgage you would need and whether the repayments fit your income and expenses.

If you already have a mortgage, the national affordability figure tells you less about your own position. Your interest rate, repayments, loan balance and features are more relevant.

That's why it can be worth checking your own home loan rather than relying only on what's happening in the wider housing market.

Bheja's Health Check lets you compare your actual home loan rate with current market pricing. It gives you a starting point to see whether your rate is still competitive and whether it may be worth looking at your options.

Run your Health Check to see how your rate compares.