Is housing the new Australian dream?

The Australian dream of owning a quarter-acre block with a detached house and backyard is increasingly out of reach. Affordability has fallen nationally, as it sits closer to the most affordable place than ever.

However, demand for housing remains strong, mainly driven by population growth, shrinking household sizes, and an increase in first home buyer interest due to the extended 5% deposit scheme.

This strong demand is highlighted by the fact that National consumer inquiries are almost back to February 2022, when the RBA’s interest rate was 0.1%. Inquiries per unit purchase list drove that growth, up 19.6%. Although home purchase inquiries have fallen by 16.2% since then, they have been on the rise again over the past 12 months.

The difference in the growth rate between listing inquiries for houses and units is mainly driven by the household’s ability to provide mortgages. As prices rise to ease inflationary pressures, service costs increase, and prices rise sharply. continued, causing some consumers, especially stockholders, to reevaluate their lifestyles.

There has been a growing need for buyers to consider the trade-offs between the type of housing they want and the location they want to live in. Therefore, the desired interest in units, traditionally more affordable and in higher resource areas, has become more common.

Demand for housing remains high, but units are closing

In all major metropolitan areas, housing continues to be more popular overall, in asking on a per listing basis – that is, average inquiries per housing listing removed from units – interest in housing purchases continues to outpace units. However, the gap is closing, especially in our big cities.

Sydney had a total inquiry per listing in February 2022 of +26, meaning the average house listing received 26 more inquiries than unit listings in Greater Sydney. That declined to a total of +10 since January, due to increased interest in the units.

Melbourne had a similar decline, with their total investigation down from +10 to +2. The difference is that inquiries for units have increased by 13% since February 2022, while houses remain 33% below the point in February 2022 when the RBA’s interest rate was 0.1%. Since then, the inquiries have been increasing rapidly again, with rates at high levels.

In Brisbane, the net average of +15 has dropped to -1, meaning that, on average, a unit for sale in Greater Brisbane receives More questions than the house. This is not because housing is becoming less popular: the basic demand for housing has continued to increase recently, but interest in units is growing much faster.

Perth is the outlier, with net inquiries remaining at +5 but experiencing significant growth in both house and unit enquiries, mainly due to strong mining activity supporting rising migration and wages. House key inquiries are up over 200% since February 2022, with units down 300%.

Adelaide went from +12 to +4, while inquiries for semi-detached houses and units are increasing. Darwin saw an acceleration of house inquiries, and inquiries about listing doubled. Hobart has seen a distinct shift in asking for everything, by throwing houses over units; however, it is well below the February 2022 peak. Canberra remains below its 2022 peak, with no significant change in sight.

The performance of the mortgage encourages the transition to buying units

A household’s ability to afford a new home is very low in Australia. Servicing is a function of interest rates, housing costs and household income. When more than 30% of the family’s income is required to use the home loan, it is considered unaffordable.

From the lows of March 2022, when 23% of income was required to service a new loan, the proportion of income required to service a loan has risen to 32.4%. When broken down by housing type, there was a clear division between units and houses.

While both mortgage and unit loan performance has increased, the gap, as a share of income, has grown from an additional 4.6% of income for mortgage loans per unit in March 2022 to 7.4% in June 2025.

This may mark an inflection point in the demand for density in our cities. As the world adjusts, the proportion of income spent on new mortgages is near its highest in a century, and the gap in units continues to widen. Families are moving into units, and homeownership is becoming more permanent than a quarter acre.