The National Housing Finance and Investment Corporation (NHFIC) shows Melbourne is the most affordable capital city for renters, while Perth is the most affordable capital city for potential first home buyers.
Melbourne's improved affordability was largely influenced by the extended lockdowns faced in the city, which has led to a northern migration over the past year.
The mass exodus has led to increased vacancies and released pressure on pricing.
First home buyer affordability deteriorated substantially in regional NSW and regional Tasmania. In these regions, the bottom 40% of income earners can afford up to 10% of homes for sale.
The report found first home buyer affordability deteriorated substantially in regional NSW and regional Tasmania.
In these regions, the bottom 40% of income earners can afford up to 10% of homes for sale.
Sydney and Melbourne saw modest improvements to rental affordability on average due to a decline in net migration driving rents lower, although vacancy rates have been declining.
Rental affordability remains challenging in most cities and regional areas for the bottom 40% of income earners, who can typically afford to rent up to 10% of properties.
Deposit still the main barrier for first home buyers
Despite improved rental affordability in Sydney and Melbourne, home ownership for first time buyers is at its least affordable in five years.
Recent research from Bluestone shows all states reported falls in first home buyers except for ACT through the June quarter.
This comes as the average home loan value continues to surge and remains 'well ahead' of the values recorded this time last year.
The latest RBA ratio for house prices to debt, shows the recent housing boom has vastly outpaced borrowing capacities.
Based on Domain's most recent median household price data, home buyers would need a deposit of just under $300,000 to buy an average house in Sydney.
In Melbourne, a 20% deposit on an average home would be $220,000, while in Brisbane an average deposit would be $140,000.
These numbers have shot up more than 15% in all capital cities, except Perth, vastly outpacing wage growth.
"The sheer affordability of keeping up with rapid house price gains is proving a barrier for buyers, especially first home buyers facing spiralling deposit goals and poor interest accrued on savings," the Domain report read.
"This has resulted in the number of home loans for NSW owner-occupier first home buyers dropping 21% from the recent March high."
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Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.
| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Extra Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
5.94% p.a. | 5.98% p.a. | $2,978 | Principal & Interest | Variable | $0 | $530 | 90% |
| Promoted | Disclosure | ||||||||||
5.89% p.a. | 5.80% p.a. | $2,962 | Principal & Interest | Variable | $0 | $0 | 80% |
| Promoted | Disclosure | ||||||||||
5.99% p.a. | 6.02% p.a. | $2,995 | Principal & Interest | Fixed | $0 | $0 | 60% |
| Promoted | Disclosure | ||||||||||
5.93% p.a. | 5.93% p.a. | $2,975 | Principal & Interest | Variable | $0 | $395 | 70% | Disclosure |
