First-home buyers are confronting a tough new reality where government support aims to speed up access to property, but in doing so seems to be driving demand into a market already short on homes. Entry-level house prices have jumped from around $408,000 to about $685,000 in five years, while typical wages have risen only about 22%. What used to be considered starter homes have surged beyond what an average couple on a median income can comfortably service, turning what was once a Sydney-only problem into a nationwide squeeze.
Across the country, this shift has unfolded as lower-priced homes, traditionally the domain of first-time buyers, have become the most competitive part of the market. A new national report shows entry-level house prices have jumped about 68% between 2020 and 2025, compared with modest income growth, leaving young buyers spending longer saving deposits and facing heavier mortgage loads. The strain is particularly visible in the capital cities, where strong population growth, limited new housing and intense investor interest have combined to push up prices faster than most households can keep up.
Breaking the numbers down, Sydney’s typical entry-level house now sits around $1.15 million, up roughly 64% since 2020, while Brisbane’s has climbed past $860,000 and Perth’s to about $780,000, both more than doubling over the same period. Adelaide’s entry house price has jumped to about $720,000, more than triple in five years, while Melbourne, the relative outlier, has seen more modest house price growth of about 20% to a similar $720,000 and is the only major city where unit values have edged lower over five years. Even units are no longer the easy fallback in every city. Brisbane’s entry-level unit price of around $660,000 now slightly tops Sydney’s roughly $645,000 after an increase of more than 80% in just five years.
For many younger households, the outcome is escalating mortgage stress. Affordability benchmarks typically suggest repayments above 30% of household income are risky, yet an average couple aged 25 to 34 in Sydney who buy at the bottom of the house market without outside help would now need to direct more than 60% of their income to loan repayments, about double the share required just five years ago. Mid-sized capitals have shifted even more dramatically. In Adelaide, the repayment-to-income ratio for an entry-level house has jumped from about 14% to roughly 44% in the same period, leaving many would-be buyers unable to secure the size of mortgage they need.
Government schemes are trying to bridge the gap, but they appear to be a mixed blessing. An expanded federal program that allows buyers to enter the market with a 5% deposit and no lenders mortgage insurance has helped more than 200,000 households purchase sooner, and in Sydney it has cut nearly six years from the time needed to save a typical house deposit and a little over three years for a unit. However, by enabling more buyers to compete for a limited pool of lower-priced property, these demand-side measures seem to be pushing up the very prices they are meant to make more manageable, especially in suburbs where homes sit below scheme price caps and are now growing at almost twice the pace of more expensive properties.
The broader picture looks like a structural affordability problem rather than a temporary phase. Analysts warn that years of underbuilding, combined with generous demand incentives and strong investor interest, have created conditions where entry-level prices consistently rise faster than incomes. Recent data shows that homes under first-home buyer scheme thresholds rose about 9% over a recent three-month period, compared with around 4.6% for properties above those caps, as investors chased capital growth in the most price-sensitive segments. There are signs investors may now be slowing as growth cools and policy risks emerge, but without a significant lift in new housing supply it seems likely that many first-home buyers will be pushed towards units, fringe suburbs, smaller regional centres or cities like Darwin if they want to buy without relying heavily on family wealth.
