HIA’s Affordability Report was released today. Its Index is calculated for each of the eight capital cities and seven regional areas on a quarterly basis and considers the latest dwelling prices, mortgage interest rates, and wage developments.

“The HIA Affordability Index increased by 3.6 per cent in the September quarter 2026, reflecting improved affordability across most markets,” added Mr Devitt.

“Despite this improvement, housing affordability remains 5.4 per cent worse than a year ago and close to the least affordable level on record. 

“The fundamental problem remains unchanged. Australia is not building enough homes to meet the housing needs of its growing population.

“A household still requires 1.8 average incomes – in both the capitals and the regions – to comfortably service a mortgage on a median priced dwelling, when an ‘affordable’ home would be serviceable with a single such income.

“Moreover, this interlude of improving affordability is likely to be short-lived.

“The underlying fundamentals of the market bode worse for affordability than they did last year.

“Australia still has 11 million households chasing 10 million homes. Population growth is still expanding the demand side, while this year’s speed bumps have constrained the supply side even further.

“The potential for further interest rate hikes does increase the likelihood of further dwelling price declines, but not necessarily improving affordability.

“The 2022-2023 RBA rate hiking cycle was the steepest in a generation and still saw dwelling prices rise and affordability deteriorate by more than 25 per cent over the same period.

“Strong population growth, record low unemployment, shrinking household sizes and constrained home building overpowered the effect of rising interest rates, seeing prices head straight back up.

“Eventually, the fundamentals of the market will re-assert themselves in this cycle too.

“Population growth may have normalised somewhat since 2023 and the labour market may have loosened, but home building volumes are still not meeting the housing needs of our increasingly large and wealthy population, let alone reducing pre-existing shortages.

“Once confidence returns to the market, these fundamentals will see dwelling prices head back upwards and affordability deteriorate all over again, especially if prices recover while interest rates are still going up.

“Sustainable affordability is not produced by tighter borrowing conditions, higher taxes or greater restrictions on investment in housing,” concluded Mr Devitt.

The HIA Affordability Index improved in most markets in the September 2026 quarter, led by Brisbane (+5.6 per cent), Perth (+5.2 per cent) and Sydney (+4.9 per cent). Only four markets saw affordability continue to deteriorate in the quarter, led by regional Northern Territory (-3.0 per cent) and followed by regional South Australia (-1.5 per cent), Darwin (-0.7 per cent) and regional Tasmania (-0.4 per cent).

Despite quarterly improvements, there were only two markets that saw affordability improve over the year: Melbourne (+2.1 per cent) and Sydney (+1.2 per cent). The annual declines in affordability were led by regional Western Australia (-15.3 per cent), regional Tasmania (-14.6 per cent), Darwin (-13.1 per cent), Perth (-12.5 per cent) and regional South Australia (-12.4 per cent), with the Australian Capital Territory recording the most modest of declines in affordability (-2.8 per cent).

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