Realestate.com.au
DECADES of rapid home price growth have ruptured the bottom rung of the Australian property ladder.
New data from research group FoundIt reveals that homes priced under $500,000 are disappearing from the market, while properties between $500,000 and $750,000 are also becoming increasingly scarce.
The decline in affordable housing, coupled with a recent interest rate hike, is leaving many Australians locked out of homeownership and trapped in an already pressured rental market.
Sydney is facing a particularly stark reality. Properties under $500,000 now make up just 4 per cent of all listings, compared with the early 2010s when such prices were common.
Homes priced above $2 million outnumber those under $500,000 by four-to-one, accounting for nearly 20 per cent of the market.
According to FoundIt analyst Kent Lardner, buyers face a “distance trade-off”, sacrificing either commute times or property quality to access affordability.
Government initiatives like the First Home Guarantee Scheme have added to competition at the lower end, making it even harder for first-home buyers.
Brisbane has emerged as an unexpected challenge for entry-level buyers. Once considered an affordable alternative to Sydney and Melbourne, the city’s cheap stock has nearly vanished. Only 3.2 per cent of homes sold for less than $500,000 last year, a lower proportion than even Sydney.
Mr Lardner attributes this to strong investor demand and insufficient high-density housing, with investors targeting properties under $750,000 for high rental yields.
Melbourne stands out as the best major capital for first-home buyers. Nearly half of the homes sold last year were priced under $750,000, thanks to decades of high-rise development and a previous exodus of investors.
However, Mr Lardner warns that this advantage may not last, as a “contrarian” wave of investors begins to return, seeking value where other capitals have reached affordability limits.
Adelaide is also seeing entry-level options shrink rapidly.
Homes under $500,000 now make up just 5 per cent of all sales, while the $750,000–$1 million bracket dominates at 36 per cent.
Buyers looking for sub-$750,000 options are finding limited stock, and competition remains high.
The pressure on Australia’s entry-level housing shows no signs of easing, leaving many aspiring homeowners facing a difficult road ahead.
