It’s officially the worst time to be a first-home buyer in at least 56 years.
New figures have revealed first-home buyers face the most challenging buying conditions since price records began in 1970 due to soaring debt, high interest and minimal growth in wages.
And recent falls in prices in many suburbs and generous government support have done little to help, the FoundIt research noted.
The study flies in the face of recent claims by Labor frontbencher Tanya Plibersek that: “It’s never been a better time to be a first-home buyer”.
It also throws in doubt Prime Minister Anthony Albanese’s claim his budget would help first-home buyers.
Back in May, he claimed his changes would “make our tax system fairer to help more Australians into homeownership … this is about giving younger Australians a leg-up in the housing market”.
The current downturn has seldom helped first-home buyers as most of the falls are at the top-end, while prices for cheaper homes have grown in some suburbs. Picture: Tim Hunter.
The study by analytics group FoundIt – authored by Kent Lardner, a pioneer in Australian valuations data – measured interest rates, the average gap between wages and prices and deposit requirements.
It found that an average income earner purchasing a median-priced capital city home needed to spend 10.2 times their wages to get into the market, the highest since 1970.
2026 was found to be the first year on record where saving a 10 per cent deposit required more than a year of the average wage.
Recent price decreases were also deemed to have been little benefit for first-home buyers because interest rate hikes had reduced their borrowing power by more than the discounts they could get on homes.
Meanwhile, wages had failed to keep up with the cost of living, meaning homeowners had to divert much larger proportions of their income into servicing their mortgage repayments than in previous years.
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MP Tanya Plibersek said on a Channel 7 appearance that there’s “never been a better time to be first home buyer”. Picture: Monique Harmer
Mr Lardner said it was a “horrible” time to be a first-home buyer because getting into the market required record levels of debt that was becoming more expensive to service.
It was also noted that current conditions presented more of a challenge than even the 1989 market, when interest rates were 17 per cent.
Part of the reason was because the debt required to buy in the current market far exceeded levels in 1989 – prices then were four times the typical income, today they’re 10 times higher.
First-home buyers have been slammed with an additional level of risk: prices in the bottom end of the market have yet to fall by anything close to the margins in the top-end of the market.
Some popular first-home buyer markets have actually recorded price rises, even as the rest of the market has fallen.
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FoundIt head of research Kent Lardner.
Ray White economist Nerida Conisbee said this situation wouldn’t last and price falls would eventually spread to the bottom-end, meaning first-home buyers in cheaper suburbs risked buying at a price peak and then watching the value of their home get eroded.
This would be problematic for first-time buyers who accessed the government’s 5 per cent deposit scheme as they risked falling into negative equity, Ms Conisbee said.
Mr Lardner said the scheme was “flawed” because it was one of the driving forces behind price growth in the bottom end of the market, but was also exposing first-home buyers to risk in the form of higher debt.
Mr Lardner said getting helped with a deposit did not make housing more affordable for first-home buyers, it made it less affordable.
“The scheme (reduces) the deposit and hands the buyer the heaviest repayment schedule on record in exchange,” he said.
Ray White Chief Economist Nerida Conisbee said home prices on cheaper homes, the types that attract first-home buyers, have stayed high, but may fall.
“It relocates the burden — it doesn’t remove it. On no reading does it make 2026 the best time in history to buy.”
PropTrack figures recently showed the top growth suburbs over the June quarter were mainly suburbs priced within the price caps for the 5 per cent deposit scheme.
In Sydney, prices among the bottom 25 per cent of sales dropped by an average of just 0.7 per cent, while at the top-end they dropped by more than 3 per cent.
First-home buyer Justine Orford, 58, accessed the 5 per cent deposit scheme to purchase her Gladesville home in December and said she was aware of the negative equity risk.
She said she tried to calm her anxieties about the scheme by keeping the big picture in mind.
Justine Orford, 58, recently bought her first home with the government 5% deposit scheme. Picture: Justin Lloyd
“If the value goes down I will have to bear it, but I am planning to hold onto the property for the long-term and in the long-term the value will go up,” she said.
Navigating the Sydney market as a first-home buyer was “an emotional rollercoaster”, she said. “It was very draining, but in the end it was worth every high and low.”
Amit Shankarikoppa and Ankita Kaddipudi also recently used the government 5 per cent scheme, but Mr Shankarikoppa said it was “useless” for most of the properties they looked at.
“It’s a proper joke,” he said, adding that simply finding a home they liked was a challenge.
“It was quite tricky to try and find a place that we could actually move in without having to do a lot of works soon after moving in which obviously that’s a whole other cost.”
Loan Market broker Julian Choo said most first-home buyers were yet to benefit from recent falls in prices as they weren’t for the kinds of properties they would be buying.
“You’re not getting much discount, but you’re trying to catch a falling knife because prices may fall down the track,” he said.
Amit Shankarikoppa with wife Ankita Kaddipudi at home in Toongabbie. Picture: Jonathan Ng
LJ Hooker head of research Mat Tiller said one of the challenges for first-home buyers was that recent negative gearing reforms in the May budget were starving the bottom-end of listings.
“Most of the owners of cheaper homes, the kinds that first-home buyers would buy, are investors. They are rarely selling because that would mean giving up (grandfathered) negative gearing benefits.”
Ms Plibersek’s office was approached for comment.
BEST YEARS TO BUY A FIRST HOME
1972: the median house back then cost three and a half years of one wage
1983: interest rates were 12.5%, but houses relative to wages cost a third as much as now
1997: a house was four-times-earnings, average deposit saved in five months
2020: record-low interest rates
WORST YEARS TO BUY A FIRST HOME
1989: rates were 17%, but the average house cost 4.5 years’ pay, not 10.2, and wages were growing faster
1990: rates were 16.4%, but houses were still cheaper than today on every measure
2007: repaying the loan chewed up 62.1% of a wage in year one but that’s still below today
2025: conditions similar to today but not as bad
*2026: outright worst year in 56 years. Gap between prices and wages is at record high, repayment burden is record high
Source: FoundIt/SuburbTrends