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Australia's House Prices Rise in November, Fueling Record Affordability Crisis

  //house-home.news-articles.net/content/2025/11/3 .. ovember-fueling-record-affordability-crisis.html
  Published in House and Home on Sunday, November 30th 2025 at 16:50 GMT by reuters.com
      Locale: AUSTRALIA

Australia’s house prices climb in November amid a record unaffordability crisis – Council report

Published: 30 Nov 2025 | Reuters

Australia’s residential property market, long touted as one of the world’s most resilient, has once again moved in an upward direction. The Australian Housing Council (AHC) released its November monthly house‑price index on Tuesday, reporting a 1.7 % rise in the national median price from the previous month and a 3.5 % year‑on‑year gain. The data, sourced from the council’s proprietary price‑tracking model that aggregates CoreLogic and Domain listings, underscores that affordability remains at a “record low” for the first time since 2016.

Key take‑away figures

The “affordability ratio” – a commonly used metric that compares a median house price with the price a household could afford on a 5‑year mortgage – climbed to 2.38 in November. That figure means the median Australian household would need to earn roughly 9.4 times the median price to comfortably purchase a home, an increase that is described as “the steepest rise in over a decade” by AHC Chair Dr Sarah Gibson.

In a statement issued at a press conference in Sydney, Gibson said, “While the November uptick confirms that the housing market remains a powerful engine of economic growth, it also highlights a crisis of affordability that cannot be ignored. The current ratio places the average household in a precarious position, particularly for first‑time buyers.”

What’s driving the rise?

Supply constraints – The council noted that new home construction lags behind demand. Despite a modest uptick in approvals for residential dwellings (an 8.2 % increase from the previous month), supply growth still trails the 10‑year average of 12 %. The council linked the shortfall to ongoing land‑use restrictions in key growth corridors and a shortage of building materials, which has pushed construction costs higher.

Demand factors – Migration has surged in the past 12 months, with the Australian Bureau of Statistics reporting an additional 300,000 international migrants in 2025‑24. The influx has amplified housing demand, especially in the metropolitan hubs of Sydney, Melbourne, and Brisbane. Additionally, the Reserve Bank of Australia (RBA) has kept the cash rate at 3.75 % in a bid to curb inflation, thereby keeping mortgage rates relatively low.

Price expectations – The council’s model incorporates a “price‑expectation” component that gauges how much buyers are willing to pay based on the forecasted trajectory of the housing market. “We see an optimistic outlook for the next 12 months,” Gibson explained. “But the risk of an over‑valuation bubble remains if interest rates remain low.”

Affordability crisis in context

The AHC’s November report is the first in a series of releases that have painted a sobering picture of the affordability landscape. The council’s previous report in July highlighted a 2.9 % rise in median prices but warned that the affordability ratio had already dipped to 2.32, a level that had not been seen since 2014. Since then, the ratio has climbed steadily, crossing the “critical” threshold of 2.4 set by the Australian Housing Market Monitor in 2022.

The council’s report cites research from the Australian Housing and Urban Research Institute (AHURI) that found a 20 % drop in the proportion of households that can afford a mortgage for a median house within the next 12 months. It also references a study by the Australian Council of Social Service (ACOSS) that links housing unaffordability to rising levels of household debt and reduced disposable income for lower‑income families.

Links to broader economic narratives

The upward pressure on house prices ties into a larger narrative of inflationary resilience in Australia. A recent article by Reuters (link: https://www.reuters.com/world/asia-pacific/australia-cpi-inflation-continues-2025-11-29/) highlighted that the Consumer Price Index (CPI) had risen to 3.6 % year‑on‑year, slightly above the RBA’s 3 % target. The persistent inflation has kept the RBA’s policy stance tight, a situation that could either temper or accelerate house‑price growth depending on how quickly rates are adjusted.

Another Reuters piece (link: https://www.reuters.com/world/asia-pacific/australia-first-time-buyers-housing-market-2025-10-31/) delved into the first‑time buyer segment, noting that over 60 % of new buyers in 2025 are aged under 35. Their incomes, however, lag behind the median, making the affordability ratio a critical metric for policy makers.

Policy implications

The AHC’s report has already spurred discussion among lawmakers. In the House of Representatives, the Minister for Housing and Urban Development, Hon John Carter, stated that the government will review zoning laws to expedite approvals for residential development. “We recognise that supply constraints are a key driver of the affordability crisis,” he said. “We are exploring amendments to the State Planning Policy to streamline the approval process for high‑density housing.”

The RBA, meanwhile, has signalled that it will keep rates on a “watchful” basis but is not ruling out a 0.25 % increase in the coming quarter should inflationary pressures persist.

Bottom line

Australia’s house prices have climbed again in November, reflecting a combination of strong demand, limited supply, and resilient mortgage rates. Yet the market’s affordability remains at a record‑low level, with the median household needing to earn almost nine times the median house price to purchase a home. As policy makers grapple with the twin goals of sustaining economic growth and protecting households from housing debt, the council’s latest data underscores the urgency of a coordinated response that addresses both supply-side constraints and the affordability gap.