Housing affordability crisis intensifies in Australia and the US

Rising interest rates and high property prices are significantly impacting homeownership prospects in Australia and the United States.

In Australia, a report from Finder indicates that 36% of Australians aged 18 to 39 are pessimistic about ever owning a home, a nearly threefold increase from 13% in 2019. This trend follows interest rate hikes by the Reserve Bank of Australia to combat inflation. While some first-time buyers with strong repayment capabilities may find opportunities in falling prices, many face increased barriers due to tighter lending limits.

In the United States, the 30-year fixed mortgage rate has climbed to approximately 7.28%, the highest level since late 2023. This surge, driven by rising long-term Treasury yields, has increased monthly repayment burdens. Data from Redfin suggests that to afford a median-priced home while keeping housing costs within 30% of income, a household needs an annual income of roughly $109,796, which exceeds the median US household income.

A “lock-in effect” is also stalling the US market, as homeowners with low fixed rates from the pandemic era are reluctant to sell and move into higher-rate loans. This has resulted in lower inventory and a rise in the median age of first-time homebuyers, which reached 40 according to the National Association of Realtors.