New figures have revealed how deeply housing debt is cutting into incomes as repayment pressures intensify.
Home owners across Australia are committing a share of their earnings to mortgage payments not seen for more than three decades, with NSW Treasury’s June 2026 figures placing nearly every state and territory at or close to a historical high.
NSW households faced the greatest pressure, allocating almost 31 per cent of their income to home loan payments.
Queensland’s figure topped 28 per cent, followed by South Australia and Western Australia at close to 26 per cent each, while Victoria was slightly above 22 per cent.
The findings draw on Australian Bureau of Statistics figures, Cotality’s property data and the Household, Income and Labour Dynamics in Australia Survey, with Treasury’s analysis covering the period since 1994.
NSW’s average exceeded the 30 per cent threshold widely cited as an indicator of mortgage stress, measured against gross household income.
Pressure spreads beyond NSW
While NSW carried the largest burden, the steepest deterioration occurred elsewhere.
Between March 2020 and June 2026, Western Australia’s ratio of mortgage payments to household earnings rose by 174 per cent, while Queensland recorded a 152 per cent increase and South Australia registering a 140 per cent surge.
NSW’s ratio increased by almost 79 per cent during that period, with its higher starting burden helping distinguish the state’s current position from the faster deterioration recorded in other markets.
A separate assessment by REA Group revealed that financing a median-priced purchase could soon require an income commitment rivalling the late 1980s.
If the Reserve Bank of Australia (RBA) raises rates again in November, the group estimates repayments would take 37.4 per cent of a typical household’s income. The previous record was 37.5 per cent in December 1989.
On REA’s measure, Queensland, South Australia, and Western Australia have already moved beyond their earlier records, although Australia’s national reading still remains below its peak.
Price falls offer limited relief
Separately, new calculations from SQM Research have revealed that cheaper property has provided insufficient compensation for more expensive finance.
It estimates that the four rate increases this year have lifted total repayments on a typical new home loan by $172,000, several times the dollar benefit from property value declines over the preceding six months.
SQM Research managing director Louis Christopher attributed diminished purchasing capacity to successive rate increases, saying they had “forcibly reduced” buyers’ purchasing and borrowing power.
“The rise in interest rates is offsetting the housing price falls so far, so affordability has deteriorated because lending costs have gone up,” Christopher said.
He also identified caution about further losses as a separate deterrent, saying many potential buyers were holding back because they “don’t want to catch a falling knife”.
[Related: Mortgage demand collapses as refinancing retreat gathers pace]
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