Housing crisis forces Aussie couples to have fewer kids, expert says

Australians now need $180,000 in household income to buy their first home, with economists warning the affordability crisis could reshape family planning decisions.

Plummeting housing affordability could lead to young couples deciding to forego children with only 12 per cent of would-be first home buyers able to afford a home, compared to 30 per cent five years ago.

Stark analysis from KPMG shows first home buyers with an average household income of $180,000 could only afford to buy 12 per cent of homes for sale in 2025.

This is compared to 30 per cent of homes in 2019-20, when the average income was $150,000.

The average purchase price for a first homebuyer in the 2025 year was $760,000, in contrast to $560,000 five years before.

The issue is nationwide, but South Australia suffered the most dramatic slide, where first home buyers – with an average household income of $180,000 – can access 25 per cent of homes on the market, down from 75 per cent five years ago.

Queensland and WA both dropped from 60 per cent to 25 per cent, and the chronically unaffordable NSW market has remained at 5 per cent of homes affordable to first home buyers. Victoria has had a modest drop from 15 per cent to 10 per cent.

Urban economist Terry Rawnsley said the housing affordability crisis could mean young couples decide to have fewer children or no children at all. Picture: Supplied.

KPMG urban economist Terry Rawnsley said the changes in the market could result in smaller families – similar to what was seen in the 1970s.

“A young couple hoping to buy their first home and have a couple of kids after that, they’re looking for a three-bedroom home for example,” he said.

“With affordability the way it is, they might only be able to afford a two-bedroom home.

“So they might be thinking, ‘Well I would have liked to have had two kids, but now with my house having two bedrooms, I’m only going to have one child’.

“They’re foregoing having more kids or they might not have kids at all.”

Mr Rawnsley said steep house prices rises, particularly in Queensland, meant other states were experiencing similar challenges to the traditionally unaffordable markets of NSW and Victoria.

“Part of it had to do with the big internal migration we saw after Covid, people were looking to get out of Sydney and Melbourne,” Mr Rawnsley said.

“They were looking to Queensland for more affordable housing, good weather, good job prospects.

“Sydney and Melbourne exported their high price growth into places like Queensland – southeast and even regional Queensland.”

The KPMG analysis noted first home buyers need to be earning more than the average Australian to enter the market.

First home buyers are being squeezed out of the market.

It said a minimum household income of $180,000 was required to service a typical home loan, well above the average $145,000 wages for two full time workers.

Mr Rawnsley said home ownership was slipping out of reach for individuals and it was requiring more compromises – although new buyers were being priced out of capital cities’ outer suburbs or neighbouring towns.

“We’re running out of places where people move to the next location,” he said.

“It’s not as much of a solution as it might have been in the past.

“If you grew up in Brisbane and you wanted to buy a home, you go, ‘Oh well look, I just have to move out to Ipswich to find one I can afford.

“Now it’s like, ‘I might have to move to Townsville or Cairns or Mackay’.”

New housing supply priced at $800,000 or lower had steadily fallen over the last three years, from about one-third of stock to 12 per cent in the last financial year, the analysis revealed.

Mr Rawnsley said higher construction costs, higher interest rates and the collapses of multiple builders had affected the market.

Experts believe young couples could forego children. Pic: iStock

“There was a lot of risk in the development sector and developers are going, ‘well look I know it’s going to be easier to move a property worth $1.5m than it is trying to move a property worth $750,000,” he said.

“A lot of developers have gone more to the luxury end of the market, where it’s less risk and easy to sell.

“That sort of prime territory for first home buyers between $600,000 to $800,000 has disappeared pretty quickly.”

The government’s new 5 per cent deposit scheme – recently allowing all first home buyers to purchase a home with a 5 per cent deposit – was only expected to have a “marginal” effect on prices next year, Mr Rawnsley said.

Originally published as Housing crisis forces Aussie couples to have fewer kids, expert says