101 Australian suburbs average homebuyer will lose after rate rise
Nathan Mawby, Property journalist
Updated 27 Sep 2026, 9:56am
First published 27 Sep 2026, 9:55am
A decision to hike interest rates by Reserve Bank governor Michelle Bullock could squeeze homebuyers out of more than 100 Aussie suburbs and towns.
Australia’s average homebuyer is facing a 101 suburb wipeout on where they can afford a house if the Reserve Bank hikes interest rates on Tuesday.
One rate cut is enough to wipe about $20,000 from the borrowing power of the nation’s typical homebuying household, taking them from being able to afford homes with $877,000 down to homes maxing out around $858,000.
Analysis of impacts to borrowing capacities also shows that a second rate hike before the end of the year could leave those borrowers who can afford the nation’s average loan struggling to get a home worth $840,000 and at risk of no longer being able to access 236 areas around the nation that they can afford today.
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Why property downturn is good news for upgraders
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Industry experts are warning a downshift in borrowing power will also have impacts on the nation’s wider financial health, with prospects the nation’s average homebuyer being forced to purchase cheaper homes will impact state budget revenues through reduced stamp duty.
And while the impact for buyers will likely be looking for a more affordable home, with the nation’s housing market already losing ground it could mean sellers in even relatively affordable suburbs that were currently attracting the nation’s average buyer will be facing less competition for their home — and a worse hit to prices.
While the nation’s typical homeloan was $731,000 in June, according to Australian Bureau of Statistics figures, the minimum household income most lenders would accept an application for that much debt is about $162,500 a year.
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| Household income | Borrowing capacity today | Purchase price today | Purchase price after 0.25ppt hike | Purchase price after 0.5ppt hike |
| $75,000 | $337,500 | $405,000 | $396,170 | $387,748 |
| $100,000 | $450,000 | $540,000 | $528,226 | $516,997 |
| $150,000 | $675,000 | $810,000 | $792,499 | $775,652 |
| $200,000 | $900,000 | $1,080,000 | $1,056,612 | $1,034,150 |
| $250,000 | $1,125,000 | $1,350,000 | $1,320,725 | $1,292,649 |
| $300,000 | $1,350,000 | $1,620,000 | $1,584,838 | $1,551,148 |
| $107,300 (Aus median) | $482,850 | $579,420 | $566,896 | $554,845 |
| $162,444 (Aus average loan wage) | $731,000 | $877,200 | $858,158 | $839,915 |
Source: MoneySmart.gov.au, ABS
It equates to being able to borrow about 4.5 times your income, typically only possible if you have minimal liabilities such as credit card debt, other loans and dependent family.
With a 20 per cent deposit, it means a family pulling in that wage could purchase a home worth up to $877,200.
That drops to $858,158 with on rate hike, and down to $839,915 with a second.
For a family on a more modest budget, with annual income at $100,000, a single extra rate hike would cut their access from homes worth up to $540,000 to those worth about $528,000 and sideline dozens of towns and suburbs around Australia.
Higher income earners are also facing compromises, with households earning $300,000 a year likely to see their access to 47 suburbs impacted as a single rate hike cuts their purchasing power from $1.62m to $1.585m.
REA Group economist Luc Redman said borrowing up to 4.5 times income was typically considered quite high and would come close to maximum capacity for most.
![](data:image/svg+xml,%3Csvg xmlns="http://www.w3.org/2000/svg" viewBox="0 0 1280 720"%3E%3C/svg%3E)
REA Group economist Luc Redman believes while home values will fall this year, they won’t outpace lost borrowing power from rising interest rates.
For those heading to that level, any Reserve Bank hike before the end of the year could be more problematic than for most others — and was unlikely to be compensated for by falling home prices.
“The instantaneous effect of interest rates is increased repayments for loan holders and reduced borrowing capacity for households,” Mr Redman said.
“As that cools demand in the economy, the subsequent short-term effect is on slowing home prices as competition reduces.
“But it is likely that the reduction in borrowing capacity from interest rates will be larger than the downward pressure on home prices, because of ongoing supply shortages.”
Real Estate Institute of Australia president Jacob Caine said their analysis of housing affordability had recently found 59 per cent of the median family’s income was being spent paying their mortgage, working out to in excess of $6000 a month — up 12.5 per cent from a year prior.
![Real Estate Institute of Australia president Jacob Caine - for herald sun real estate](data:image/svg+xml,%3Csvg xmlns="http://www.w3.org/2000/svg" viewBox="0 0 1280 720"%3E%3C/svg%3E)
Real Estate Institute of Australia president Jacob Caine says they had already been tracking significant impacts to housing affordability from rate hikes earlier in the year.
“The prospect of another interest rate rise will only further negatively impact those figures, and drive up the average monthly repayment,” Mr Caine said.
“Not only will prospective buyers be dedicating more of their income to service the mortgage, but they will have less choice of where and how to live as a result.”
He added that impacts on borrowing power would hurt those struggling to get into or stay in the market, for those with more equity behind them there could be better opportunities to purchase — and homeowners wanting to sell more affordable properties could also benefit from increased demand as buyers were concentrated on lower price brackets.
However, Mr Caine warned all Australians were likely to feel the impacts of a spring with fewer home sales and potentially lower prices, noting that government budgets around the country would next year see the impacts of a real estate market struggling to meet the populations’ needs.
![Worried estate agent](data:image/svg+xml,%3Csvg xmlns="http://www.w3.org/2000/svg" viewBox="0 0 1280 720"%3E%3C/svg%3E)
Australians selling home in suburbs that are a key target for the average homebuyer today could be getting less attention after a rate hike.
“What that means for state and territory governments is a massive reduction in tax revenue, predominantly through stamp duty,” he said.
“For the average homeowner or renter, across all states, that means fewer services and lower quality outputs from their government, and functionally a reduction in the quality of their life as well.”
Real Estate Buyers Agents Association of Australia president Zoran Solano said he was expecting home buyers would likely find themselves having to look lower down the ladder after a rate hike — but warned there was also a risk some might just look to rent instead.
“While interest rates are going up, people will prioritise securing and holding a home over a lot of other things,” Mr Solano said.
“But they might need to buy in a more affordable suburb, and that might lead to a stimulation of that more affordable property.
“We might see a compression of buyers to the bottom end of the market.”
![Supplied Real Estate Zoran Solano from Hot Property Buyers Agency.](data:image/svg+xml,%3Csvg xmlns="http://www.w3.org/2000/svg" viewBox="0 0 1280 720"%3E%3C/svg%3E)
Real Estate Buyers Agents Association of Australia president Zoran Solano is expecting buyer activity could pull back following a rate hike — leading to fewer sales.
For investors, he said one and certainly two rate hikes would potentially even see them hold off from a purchase — potentially until the next federal election in 2028, in the hopes a new government might bring more favourable conditions for investors after Anthony Albanese this year made sweeping changes to negative gearing and capital gains tax discounts.
Mr Solano added that he was already encountering homeowners deciding to sell and return to the rental market to do away with the stress of rate hikes on their mortgage repayments, though warned this could lead to a concerning increase in tenants without a rise in investors.
“And there’s a changing demographic in Australia where some of the younger Australians will just look at this and say I’m content renting, I’d rather go on holiday and I don’t want to get connected to a mortgage,” he said.
Where Average Buyer Will Struggle To Buy After Next Rate Hike
Aldinga Beach – SA
Angle Park – SA
Angle Vale – SA
Athol Park – SA
Banksia Park – SA
Beenleigh – QLD
Bees Creek – NT
Bellara – QLD
Bentley – WA
Berkeley – NSW
Berrambool – NSW
Bilingurr – WA
Bindoon – WA
Black River – QLD
Blackett – NSW
Bolton Point – NSW
Boronia Heights – QLD
Brabham – WA
Broadwood – WA
Budgewoi – NSW
Burrill Lake – NSW
Byford – WA
Coffs Harbour – NSW
Crestmead – QLD
Crestwood – NSW
Cudmirrah – NSW
Dapto – NSW
Deception Bay – QLD
East Geelong – VIC
Edgeworth – NSW
Endeavour Hills – VIC
Ethelton – SA
Evatt – ACT
Ferndale – WA
Fernvale – QLD
Ferryden Park – SA
Forrestfield – WA
Frankston – VIC
Furnissdale – WA
Geelong West – VIC
Gleneagle – QLD
Glenroy – VIC
Glenvale – QLD
Gobbagombalin – NSW
Gordon – ACT
Heathcote Junction – VIC
Higgins – ACT
Hill Top – NSW
Hindmarsh Island – SA
Holden Hill – SA
Jarrahdale – WA
Jesmond – NSW
Kamerunga – QLD
Kenilworth – QLD
Kianga – NSW
Kilkenny – SA
Kingsbury – VIC
Kooralbyn – QLD
Kyneton – VIC
Lake Conjola – NSW
Lake Haven – NSW
Latham – ACT
Llanarth – NSW
Lloyd – NSW
Menzies Creek – VIC
Milpara – WA
Modbury – SA
Mooroolbark – VIC
Muirhead – NT
Narre Warren South – VIC
Normanville – SA
North Rothbury – NSW
O’Halloran Hill – SA
Osborne – SA
Pooraka – SA
Port Adelaide – SA
Port Fairy – VIC
Port Kennedy – WA
Purga – QLD
Queanbeyan – NSW
Queanbeyan West – NSW
Redbank – QLD
Redwood Park – SA
Ridgewood – WA
Rockingham – WA
Royal Park – SA
Safety Bay – WA
Selby – VIC
Skye – VIC
Springvale South – VIC
The Palms – QLD
Toogoom – QLD
Tootgarook – VIC
Tyabb – VIC
Tynong – VIC
Warnervale – NSW
Waterford West – QLD
West Beach – WA
Woolner – NT
Wulkuraka – QLD
Yalyalup – WA
Source: ABS, MoneySmart.gov, REA Group
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