House prices are falling. The average home loan now needs $23,600 more income than a year ago.

The headlines say house prices are falling at the fastest pace in 40 years, and they are. National values fell another 1.2% in October, the seventh fall in a row, and the median is now $884,855, about $63,400 below where it was in March, according to Cotality.

So is now a better time to buy than a year ago? The price is only one line of the answer. Interest rates are 1.25 points higher than a year ago. Wages have risen, but more slowly than prices in general. On the average new home loan in Australia, $731,000 according to the ABS, the repayment is about $589 a month higher than a year ago, and keeping it to 30% of your income takes about $23,600 a year more.

Here is the ledger, one line at a time.

The ledger

	A year ago	Now
Cash rate	3.60%	4.85%
Illustrative loan rate	5.45%	6.70%
Monthly repayment on the average new loan (national average, $731,000)	$4,128	$4,717
Average full-time weekly pay	$2,010.00	$2,083.70
Repayment as a share of average gross pay	47.4%	52.2%
Income needed to keep the repayment at 30%	$165,105	$188,679

Loan figures are a new 30-year principal and interest loan on the average new owner-occupier home loan, $731,000 (ABS Lending Indicators, June quarter 2026), at illustrative rates: 5.45% a year ago and 6.70% now, which is 1.25 points of cash rate rises passed on in full. They are the same rates we use in every post, not market averages. Pay is the ABS full-time adult average weekly ordinary time earnings for May of each year.

Three lines in that table matter more than the rest.

Prices: down from the peak

The falls are real, but they are measured from March, and March was the top of a run. Through 2025, Cotality's index rose about 8.6%. Seven months of falls since have taken 6.7% back off.

So a buyer today is looking at a lower price than at the peak, but not a bargain against the last couple of years. A 20% deposit on today's median is $176,971, or about 85 weeks of average full-time pay before tax. Lower prices make the deposit a little easier to reach. They do much less for the loan, and the loan is the part that runs for 30 years.

Rates: the line that moved the most

The cash rate was 3.60% a year ago. Five rises later it is 4.85%. On the average new loan, that is the difference between about $4,128 a month and about $4,717: $589 a month, or $7,072 a year, for the same amount borrowed. That is a 14% rise in the repayment.

It is the biggest number in the ledger by a distance. To bring the repayment back to where it was a year ago at today's rate, the loan would need to be about 12.5% smaller. For a buyer who borrows a fixed share of the price, that means prices falling about another 12.5% from here. Each 1% off the loan takes about $47 a month off the repayment. The rate rises added $589.

Wages: up, but not as fast as everything else

Average full-time weekly pay rose from $2,010.00 to $2,083.70 in the year to May, 3.7%, the smallest rise since late 2022. The Wage Price Index, which tracks the price of the same jobs over time, rose 3.2%.

Prices rose faster. CPI was up 4.3% in the year to September. Pay that rises 3.2% to 3.7% while prices rise 4.3% is a real pay cut of somewhere between 0.6 and 1.1 points, which is less left over each month to save from.

Put pay and the repayment side by side and the gap is plain. Average full-time pay rose about $3,800 a year. The income needed to keep the repayment at 30% of it rose about $23,600.

What the CPI sees, and what it does not

This is the part that surprises most people. Australia's CPI is built to measure inflation, not the cost of buying a home, so the ABS leaves three big things out:

• Established homes. A sale between two households is treated as a transfer of an existing asset, so it is not counted.
• Land. Even for a new home, only the building is priced.
• Mortgage interest. Excluded since 1998.

What it does include are the costs a renter saving for a deposit pays every week. In the year to September:

CPI item	Annual change
Housing group overall	+5.2%
New dwellings, owner-occupiers	+4.7%
Rents	+3.6%
Electricity	+12.8%
All items	+4.3%

Source: ABS, September 2026.

So the two biggest changes in the ledger, the falling price and the rising repayment, do not appear in the CPI at all. The costs that do appear, rent and power, are rising faster than pay. For someone renting and saving, measured inflation captures the squeeze on the saving, but not the squeeze on the buying.

What would change the picture

Any of three things, and they are worth watching rather than predicting:

• Prices falling further. At today's rate, each 1% off the loan is about $47 a month. It would take about 12.5% to undo the rate rises.
• Rates coming down. Each 0.25 off would take about $121 a month off the average loan.
• Pay rising faster than prices. The September quarter Wage Price Index is published on 18 November.

None of these is in your control. Your own deposit, income and borrowing power are, and they will give a different answer from the national averages. If you are working on a first home, our post on what you actually need to save goes through stamp duty, fees and the cash buffer that the 20% rule leaves out. And for what this week's rate rise does to loans of other sizes, see the table after the fifth rise.

Running your own numbers

• The free mortgage scenario calculator shows the repayment on a loan and rate you choose, with no account needed.
• In Funance, the New Home goal works out the deposit, stamp duty for your state and what you need to save each month, and the What-If Scenarios tab (Pro) shows what a rate change does to your whole budget. Pro starts with a 14-day trial.

This post is general information about published price, wage and inflation data and standard loan arithmetic. It does not take into account your objectives, financial situation or needs, and it is not personal financial advice. For your own situation, talk to a mortgage broker or a licensed financial adviser.