Most people start a property search in the wrong order.
They pick a suburb, fall for it, then work out whether they can afford it. By the time the finance conversation happens, the emotional decision is already made and the numbers are being asked to justify it.
Run it the other way. Establish what you can actually borrow, then find out where that number reaches. New data published by realestate.com.au on 19 August 2026 makes the second half of that far easier than it used to be, and the answer is often broader than people expect.
Affordability Went Backwards This Year
Even with values falling in most of the country, housing affordability is worse than it was a year ago. REA senior economist Angus Moore points out that last year’s rate cuts improved borrowing capacity and reduced mortgage costs, and that three rate rises across 2026 have undone that gain entirely. Affordability has deteriorated over roughly the last seven months.
A cheaper house you can borrow less against is not automatically more affordable. Price and capacity move separately, and this year they have moved in opposite directions.
Moore’s more optimistic note is that with the cash rate at or near its peak, affordability is unlikely to worsen much further from here.
So What is Your Number?
Borrowing capacity is assessed individually and it moves on things people underestimate: how your income is structured, whether it is salaried or variable, what other debts sit behind you, your living expenses, the number of dependants you have, and critically, which lender is doing the assessing. Two lenders can arrive at figures that differ by six figures on identical financials, because they apply different assessment rates, treat overtime and bonus income differently, and take different views on self-employed applicants.
That last group is where the gap is widest. If your income is lumpy, or you have been trading for less than two full financial years, or your returns show a business absorbing legitimate expenses, the lender you approach matters enormously. Plenty of people in that position assume they are not in a position to buy at all. Often they are, just not with the first lender they spoke to.
The point is not that everyone can borrow more than they think. Some people can borrow less.
Where $1 Million Still Buys a House
The national median house price now sits at $1 million, with the typical unit around $700,000, according to the realestate.com.au Home Price Index. But as Moore notes, a median is a single point on a distribution. Half the homes in a suburb sit above it and half below, which means an expensive median does not rule out affordable stock within the same postcode.
The REA analysis found only 25 suburbs nationally where every single house is valued under $1 million. But suburbs where the great majority of houses fall under that threshold are far more common, and they exist in every capital.
In Sydney, the strongest concentrations sit in the Mount Druitt corridor in the city’s west, in suburbs like Willmot and Tregear. If Western Sydney doesn’t interest you, then you have options on the Central Coast where 98% of houses in San Remo and 97% in Blue Haven sit under $1 million.
Melbourne’s highest proportions remain on the outer fringe, particularly through the Broadmeadows corridor. But sustained soft price growth means middle-ring options exist that would not have a few years ago.
Brisbane deserves a note of its own. It is now the second most expensive capital city behind Sydney, with median house prices having doubled over the past five years to $1.2 million. Buyers looking below the national median have the most choice out through Ipswich and Logan.
Perth, Adelaide and Canberra all have outer-suburb pockets where effectively every house sits under $1 million. In Darwin and Hobart, a million-dollar budget still reaches a share of stock even in the most sought-after areas.
What About Units?
Moore’s explanation is straightforward. A unit carries a much smaller land component than a house, and land is what drives price closest to the city. That is why affordable units turn up in inner and middle-ring areas where an affordable detached house simply does not exist.
For buyers, that is a genuine trade. Proximity, in exchange for land. Neither answer is wrong, but they are different financial positions, and they have different implications for how a lender assesses the security and what your deposit needs to look like.
What the Market is Doing Underneath All This
Values are falling, and the fall broadened in July.
Cotality’s national Home Value Index dropped 0.7 per cent that month, its largest single-month decline since December 2022. Sydney and Melbourne led it, down 1.4 and 1.2 per cent respectively, and both now sit more than 5 per cent below their recent peaks. Brisbane and Adelaide have joined the decline at 0.6 and 0.2 per cent. Regional Australia fell for the first time since January 2023.
Two pieces of context matter here.
The first is that this follows exceptional growth. National values are still 5.3 per cent higher than a year ago. Prices had a long way to fall before they stopped being high.
The second is more useful if you are buying near the national median. The correction is concentrated at the top of the market. Nationally, upper quartile values are down more than 3 per cent over three months, while lower-priced housing has held comparatively firm. If you are shopping in the sub-$1 million bracket, you are looking at the part of the market that has moved least.
What Does This Mean For You?
It means the search should start with your capacity, not with a suburb.
Falling values and thinner auction competition can work in a buyer’s favour, though that varies considerably by city, suburb and property type, and nobody can tell you where the bottom is. What we can tell you is that your borrowing capacity is the one variable in this that is both knowable and, in some cases, improvable. Which lender you approach, how your income is presented and how your existing debts are structured all move it.
Work that out first. Then look at suburbs, with a number you can trust instead of one you assumed.
If you want to know where you actually stand, reach out to our team for a no-commitment, no-jargon chat about your position.
Sources: realestate.com.au, published 19 August 2026, and the realestate.com.au Home Price Index. Cotality Home Value Index, July 2026. ABS Lending Indicators, June quarter 2026.
This article is general information only. It does not take into account your objectives, financial situation or needs, and it is not financial, tax, investment or property advice. Borrowing capacity is subject to lender assessment, criteria and approval. Consider whether this information is appropriate for you and seek advice from a qualified professional before acting.