Borrowing capacity took a major hit post-pandemic. At its lowest point in 2024, a household earning $100,000 could borrow just $469,800 — down 36% from $735,500 in April 2022.

The impact was swift: demand shifted, some homeownership goals were shelved, and many buyers found themselves priced out of the market. But now, we’re seeing early signs of recalibration.

A modest but meaningful lift 

Several factors are driving the shift. The stage 3 tax cuts introduced mid-last year, competitive lending rates as banks chase new customers, and the RBA’s first interest rate cut in five years.

The gains in borrowing capacity may look modest on paper (between $5,900 and $19,000 depending on income) but they matter. For many, that’s the difference between staying in the rental market or buying a well-located and well-designed townhome.

A $100,000 household might now borrow $477,800 – around $8,000 more than before. This may not yet be game changing, but it is enough to shift the conversation.

What happens next? 

Future borrowing power will depend on the pace of further rate cuts. Markets are currently pricing in three more this year. If that plays out, borrowing capacity could increase significantly:

  • +$25,300 for an $80,000 household 
  • +$80,400 for a $200,000 household 
  • Up to $511,500 for a $100,000 household 

This is not back to 2022 levels but it’s moving in the right direction.

Planning for shifting affordability

These shifts shape how we plan, price, and positioning housing – especially townhomes. As borrowing power recovers, so does demand for well designed, well located, and attainable options.

Our teams are tracking this shift, using projected affordability to guide future supply and work with builder partners to deliver smart, price-sensitive products.

This article references findings from our Q1 2025 Victorian Greenfield Market Report. Read the full report here.