Microburbs Affordability Index
A 1-100 score for every postcode, measuring how purchase affordability relates to subsequent growth. Backtested monthly from 2010 to 2023 across 2 million house sales.
Luke Metcalfe · Microburbs Research · 2026What This Research Measures
The Microburbs Affordability Index scores every Australian postcode from 1 to 100 based on how likely a property purchased there is to outperform others bought and sold at the same time. It combines salary income, welfare dependency, investor intensity, and local employment data into a single score. A rolling monthly backtest from 2010 to 2023 confirms the signal holds in every year tested.
The Test: Price Divided by Local Income
Take the purchase price. Divide it by the median annual household income in that area. That gives you a ratio. A $600,000 house in an area where households earn $80,000 a year is 7.5 times income. A $1.2 million apartment where locals earn $60,000 is 20 times income.
We looked at every property in Australia that was bought and later resold between 2003 and 2026. We grouped them by when they were bought and sold, so that properties traded in the same market conditions are compared fairly. Then we asked: which properties beat the average, and which trailed?
The answer was clear and consistent. Properties bought at low price-to-income ratios beat the average. Properties bought at high ratios trailed. Consistent across all cities and property types from 2003 to 2026.
How we built the score: The Microburbs Affordability Index combines price-to-salary ratio, welfare dependency, investor activity, and local employment data. One score from 1 to 100. The higher the score, the more the historical data favours you.
Grey bars: a simple price-to-income calculation anyone can do. Blue bars: the Microburbs Affordability Index. Our index finds the winners 1.7 times more effectively. 4.6 million transactions, 2003 to 2026.
A price-to-income ratio is a good starting point. But it treats all income the same. A suburb where people earn $80,000 from salaries is very different from one where they earn $80,000 from investment returns. The Microburbs Affordability Index looks deeper: what type of income, how much welfare dependency, how many investors, what the local job market looks like. The result is 1.7 times more effective at separating properties that outperform from those that trail (2003-2026).
The Four Zones
Based on more than 20 years of data, here is what happened to properties at different Microburbs Affordability Index scores from 2003 to 2026:
The breakeven sits around a Microburbs Affordability Index score of 50. Above that, the odds tilt in your favour. Below it, they tilt against you.
A quick example: a $500,000 house in an area where the median household earns $70,000 per year scores around 60, putting it in the Solid zone. A $400,000 house where locals earn $70,000 scores above 80, placing it in the Strong Outlook zone.
Where This Played Out
Tapping, Perth
A growing suburb in Perth's north. Over 1,400 properties traded from 2003 to 2026. On average, these properties beat other properties bought and sold in the same years by more than 20% per year from 2003 to 2026. Tapping attracted young families with affordable land and good schools. Low price-to-income, high demand, strong returns.
Spring Farm, Sydney (outer south-west)
A new-build suburb in Sydney's south-west corridor. Over 800 transactions from 2003 to 2026. Properties here beat their peers by roughly 23% per year over the same period. Affordable relative to Sydney incomes, with strong population growth from families priced out of inner suburbs.
Wentworth Point, Sydney
A high-density apartment suburb near Olympic Park. Over 2,400 transactions from 2003 to 2026. Properties here trailed their peers by roughly 7% per year from 2003 to 2026. High purchase prices relative to local income, heavy investor presence, and oversupply of new apartments created a persistent headwind.
The Sweet Spot: Affordable Areas Where Owners Live
The strongest outperformance from 2003 to 2026 came from areas that were both affordable and had a high proportion of owner-occupiers (not investors). These areas beat the average by roughly 6% per year.
The mechanism is simple. When most buyers in an area are families buying a home to live in, prices reflect genuine housing need. When incomes rise, prices follow. There is less speculation, fewer empty apartments, and more stable demand.
Surprisingly, new housing supply did not cancel out the effect. Affordable areas outperformed whether or not there was a lot of new building activity nearby.
Affordable areas outperformed regardless of how much new housing was being built. The effect was strongest where investors were absent. 2003-2026 data.
How to Use This
Check the Microburbs Affordability Index score for the postcode. Above 50, historical odds favour you. Above 80, they strongly favour you. Below 20, you face a headwind.
- Before you buy: Look up the Microburbs Affordability Index score for the area. Above 50, the historical odds favour you. Above 80, they strongly favour you.
- When comparing options: If you are choosing between two properties, pick the one with the higher Affordability Index score, all else being equal. The data says this gives you better odds of outperforming.
- For buyers agents: Use the four zones (Strong Outlook, Solid, Cautious, Headwind) as a screening filter. It does not replace due diligence, but it tells you whether the price is working for you or against you.
- For long-term investors: The effect was strongest for houses held for three or more years in owner-occupier areas (2003-2026). If your strategy is buy-and-hold in family suburbs, a high Affordability Index score at purchase is your best friend.
About This Research
This study was conducted by Luke Metcalfe at Microburbs Research. It covers 4.6 million residential property transactions across all eight Australian states and territories, from January 2003 to December 2026. Every property was matched to the annual median income of its area at the time of purchase. The analysis controlled for timing by comparing each property only to others bought and sold in the same years.
For full details, methodology, and charts, read the complete research paper.
Want to Check Your Next Purchase?
Look up the Microburbs Affordability Index score for any postcode. See where you land in the four zones.
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