australian houses 'world's least affordable', page-23

"If the average mortgage was compared to the average household income then a very different picture would result."

That measure would have precisely zero to do with affordability. How much debt someone has outstanding on their property, or indeed any product, has no correlation to the relative cost of an item. I'd also be interested to see a worked example of why average is a better measure than median. There's a good reason the average is not used when working out these ratios.

"If on the other hand its saying that a first home buyer (mortgage near purchase price) cannot afford the median house price, has that ever been so?"

Are you kidding? Interest only repayments (~6.2%) on median property in 2001 (Perth) were under $200/week.