The Fading Australian Dream

Thursday, March 23, 2017

Housing affordability is currently a key issue of discussion in Australia and while there are a number of factors at play, the main price driver is that demand for houses is exceeding supply. Population growth, a trend to smaller households (and so more homes needed relative to the population), and demand for homes not only from first home buyers but also from downsizers, overseas buyers, local investors, and self-managed super funds and trusts are all fuelling price rises.

While Australia’s current annual population growth of 1.4% may seem modest, this adds almost 340,000 to our population each year- which is one new Darwin every 20 weeks or a new Tasmania every 18 months.

Where population growth is strongest, house price rises are the highest

Sydney is growing much faster than this having averaged 1.8% per annum for the last five years. It will add almost two million to its population by 2037 – which is the equivalent of adding a new Perth into Sydney. Melbourne is currently Australia’s fastest growing city and based on the current growth trends, it will overtake Sydney to become the nation’s largest city around the middle of this century. Unsurprisingly where population growth is strongest, house price rises are the highest.

Earnings growth has not kept up with house price growth

In just twenty years, the average Sydney house price has increased more than five-fold from $233,250 in 1997 to $1,190,390 today while in Melbourne prices over the same period have increased by more than six times from $142,000 to $943,100 today. While it is true that wages have increased over this time, earnings growth has not kept up with house price growth. In 20 years, average annual full-time earnings have not quite doubled from $42,010 in 1997 to $82,784 today.

The impact of growing demand on house prices is most evident when comparing prices to average earnings. Twenty years ago, the average Sydney house was 5.6 times average annual earnings while in Melbourne it was an affordable 3.4 times annual earnings. Today Sydney homes are more than 14 times average earnings, and in Melbourne more than 11 times annual earnings. While the maxim that house prices double every 10 years is not always the case and growth fluctuates, since 1997 Sydney prices have in effect doubled every 8 years while Melbourne has managed this every 6 years.

If the growth metrics over the last two decades play out over the next two, the average home in both Sydney and Melbourne in 2037 will exceed $6 million. Clearly, the Australian dream of home ownership for the next generation is fading. Young people today need almost three times the purchasing power that their parents needed to buy the average place, so even double incomes will not quite do it. Additionally, today’s new households are starting their earnings years later than their parents, having spent longer in tertiary studies, and they begin their economic life not with zero savings like their parents, but well into the negative- with interest accumulating study debts to pay off. Even if today’s emerging generations start saving harder and earlier and live with their parents longer, home ownership is still not a given.

Policy settings around migration and baby bonuses have grown the population and policies around property tax incentives, self-managed superannuation and investment provisions have fuelled property demand therefore policy support will be required to bring the great Australian dream a little bit closer to reality.

Sources: Population at 2017 (ABS). 1997 prices: Macquarie University (Abelson). 2017 house prices: Core Logic. Analysis: McCrindle

Welcome to our blog...

We have a passion for research that tells a story, that can be presented visually, that brings about change and improves organisations. And we hope these resources help you know the times.

Our Social Media Sites

Facebook | McCrindle Research Social Media YouTube | McCrindle Research Social Media Twitter | McCrindle Research Social Media Flickr | McCrindle Research Social Media Pinterest | McCrindle Research Social Media Google Plus | McCrindle Research Social Media LinkedIn | McCrindle Research Social Media Mark McCrindle Slideshare


Last 150 Articles


Tags

forum school sydney event medicine young people Australian Families responsive dreams darwin financial independence christianity choice workers Tuesday Trends Northern Territory digital economy business performance trends of 2016 work mates the hills work investing social media proactive screenage deloitte year 7 plans McCrindle Speaker youth Australian Dream google for education baby boomers leadership workshop gig speakers pack balance social impact potts point engagement skills goals baby name trends coffee food bank buildings daily telegraph mining boom housing market local communities 1975 speajer small business professional speaker community engagement renting baby name predictions video hills Charlotte public transport employmee 1968 victoria Lower Hunter Region post rationalism suburban living new york times crows nest events Australian schools Assistant Store Manager futurist 1980 Christmas lunch Generation X alpha FPA emerging generations mccrindle tea princess charlotte purpose rule keeper owning a home sunburnt country australian townhouses tv menai keynote gig economy curiosity 2012 prince george cancelling plans Willowdale Kiwi Scouts SRE mentor australian communities trends report casual growth motivate communities education sector identity sydney hills transport intern financial planning learner optus graphs career Crime Rates jobs census Maxim Accounting tertiary education cooking speakers The ABC of XYZ not for profit research Hunter Valley father's day Caregiver Sydney population village Australian Bureau of Statistics aged care puzzle thrive consumerism generational trends training economic faith manly Royals Gen Y Aussies friendship mover and shaker global retail 2017 ferry trends geomapping cars home ownership parents bus bondi royal data visualisation digital Queensland young australians Christmas presents Engineering Manager population GPO real market research 2016 workshop dreaming shopper's pick housing Myth priorities social research easy rider kate middleton conferences emerging technologies teleworking in the media forecast gen alpha research visualisation Skilling urban social commentary McCrindle Speakers technology 40 million sentiments VET pyrmont royal baby easter teachers work from home rising house prices average sydneysider affordable employers visualisation environmental scanning hunger stay home perth residents Research Director pharmacy screenagers sydneysiders employment news student research on coffee equip infographics housing trends Retail panel mortgage media activity growth of sydney sector wide study storytelling workplace culture car education future report PSI non profit etiquette salary schools financial research wage trades Sydney Hills Business Chamber consumer Res Vis shifts internship norwest IT Specialists ashley fell JOMO paying to work cultural diversity typical australian World Water Day language leadership travelling investor future of work national crime rates Business analysis income baby boom house prices entrepreneurs of today vegetarian workforce baby names Channel 7 Australian communities charities Australian Home spirituality Western Australia media marketing hobart couple 10 years contiki high density apartments christmas online shopping award program focus groups trends of 2017 What is food insecurity? Sydney property suburb outsourcing retirement mother's day Gen X collaboration acf15 ageing population coffee lovers government cultural diveristy wellbeing Deaths not for profit social researcher charity ease of travel future proof TEDx Northern Beaches cloudy days online professional presenters men visual communication social life focus group urban living financial future business insights snapshot wealth distribution sunny days rich brand anzac education future mccrindle research analysis spend teaching innovative Bathburst fresh world wealth and income distribution religion Generation Y mobile cica speaker FOMO rain Lower Hunter brands workplace sydneysider ageing lifestyle innovation CBD gen z culture presentations divorce Valentine’s Day monarchy pharmacies goal TAS micro students hopes teach generation builders public holiday annual income commuters social researchers publication world youth day #censusfail social shifts domestic repayments CPI research services mythbusting Research Executive aussie culture australian communities forum US relevant census fail TDE 2013 budget Mark McCrindle debt child care ACF 2016 list social commentator Love high school careers public speaker new office New Zealand emerging trends winter christian REIV Conference learn ABS names social trends commute social change Australian Communities Trends apartments the average aussie cartodb demographic trends capital cities baby name experience Australian Population Work place apartment school students tips communications global financial crisis 2020 unemployment researcher local community belief event school satisfaction area NFP event donation Aussie thought leadership public speaking Social Trend younger generations ACF2017 state Northern Beaches Christian School Real Estate Institute of Victoria social lives wedding millenials Jura Coffee 24,000,000 NBRS Netflix faux-cilising Christmas season national wealth English ultimo not-for-profit Elderslie-Harrington park educhat blaxland sector happiness business index donate Tuesday Trend Word Up wealth inequality house price rise ACT healthy future South Australia NT report NEETs 1994 money long weekend care support Australian Census 23 million sustainable cancel plans McCrindle Keynote Speakers ACT Report weather narcissism wealth parenting census results Cobbitty-Leppington gender demographer households eliane families SMART Financial Planning Association of Australia Canberra forecasting Australian community trends media commentary local Hornsby Shire Council shopping megatrends litter Financial Planning Association volunteering 24 million facts Jura Australia 2016 census mccrindle trend tuesday work-life teacher household jobs of the future marriages australians staying home more clothing australian community trends report average aussie Real Estate New South Wales group session middle class social analyst VET sector engage Australian Trends TED Australia Day 2017 the great screenage Channel Seven moreton bay REIV National Conference entertainment staff Do It Yourself ashley mckenzie unaffordable ethnography media release housing growth rental stress TED talk mateship global generations states New Zeland politics tea who is generation z Hills Shire Council "know the times" trend in depth interviews future of shopping gold coast dare to dream mythbusters mccrinlde survey Northern beaches Event australian real estate DESTEL cash internet Wodonga Kirsten Brewer Mount Annan-Currant Hill women holidays vegemite chairty going out environment baby data selfie nfp generation alpha EFF the australian dream micro apartments slideshare Black Friday social wages criminal logan breakfast survey design debate economy entrepreneurial research data customer education personal growth professional toys VIC hello fresh impact food insecurity Andrew Duffin ACF demographic transformations church stats supply and demand staying in travel educated high density divorce rate data analyst future of education future proofing The Daily Edition food live the dream Wagga Wagga System's Architect wolloomooloo the changing face of high density living future Merry Christmas average Australian youth unemployment housing affordability Territory family celebration sydneycity urban taskforce volunteering data Vocational education google house qualitative research social analysis demography greatness safe tattoos Gen Z Expert quote learning Duchess of Cambridge baby names report professional services offenders ipswich winter blues cost financial fears weekly earnings australian social research property market community university degree grave decision earning know the times TEDx Speaker 2016 census results bureau earnings seasons professional development suburbs summer sun overcast Australia street recap DIY lalor park royal influence the lucky country meals marriage Melbourne society city sector wide resource generation Z baby names australia report 2014 research report poor optimistic shopping centre Performance Sentiment Index twentyseventeen meetings hornsby resilience showreel life WA sports millionth fears commuting collaborative holiday ideas sydney speaker Queensland: QLD daily commute 2015 change dream research pack poker master national private wealth university conference speaker urban living index rise of local Wellington February 16 future-proof finance Christchurch click neutral bay story infographic wall water generations interactive learning styles mccrindle in the media study NSW increasing densification Black Friday Sales participants volunteer home define crime omnibus office opening investment Australia Day brisbane personalities social issues the hills shire Sydney keynote speaker insight organisations Black Friday in Australia growing population sydney metro faux-cilise January 26th population map office space children group living australia demographics networking schools students Macquarie University cold aged care cancelling event friends brand experience Financial Planning Week grandparents socialising internships global year 12 financial dreams Sydney’s south west millennials tableau challenge population milestone energy culturally diverse census 2016 relational volunteers census data socialites NBRS Architecture society trends giving optus my business awards Births James Ward earn education research organisational culture faux-ciliser infographic property price dessert cost of living Australian demographics rent results entrepreneur HSC statistics tuesday Mark McCrindle in the media SA renter of the future royal family case study waverton moderators guide leader follow community event Adelaide affordability huffington post hills shire award winner demographic home owner changing face of sydney population growth product eliane miles marrickville Tasmania McCridle woolworths wealth and income keynote speaker trends analyst train social enquiry house price conference ACF17 Geoff Brailey presentation Education Future Forum newspaper SMSF authenticity conference presentation employmer office capital city communicate Australians shbc low density Population Clock land of the middle class

Archive