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


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