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

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

Archive