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

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

Archive