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

Housing Affordability in NSW [infographic]

Monday, January 30, 2017

We’ve all heard about the difficulty of buying into the housing market in recent times and the subsequent decreases in home ownership rates (in NSW, from 68% in 2004 to 63% in 2014). With less people able to afford a home in the current market, there have been increases in the numbers of people looking to rent in New South Wales, and particularly Sydney.

We were delighted to be commissioned by Churches Housing and Shelter NSW to uncover the story of rental unaffordability in New South Wales. Through this research, we discovered that finding an available, affordable rental property is becoming increasingly difficult, particularly for those in the bottom 20% of income earners.

The decrease in the availability of rental properties over the last decade or so, has been influenced by a number of factors. Rental prices have increased due to the increased numbers of people looking to rent, and in past decades, rental prices have grown faster than income.

The infographic particularly highlights the difficulties for the bottom 40% of income earners in looking for appropriate rental properties. The term ‘rental stress’ is used to describe those in the bottom 40% who are spending over 30% of their income in housing costs. In 2013-14 NSW had the highest proportion of low income households experiencing rental stress, at 76% (compared to 68% nationally). For these households, rental stress can impact on other areas of life, including health care, schooling, diet and in the worst case can sometimes lead to homelessness. 


A Snapshot of the Changes Transforming Real Estate

Tuesday, September 06, 2016

Change. It’s happening all around us, and it’s easy to be intimidated by the scope and scale of it, but if we can observe the trends and the shifts, then we don’t have to become victims of change but rather we can proactively respond. That’s what’s key. Having the confidence to move forward strategically and proactively, to embrace the trends rather than hide from them.

Earlier this year Mark McCrindle presented Understanding the Times, Shaping the Trends: A Snapshot of the Changes Transforming Real Estate at the Real Estate Institute of Victoria National 2016 Conference. Here are some of his thoughts on trends shaping the Real Estate Industry.



How are generational differences impacting the REAL Estate industry?

Generationally, it is more important than ever to understand the six generations that we have in Australia. While the younger generations might not be active clients in terms of real estate vendors, they do influence parental purchasing and decisions a lot.

We can sometimes pre-qualify people based on our perception of where they’re at in their life stage, but actually there are a lot of people in their late 70’s who are still active in property, perhaps downsizing to buy their next place. Then you’ve got someone in their early 20’s who’s maybe not buying their own place, but perhaps looking at an expensive home because they will be living in that home with their parents. We have to understand the diversity of the generations and all of them may well be active influencers in the buying decision.

Do you have any recommendations on how the Real Estate industry can engage their community?

Sometimes the best connections are actual connections, not just personal ones. The events, the openings, the events where we invite the community along and talk about the area and what’s happening. That brand experience, where people can come to meet and greet with free pizza or cocktails, that sort of thing is what works well, people are looking for that social interaction.

Any tips for those working in real estate?

Well I’d sum it up with the 4 R’s of Real Estate in the 21st Century:

REAL

Keep it real and authentic

RELEVANT

To adjust and adapt

RELATIONAL

Keep it relational in terms of how we connect

RESPONSIVE

We can’t just rely on yesterday’s wins, we have to adjust and adapt to remain responsive to the needs of today


ABOUT MARK MCCRINDLE

Mark is an award-winning social researcher, best-selling author, TedX speaker and influential thought leader, and is regularly commissioned to deliver strategy and advice to the boards and executive committees of some of Australia’s leading organisations.

Mark’s understanding of the key social trends as well as his engaging communication style places him in high demand in the press, on radio and on television shows, such as Sunrise, Today, The Morning Show, ABC News 24 and A Current Affair.

His research firm counts amongst its clients more than 100 of Australia’s largest companies and his highly valued reports and infographics have developed his regard as a data scientist, demographer, futurist and social commentator.


DOWNLOAD MARK'S SPEAKING PACK HERE

What Makes a City the Most Liveable?

Wednesday, July 20, 2016

What makes a state or city liveable? Is it the low crime rate, affordability, ease of travel or is it simply the weather? We have compared some of the major factors and revealed what Aussies really think.

Affordability

If you take the average weekly earnings, subtract the average weekly mortgage repayments based on house costs, you find that NSW doesn’t do too well, it is earning 20% above the average, but the houses are 64% above the average, so NSW works out to be the worst in terms of income after housing. But WA is on top of the charts, with the ACT doing pretty well also.


Ease of travel

We took the centre of population of each of our capital cities, the mid-point of the population sprawl where as many people live north, as south of this point, and as many east, as west. From this centre of living we measured the average, non-peak hour driving time to the centre of the CBD marked by the GPO of each capital. We found that as we would probably expect, Sydney was the longest drive, about 33 minutes to get from the centre of population to the centre of the city, but the quickest trip of all was Brisbane with just 8 minutes.


Crime rates

This is the number of offenders per annum, per 100 people and the Territories book end the data here, with the ACT with the lowest crime rate nationally and the Northern Territory as the highest crime rate and the other states right in the middle. As measured by crime rates, the ACT is Australia’s safest place to live.


Weather

We measured this by looking at the average number of sunny days - totally clear days in a year. Tasmania not doing too well with a lot of cloudy, overcast days, but WA takes the crown with the most number of sunny days in any given year.



Watch Mark McCrindle's full interview on The Daily Edition here


Homes of the Future: Mark McCrindle discusses housing trends

Thursday, June 16, 2016

What is shaping our built environment?

The first is population growth. Australia has just reached 24 million which means we have added an extra million people in less than 3 years, and most of this growth is in our larger capital cities. This is creating a shift from suburban to urban living; from the traditional horizontal communities to the new vertical ones. In our largest capital cities, two-thirds of all new housing approvals are high or medium density rather than detached homes. This densification is creating walkable communities, multi-use areas where people live, work and play in a more localised space, and of course increased access to transit and transport hubs. The other factor shaping developments is affordability. With rising house prices, Australians are looking for financially sustainable options which meet the needs of both lifestyle and affordability, and create the flexibility for our homes to change in tune with our needs and lifestyles.

What are the current trends and will they last?

While design trends come and go with the changing fashions, there are some broader development trends that are here to stay. The increased access to open spaces, in-door out-door areas, balconies, natural light and bringing vegetation into urban environments are all timeless trends that resonates with our temperate climate and needs. Similarly, with food central to our social environment, open-plan kitchens and meal areas in homes and open social spaces in offices are trends we will see continue.

How is technology affecting it?

Today’s technology is seamlessly integrated into our lives, and we are seeing the same seamless integration into our homes. The internet of things means that lighting, sound, temperature, entertainment and security in our domestic environments are all manageable through our personal devices. The decade ahead will see our pantries and fridges talk to our devices to update shopping lists, our home entertainment experience continue playing seamlessly on our portable devices and our hydrogen cars help power our homes.

Image source: The Clipsal Smart Home range (courtesy of www.clipsal.com)

What are the demographic trends?

Homes of the future will have the flexibility to accommodate multiple generations living under the one roof. They will meet the changing needs of a more culturally diverse community and have clever innovations to facilitate support to Australians living independently in their homes to a much older age than we currently see.

What does the future hold?

While Generation Z, who are just starting their careers, will have to pay more for their homes in the future, these buildings and the built environment in which they sit will far exceed what their parents experienced in their first homes. Not only will the technologies and fittings in the home be exciting but the community spaces, café culture and neighbourhood amenities will continue to adjust and adapt to meet the lifestyle expectations of the 21st Century generations.

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

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

Archive