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


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