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


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