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

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

Archive