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


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