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

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

Archive