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


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