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

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

Archive