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

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

Archive