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

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

Archive