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

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

Archive