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


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