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

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

Archive