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


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