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

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

Archive