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

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

Archive