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

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

Archive