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


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