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


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