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

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

Archive