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


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