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


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