The Dwindling Australian Dream: Home Ownership Beyond Reach?
The Dwindling Australian Dream: Home Ownership Beyond Reach?
1
Recent insights from PropTrack have painted a bleak picture of Australian housing affordability, reaching unprecedented lows.
In a market where a typical household makes just over $112,000 annually, a mere 14% of homes sold are within their budget.
This dwindling accessibility starkly highlights the challenges for would-be homeowners today.
The situation is more dire for median-income renters, who find that they could compete for just 11% of homes sold last year, and an even narrower 9% for standalone houses. This limited access forces many to reconsider traditional homeownership as a viable option.
Surveys are underscoring this crisis. An Accent Research poll revealed a significant gap between aspiration and reality, with only 15% of participants confident that young Australians can secure home ownership without substantial financial support from external sources such as family.
The hurdles to entering the housing market don't end here. Analysis from Money.com.au demonstrated that the journey of amassing a deposit has become more onerous than ever for first-time buyers, who now face the daunting prospect of taking out hefty mortgages for homes that might previously have seemed modest.
Reflecting these financial strains, the average size of owner-occupier mortgages for first-home buyers ballooned to a historic high of $538,200 as of September 2023. This surge represents not just increasing home prices but a shift in expectations and financial commitment needed just to step onto the property ladder.
Adding a historical perspective to this discussion, independent economist Tarric Brooker shared a comparison on social media. His chart contrasted the stark change in housing affordability between 1998 and now. Back in 1998, armed with an average full-time income, Australian households could afford homes virtually everywhere except Sydney.
Examining this longitudinal data—sourced from benchmark rates in 1998 and present-day rates, albeit currently lower than benchmark rates—emphasizes the affordability decline, now with Darwin being the occasional outlier.
Delving deeper into historical patterns, housing affordability actually showed more strain in 2022 compared to pre-1998 levels, even before the Reserve Bank of Australia embarked on its current cycle of monetary tightening. This insight challenges perceptions and encourages reflection on any symmetry between historical and current affordability conditions.
Today's scenario is further complicated by elevated mortgage repayments reflecting a steep rise compared to interest rates touching as high as 17% in the 1990s. This comparative data begs reflection on how consumer expectations and economic realities shape the housing landscape.
Alex Joiner from IFM Investors contributed further historical analysis by demonstrating that mortgage repayments as a portion of income slightly outpaced these present figures in 1989-90, prompting considerations around economic adaptability and inflation-adjusted incomes.
Joiner poignantly remarked, "It will be a story we will tell children in future that there was once a time in Australia when a one income household (or individual) could buy a house" on Twitter. This sentiment encapsulates the gulf between past and current generational experiences.
The original article from PropTrack highlighted these economic divides which stress a narrative of a once egalitarian Australia, increasingly drifting towards disparities tied to class. Intergenerational wealth transfer, rather than earned income, now often defines home ownership possibilities in Australia, significantly altering the modern perception of the Australian Dream.
Published:Wednesday, 6th Nov 2024 Source: Paige Estritori
Australia’s leading financial institution, the Commonwealth Bank of Australia, has openly criticised the Reserve Bank of Australia (RBA) for its calculations related to a proposed reduction in debit and credit card transaction fees. The RBA suggested that the reform would save Australian businesses $1.2 billion annually and benefit the majority of companies, a claim that the Commonwealth Bank strongly disputes. - read more
Amid a period of robust consumer spending, Australia's mortgage holders may face limited future interest-rate cuts. The Commonwealth Bank has observed Australians increasing their spending over the last six months, spurred by rising incomes, a robust job market, and previously lowered interest rates. - read more
The Compensation Scheme of Last Resort (CSLR) recently highlighted potential delays in compensation payments due to insufficient special levy funds. In July, the CSLR's proposed FY2025–26 levy plan allocated $67.29 million for financial advisers, surpassing the $20 million limit set for the subsector. This shortfall of $47.29 million prompted the Treasury to initiate a consultation in August to determine funding solutions for the excess levy. - read more
A recent study by Adviser Ratings, as outlined in the 2025 Australian Financial Advice Landscape Report, indicates that the number of financial advisers in Australia will need to increase significantly. From the present count of 15,500 advisers, the industry is expected to require more than 50,000 over the next thirty years to cater to a growing retiree population. - read more
The Australian government is examining potential reforms to non-compete clauses in employment contracts, driven by concerns that current laws may impede workers from advancing their careers and, in turn, hinder economic growth. In this context, the Financial Advice Association Australia (FAAA) has raised concerns about these reforms, urging that the proposed changes should balance the interests of both employees and employers. - read more
Jet skiing is an exhilarating water sport that many Australians enjoy, especially during the warmer months. With the vast and beautiful coastline that the country offers, it's no wonder that jet skis are becoming a popular addition to many households. - read more
Jet skiing is one of the most exhilarating water sports out there and owning a Jet Ski can be incredibly exciting. However, along with the excitement comes the responsibility of ensuring that your Jet Ski is well-maintained. Jet Ski maintenance is important for many reasons, and in this article, we will explore the reasons behind why it should be a top priority for any Jet Ski owner. - read more
Imagine cutting through the sparkling waters, the sun on your skin, and the thrill of speed and spray - this is the exhilarating world of jetski ownership. It's a realm where freedom meets adventure, where weekends transform into adrenaline-fueled escapes. However, the rush of riding the waves isn't without its costs, and savvy enthusiasts know that budgeting for your aquatic escapades is as essential as the lifejacket you wear. It's about balancing passion with practicality. - read more
If you’re looking to finance a new or used jet ski, you may be wondering if it’s possible to get a loan with bad credit. The short answer is yes – and it may be easier than you think, but there are a few things you need to know before you start the process of applying for a loan. - read more
The thrill of slicing through the waves, the rush of the open water, and the spirit of adventure all encapsulate the undeniable excitement of jetskiing. In Australia, with its vast and spectacular coastlines, owning a jetski is a dream many aspire to achieve. The power to zip across the sea at your own pace is not just a hobby; it's a lifestyle that beckons adventurers and water sports enthusiasts alike. - read more
Knowledgebase
Amortization: The process of gradually paying off a debt over a period of time through regular payments.
