Analysis released by social research firm McCrindle this week has shown that the price of a typical house in Melbourne has multiplied by 22 in the past 40 years, almost four times faster than wages. It’s part of a report aptly titled ‘The Fading Australian Dream’ – and it’s the latest in a well-researched area of our economy. Over the past year, median house prices have soared by 24% Sydney and 16.2% Melbourne. The average house in Melbourne is now just over $1 million, and in Sydney it’s $1.4 million.
If you’re looking to buy in Darwin, you’re looking at a price tag 23.4% higher than a year ago. Hobart has gone up 21.9%, and Canberra is up 20.5%. And before you say “just look further out” – regional house prices have skyrocketed too. In regional Tasmania and regional New South Wales, they’re up nearly 23%.
There’s also a decline in supply – data from national real estate websites show a 34.9% national decline in advertised properties.
Was it hard for our parents?
Often younger people are told it is just as hard to buy a property now as it was for our parents, but that’s not the case. 30 to 40 years ago, the house price to income ratio was sitting at around 3.5. That means it took 3.5 times a yearly salary to buy a house. If we compare that to housing prices currently, the difference is stark. The median salary in Australia roughly sits around $52,000. At that salary, the ratio is now 1:18 – in Sydney, it’s 27. That means that now, it’s about 5 times more expensive for someone on the median income to buy a house compared to 30 years ago.