The Australian Housing Market

Does hard work and determination still suffice for young Australians?

This fortnight I have spent my time looking into the Australian Housing Market, one which I am fortunate enough to have broken into, but increasingly higher amounts of people, at increasingly lower ages are having their prospects of reduced to nothing. I live in Brisbane, in a 1 bed, 1 bath, 1 car apartment. The property has experienced nearly 50% growth in two and a half years, something which I feel increasingly torn between overjoyed, and worried about. Sure, this is great for my financial future, yay me. But the bigger (more important) picture is looking worse for young Australians, many of which will likely never own a home.

The Housing Market 50 years Ago vs Now

To evaluate if young Aussies really have it that bad, we need to compare it to the 80-year-olds that were buying houses in their 30’s. Maybe that generation was just comprised of a harder working population with better attitudes to work and spending habits. Back to 1975, the Vietnam War was ending, and Gough Whitlam (Prime Minister) got dismissed by the Governor General (Crown Appointee). The average Brisbane house would set you back a whopping $17,500 dollars. This does not account for inflation however, which increases the figure to a few hundred dollars above $200,000 in today’s money. Today’s average Brisbane house price just surpassed $1,000,000. Another common rebuttal to the debates that occurs with regards to house prices these days is the fact that interest rates were much higher than today, often being over double what we would consider high at 5%. Back in ’75 someone on a variable mortgage would be paying approximately 10.5%, stretch out repayments over 25 years, and they would be locked into repayments of $1,636 per month (presuming 10% deposit). Someone borrowing $900,000 (10% deposit on $1M) today, at 5.36% rates (best offered by CommBank on LVR<60%), is looking at monthly payments of $5,712 (Borrowing Power Calculator - How Much Can I Borrow?, 2025). Not only that, but wage growth has been 1,183%, while property price growth has been over 4000%, and similar in rental rates (40 Years of Change: 1975 to Today - McCrindle, 2018). I’ve got a funny feeling that cutting out a $5 coffee 3 times a week is not going to change housing prospects for pretty much any Australians.

The Average Australian Household

So, imagine that you’re one half of a couple who represent the average Australian household. You have a household income of $7,738 per month, from this, non-discretionary spending of $5,672 is deducted which covers rent, food, fuel etc. This leaves you with $2,066 leftover for the month, this can be saved, or spent on discretionary items such as movie tickets, meals out, or anything else that isn’t necessary (Monthly Household Spending Indicator, May 2025, 2025). If you’re a good household, and you set aside half of that for savings, you are saving $12,396 per year. Put all of this into a 5% savings account, and in just over 12 years, you’ll have the 20% required for a deposit on the average house, not actually that bad. However, this disregards the property price growth, and if its consistent with the previous 12 years, that average house will have increased 127% to $2.27M. And yes, while wage growth will have occurred, as previously covered it won’t be anywhere close to house price growth and will likely follow the growth in non-discretionary goods much closer, cancelling out any real wage growth. Here is where the issue becomes clear, the average Australian is stuck in a rental trap that is impossible to escape. It will still take a household saving double that each month 14 years to have enough to deposit 20% on the average house at the time.

Closing Remarks

The housing market in Australia is getting increasingly worse, with more people unable to get onto the property ladder without an inheritance. It has been shown that increased housing supply directly combats excessive house price growth, and this is what needs to be done. Without a drastic change in the spread between property prices and wages, it’s likely that a significant amount of the population will be barred from entering the market.

Reference List

40 years of change: 1975 to today - McCrindle. (2018, April 25). McCrindle. https://mccrindle.com.au/article/blog/40-years-of-change-1975-to-today/#:~:text=Australians%20are%20also%20earning%20a,than%20they%20were%20back%20then.

Borrowing Power Calculator - How Much Can I Borrow? (2025). Commbank.com.au. https://www.commbank.com.au/digital/home-loans/calculator/how-much-can-i-borrow?mch=ps&mcpid=71700000075360927&mpb=700000002103803&gad_source=1&gad_campaignid=2070559089&gbraid=0AAAAADxfaH9o7Kw8uko74qndEqkXrA-6F&gclid=Cj0KCQjwm93DBhD_ARIsADR_DjEzoKz2cUmrv6IIikNyEOtHA0X9g9nRLN_UBrURZ59q_St27mOEe1AaAqqfEALw_wcB&gclsrc=aw.ds

Monthly Household Spending Indicator, May 2025. (2025, July 4). Australian Bureau of Statistics. https://www.abs.gov.au/statistics/economy/finance/monthly-household-spending-indicator/may-2025#discretionary-and-non-discretionary-spending

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