For many Australians, the dream of homeownership has become more of a distant fantasy than a realistic goal. If you’ve ever found yourself shaking your head at property prices or wondering how your children or grandchildren will ever get a foot on the ladder, you’re not alone.
Housing affordability is one of the most hotly debated issues in Australia, and new analysis suggests the wait for relief could be much longer than any of us hoped.
Housing affordability was front and centre in the recent federal election, with both major parties promising solutions. But despite their different approaches, both Labor and the Coalition share a common, unspoken goal: they don’t want house prices to fall.
Why? Because falling prices can upset homeowners, investors, and the broader economy. But this political caution means that, for now, the dream of affordable housing remains just that—a dream.
Let’s imagine a best-case scenario: wages grow at a healthy 3% per year (better than the pre-COVID average of 2.15%), and house prices slow to just 2% growth per year (a far cry from the 6.9% average over the past 25 years). Let’s also assume mortgage rates drop to 4.75% (well below current levels), and that a home is considered ‘affordable’ if repayments are 35% of a household’s gross income (even more generous than the traditional 30% benchmark).
Even with all these optimistic assumptions, the results are sobering. In Sydney, the median household wouldn’t be able to afford the median house until the year 2096—a staggering 71 years from now. Perth fares a little better, reaching affordability in 2049, but that’s still a 24-year wait.
Some might argue that it’s always been tough to buy a home in Australia. But the data tells a different story. According to the PropTrack Housing Affordability Report, back in 1999, the median household could afford the median home. Even after adjusting for differences in how ‘affordability’ is measured, the late 1990s were a golden era compared to today.
So, what’s changed? In short, house prices have outpaced wages for decades, and the gap keeps widening. The median house is now nearly 8% more expensive than the median dwelling, and households are expected to spend 40% more (in relative terms) on repayments than they did a generation ago.
The idea of letting wages catch up to house prices sounds appealing, but it’s a political and economic tightrope. Even if wages outpace house prices for years, a single property boom can undo a decade’s worth of progress. And with both major parties reluctant to let prices fall, meaningful change seems unlikely.
Interestingly, New Zealand has shown what can happen when house prices do fall. Since their post-COVID peak, prices have dropped by 17.5% nationally, and even more in Auckland and Wellington. Despite fears of economic chaos, the downturn has been relatively uneventful—proving that lower prices don’t necessarily spell disaster.
Ultimately, the quickest way to restore affordability is for house prices to fall or, at the very least, for supply to increase dramatically. This would require bold political action—something neither major party seems willing to pursue. Instead, we’re left with policies that tinker at the edges, while the fundamental problem remains unsolved.
Housing affordability may not be a personal concern for those who already own a home, but it’s an issue shaping the future for many Australians.
How do you see the current housing landscape compared to when you first bought a home? What are your observations on how the housing market has changed over the years? Share your thoughts and experiences in the comments below.
Also read: Report finds Victoria needs 80,000 new homes in next decade to start fixing social housing crisis
