As we navigate through the ever-changing landscape of the Australian housing market, experts have cast their gaze into the future, offering a glimpse into what the year 2050 might hold for homeowners and prospective buyers. The forecast, however, is far from sunny, painting a picture of a nation grappling with soaring property prices, widening wealth gaps, and a social fabric at risk of unravelling.
The Great Australian Dream, once a reachable milestone for many, is now under threat as property speculation becomes a national obsession. Ravi Sharma, an author and founder of Search Property, has projected that Sydney house prices could reach a staggering $3.8 million by 2050, assuming a ‘conservative’ annual increase of 4%. While this figure may seem outlandish, Sharma insists it’s not only possible but ‘likely,’ albeit with the usual ebbs and flows of the market.
This prediction aligns with the broader concerns voiced by Michael Fotheringham from the Australian Housing and Urban Research Institute. He warns that the decline in homeownership is set to accelerate, with the current system making it easier to purchase additional properties rather than a first home. This could further entrench the wealth divide, creating a society split between property investors and a growing class of long-term renters.
The implications of such a divide are profound. Brendan Coates, a director at the Grattan Institute, cautions that we could find ourselves in a ‘pretty bad place’ by 2050, with homeownership increasingly dependent on parental wealth rather than individual effort. This trend is already evident, with homeownership among the poorest 40% of Australians plummeting across all age groups.
The statistics are sobering: homeownership in Australia has fallen from over 70% in the 1960s to around two-thirds today. Millennials are particularly hard hit, with less than half of those aged 30 to 34 owning their home, a stark contrast to the two-thirds of baby boomers who had achieved this milestone by the same age.
The root of the issue, according to Coates, is a chronic undersupply of housing. Australia lags behind other OECD countries in terms of housing per capita, leading to scarcity and inflated prices. The National Housing Accord’s goal of 1.2 million new homes in the next five years is a step in the right direction, but Fotheringham stresses that inefficient construction practices and a slowdown in housing construction over the past 50 years must be addressed to keep pace with demand.
The housing crisis also intersects with demographic trends. KPMG urban economist Terry Rawnsley links the nation’s declining birthrate to unaffordable housing, noting that fertility rates are lower in areas where housing is more expensive. This could lead to a ‘time bomb’ for Australia’s economy, with potential labour force shortages and taxation issues on the horizon.
In response to these challenges, the federal government has invested heavily in housing, with initiatives aimed at increasing homeownership and strengthening rental protections. The Coalition, on the other hand, proposes reducing migration and allowing the use of superannuation for home deposits, alongside a $5 billion Housing Infrastructure Programme to support new home construction.
As the housing debate takes centre stage in the political arena, Fotheringham calls for a nonpartisan approach to housing policy, emphasising the need for decisions that benefit all Australians and contribute to the overall health of the economy and society.
As we reflect on these expert predictions and the potential challenges facing Australia’s housing market in the coming decades, it’s clear that the path forward will require thoughtful and strategic solutions. The conversation around housing affordability, homeownership, and economic stability is complex, and diverse perspectives are essential to finding a balanced approach.
What are your thoughts on these projections? Do you believe the housing market can be steered in a different direction? Have you experienced challenges related to housing or homeownership? We’d love to hear your insights—share your thoughts in the comments below!
Also read: Prefab housing promised 50 years ago as solution to housing supply crisis
