The Great Australian Dream, Deferred
In 1980, a median house cost 3.5 times the average income. Today it's over 13 times. We charted five decades of Australian housing data to show how home ownership slipped out of reach.
For generations, Australians were promised a simple deal: work hard, save up, buy a house. It was called the Great Australian Dream — and for most of the 20th century, it worked. Home ownership peaked at 71% in 1966. A house cost three to four years’ salary. Mortgages were manageable.
Then, slowly at first and then all at once, the dream began to slip away.
The ratio that tells the whole story
The single most important number in housing affordability is the price-to-income ratio — how many years of household income it takes to buy a median home. In 1980, a typical Australian house cost about 3.5 times the median income. By 2000, it was 6 times. By 2024, it had blown out to over 13 times.
A home that once took 3–4 years of income to buy now takes 13+. No amount of avocado-skipping fixes that arithmetic.
Prices left wages behind decades ago
This divergence didn’t happen overnight. If you index both house prices and wages to the same starting point in 1980, the gap is staggering. House prices have risen roughly 20 times over. Wages? About 6 times. The two lines tell a story of an economy where asset prices decoupled from the incomes of the people trying to buy them.
Capital gains tax concessions, negative gearing, restricted housing supply, population growth, and cheap credit all contributed. But the effect is simple: houses became financial assets, not just places to live. And financial assets are priced by investors, not by the wages of first-home buyers.
Ownership is declining — especially for the young
Australia’s home ownership rate peaked at 71.4% in the 1966 census. By 2021, it had fallen to around 66%. That headline number actually understates the problem — among 25–34 year olds, ownership has collapsed from over 60% to below 45% since the 1980s.
The people who already own homes have done extraordinarily well. The people trying to enter the market face a fundamentally different economy than their parents did.
The mortgage trap: rates fall, but prices absorb the savings
Here’s the cruel irony: mortgage interest rates have fallen dramatically since the 1990 peak of 17%. You’d think that would make housing more affordable. Instead, lower rates simply inflated prices further. When rates briefly spiked again in 2023–24, borrowers faced both high prices and rising rates — the worst of both worlds.
The 30% of income threshold is the traditional benchmark for housing stress. In the early 1990s, that line was breached because of sky-high interest rates. Today, it’s breached again — but this time because of sky-high prices. The cause is different; the pain is the same.
Methodology & Sources
Data compiled from the Australian Bureau of Statistics (ABS Census, Average Weekly Earnings), Reserve Bank of Australia (interest rate statistics, housing price indices), CoreLogic median dwelling values, and the Australian Institute of Health and Welfare (AIHW) housing tenure data. National median house prices use weighted capital city measures from ABS and RBA publications. Income data uses ABS Average Weekly Ordinary Time Earnings (AWOTE) annualised. Home ownership rates from ABS Census years (1954–2021). Mortgage serviceability calculated assuming 80% LVR, 30-year principal & interest loan at the prevailing standard variable rate, applied to the median house price and median household income of each period.
Some early data points (pre-1980) are estimates based on available academic research and may differ slightly between sources. All figures are in nominal (not inflation-adjusted) dollars to reflect the actual experience of buyers at each point in time.