The average home in both Sydney and Melbourne in 2037 will cost more $6 million if current price growth rates continue, according to demographers McCrindle.
In the last 20 years, the average Sydney house price has increased more than five-fold to $1,190,390 from $233,250 in 1997.
Melbourne prices are up more than six times to $943,100 from $142,000. Effectively, that’s a return of six dollars for every dollar invested.
As this table shows, Melbourne property has delivered a bigger return than any other capital city:
And affordability has suffered as prices rise.
“While it is true that wages have increased over this time, earnings growth has not kept up with house price growth,” says Mccrindle.
In 20 years, average annual full-time earnings have not quite doubled to $82,784 from $42,010 in 1997.
In 1996, the average Sydney house was 5.6 times average annual earnings while in Melbourne it was an affordable 3.4 times.
Today, Sydney homes cost more than 14 times average earnings and in Melbourne more than 11 times.
“While the maxim that house prices double every 10 years is not always the case and growth fluctuates, since 1997 Sydney prices have in effect doubled every 8 years while Melbourne has managed this every 6 years,” says McCrindle.
“Clearly, the Australian dream of home ownership for the next generation is fading.
“Young people today need almost three times the purchasing power that their parents needed to buy the average place.”
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