Baby boomers had it much easier than the younger generations buying a house – despite having to pay exorbitantly high interest rates.

The generation born after the war were hit with massive 18 per cent interest rates back in the late 1980s.

Those repayments were crippling, when they were coming of age in the seventies and eighties, but houses were significantly cheaper compared with typical incomes.

That was also back when Australia’s population was almost half of what it is today, long before annual immigration levels soared.

Baby boomer economist Saul Eslake bought his first house in Melbourne’s St Kilda East for $105,000 in 1984 on a $35,000 salary when he was 26, after benefiting from free university education.

With an $80,000 mortgage, he was borrowing little more than double his pay before tax and hits out at any suggestion his boomer generation did it tougher – despite the high interest rates he paid.

‘I paid eighteen-and-a-half per cent for some of that but my first house cost $105,000 and it took me less than three years to save up the deposit,’ he told Daily Mail Australia. 

‘Even though interest rates are less than half what I was paying, it was nowhere near as tough as now and I didn’t have HECS debt to pay off because I was part of that lucky generation when it was free.

The generation born after the war were hit with massive 18 per cent interest rates back in the late 1980s (pictured is Terrigal on the NSW Central Coast)

The generation born after the war were hit with massive 18 per cent interest rates back in the late 1980s (pictured is Terrigal on the NSW Central Coast)

‘My generation had it pretty easy – we got free education, we got housing very cheaply and we have made a motza out of the increase in house prices that we have voted for.’ 

In 1980, Sydney’s mid-point priced house cost $65,000, or just 4.5 times the average, full-time male wage in an era when a woman would struggle to get a mortgage without a signature from her husband. 

Real estate data group PropTrack estimated Sydney’s median house would cost $338,000 today, or just 4.3 times the average salary now for all Australian workers, if house prices had increased at the same pace as wages during the past 45 years.

In 2025, Sydney’s middle-priced house costs $1.47million or 14.3 times the average, full-time salary of $103,000. 

But that price-to-income ratio surges to 18.7 if it’s based on the average salary of $78,567 for all workers.

AMP deputy chief economist Diana Mousina, a Millennial, said the younger generations were having a tougher time now saving up for 20 per cent mortgage deposit just to buy a home.

‘The problem now is just getting into the market – that’s what takes the larger chunk of trying to save; it takes 11 years to save,’ she said.

Real estate data group PropTrack estimated Sydney's median house would cost $338,000 today, or just 4.3 times the average salary now for all Australian workers, if house prices had increased at the same pace as wages during the past 45 years

Real estate data group PropTrack estimated Sydney’s median house would cost $338,000 today, or just 4.3 times the average salary now for all Australian workers, if house prices had increased at the same pace as wages during the past 45 years

Boomers battled with sky high interest rates in the 80s - they haven't been that high since - but they had it easier because house prices were much more affordable

Boomers battled with sky high interest rates in the 80s – they haven’t been that high since – but they had it easier because house prices were much more affordable

Melbourne’s mid-point house price cost just $40,000 in 1980 or 2.8 times the average male salary.

If affordability had remained constant, a typical Melbourne would now cost just $205,400.

But the Victorian capital’s median house price of $850,000 is now 10.8 times the average salary for all workers. 

Brisbane’s median house price cost $32,750 in 1980 or just 2.2 times what an average man earned.

That would be $174,600 today if buying power hadn’t changed.

Queensland capital houses now cost $910,000 or 11.6 times the average salary.

The major banks are unlikely to lend someone more than five times their pay before tax, which means many couples would now struggle to get a loan for a capital city house unless they moved to a far, outer suburb and had a big deposit.

Housing affordability deteriorated following the introduction of the 50 per cent capital gains tax discount in 1999, just before annual immigration levels tripled during the 2000s. 

‘Since about 2000, you’ve seen home prices relative to incomes rise at a substantial amount – it’s been the fact that we have been running high levels of population growth – so immigration, so more demand for housing,’ Ms Mousina said.

Baby boomer economist Saul Eslake bought his first house in Melbourne 's East Kilda for $105,000 in 1984 on a $35,000 salary when he was 26, after benefiting from free university education

Baby boomer economist Saul Eslake bought his first house in Melbourne ‘s East Kilda for $105,000 in 1984 on a $35,000 salary when he was 26, after benefiting from free university education

‘We have been running high migration targets, at the same time we haven’t been building enough homes across the nation. 

‘We do have pretty favourable investment concessions for housing, including negative gearing, capital gains tax concession.’

Mr Eslake said politicians from both sides of politics wanted house prices to rise, because more voters were home owners than renters trying to get into the market.

‘For all the crocodile tears the politicians shed about the difficulties facing would-be first home buyers, they know that in any given year, there’s only 110,000 of them,’ he said.

‘Even if you assume that for everyone who succeeds, in becoming a first home buyer, there are five or six who would like to but can’t – that’s at most around 750,000 votes for policies that would restrain the rate at which house prices go up.

‘Whereas the politicians know that at any point in time, there are at least 11million Australians who own their own home; there are 2.5million Australians who own at least one investment property.

‘Even the dumbest of our politicians – as the Americans say, “Do that math” which is why at every election, politicians on both sides of the divide – while bewailing the difficulties faced by first-home buyers – promise and implement policies that make it worse because they know that a vast majority of the Australian population do not want the problem to be solved.’ 

Sydney was the first market to become seriously unaffordable as Australia’s most expensive metropolitan housing market.

PropTrack estimated Sydney's median house would cost $338,000 today, or just 4.3 times the average salary now for all Australian workers, if house prices had increased at the same pace as wages during the past 45 years (pictured is an auction at Homebush in the city's west)

PropTrack estimated Sydney’s median house would cost $338,000 today, or just 4.3 times the average salary now for all Australian workers, if house prices had increased at the same pace as wages during the past 45 years (pictured is an auction at Homebush in the city’s west)

In 1990, the typical Sydney house cost $187,500 or $447,300 now if affordability had remained constant.

A decade later 2000, shortly after the introduction of the 50 per cent capital gains tax discount, a typical Sydney house cost $284,950.

That would translate into $544,000 today if affordability had remained constant. 

This would also be the point where a single, average-income earner could still get a loan at a stretch with a 20 per cent mortgage deposit. 

By 2010, Sydney’s median house cost $600,000 or nine times the average, full-time salary, putting a home with a backyard beyond the reach of an average-income earner buying on their own.

In addition, the housing affordability crisis has worsened as Australia’s population has climbed from 14.5million in 1980 to 27.3million now.

During the 2000s, annual net overseas migration doubled from 111,441 at the start of the decade to 315,700 by 2008 when the mining boom was driving population growth.

After Australia was closed during Covid, immigration soared to a new record high of 548,800 in 2023, leading to house prices climbing even as the Reserve Bank was putting up interest rates.

When it came to the stereotype of young people wasting their money on smashed avocado breakfasts instead of saving for a house deposit, Mr Eslake had a simple answer to that.

‘At the very least, a highly visible rolling of the eyeballs,’ he said.

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