Buying a house to live in and make lifelong friends with neighbours has long been seen as a rite of passage in Australia.
Owning a home with a backyard has, for generations, given families stability, helped nurture close community ties, and given young couples something to work towards.
There is also space to grow vegetables, play sport in the garden or read a book under a tree.
Not to mention financial freedom from a landlord, and the sense of having a stake in your suburb – feeling like a valued member of society who is rewarded for hard work.
But what has long been regarded as the great Australian dream is now increasingly becoming just that – a pipe dream.
This is bound to cause more social problems, exacerbating societal tensions, leaving millions in debt and the elderly struggling to survive, and even leading to unrest on the streets.
Younger Australians really do have it worse now than during the Great Depression – at least where housing affordability is concerned – with ever-increasing immigration levels which have hit record highs under Prime Minister Anthony Albanese robbing younger generations of an economic future.
And it means that many of you reading this will never own a home, and face the prospect of lifelong financial insecurity, through no fault of your own.
Owning a house with a backyard has, for generations, given families stability and close community ties (pictured is a stock image of an Australian backyard)
AMP chief economist Shane Oliver, who compared capital city house prices with wages going back to the 1920s, tells me many younger people are likely to end up as lifelong renters, with housing affordability the worst it has ever been.
‘That’s the risk here that you’ll end up with a generation or a big chunk of Gen Z who are confined to the rental market, which obviously has long-term consequences because the key way to grow wealth in Australia is by owning property,’ he says.
‘That’s denied to many Australians, it will leave them in a difficult financial situation for much of their life.
‘It’s not a great situation – it’s leading to social tension and that could become more serious – it’s critical that we solve this affordability issue.’
The lucky ones may inherit a house from their parents, but at a later stage of life.
‘By the time that happens, you’re 55 or 60 or something; that may enable you to pay off your mortgage when you get to that age but it’s not an ideal situation,’ he says.
Those who don’t come from a wealthy family are increasingly at risk of being destitute in old age, or having crippling debts if they manage to even get into the property market.
‘It’s not a fair situation because your parents weren’t well-off, you don’t get anything when they pass on,’ Dr Oliver says.
During the early 1930s at the start of the Great Depression, the typical house cost just six times the average salary but now it’s 13 times
‘You’re now seeing many more people head in to retirement with higher debt levels – that will become more of a problem.’
While the unemployment rate of 3.9 per cent is nowhere near the 32 per cent level of 1932, it’s much harder for a worker to buy a home compared to the decade leading up to the war.
During the early 1930s at the start of the Great Depression, the typical house cost just six times the average salary but now it’s 13 times.
To put that into perspective, Australia’s capital city houses now have a middle price of $1.009million which is unattainable for someone earning the average salary of $77,000.
That rules out the typical worker buying a house in a middle-distance suburb of Melbourne or Brisbane – where prices have surged by double-digit figures during the past year.
Sydney’s median house price of $1.471million is 14.7 times Australia’s average, full-time salary of $100,000 and 19 times the average pay of $77,000.
An AMP graph of Australian Bureau of Statistics and CoreLogic data showed the typical house cost just twice the average salary during the war years.
During the 1950s, when Australia had a migration and baby boom, the ratio climbed to the four level, before broadly stablising around the five to six mark until the late 1990s.
Younger Australians really do have it worse now than during the Great Depression – at least where housing affordability is concerned – with ever-increasing immigration levels robbing future generations of an economic future (pictured is La Perouse in Sydney’s south-east during the Great Depression)
But during the past 25 years, housing affordability has radically deteriorated as overseas migration levels have surged, tripling during the 2000s.
Net overseas migration levels soared from 111,441 in 2000 to 315,700 by 2008 as the China-led resources boom saw governments from both sides of politics import more skilled workers.
‘Basically, what happens around the 2000s, we had a huge surge in immigration starting around 2006,’ Dr Oliver says.
‘We had a surge in immigration without commensurate increase in supply.’
This housing shortage from the 2000s has continued to worsen, with net overseas migration in 2023 hitting a record high of 548,800.
Back in 1931, Australia had a net overseas migration rate of minus 12,117 as more people left the country than entered permanently.
Australia’s net overseas migration rate didn’t climb into the six-figure range until the early 1950s, before tampering off again.
While the 100,000 level was revisited again, during various years of the late twentieth century, the surges were only temporary.
AMP chief economist Shane Oliver, who compared capital city house prices with wages going back to the 1920s, tells me many younger people are likely to end up as lifelong renters, with housing affordability the worst it has ever been (pictured is a Bondi rent queue in Sydney)
But in the 2000s, immigration levels consistently stayed in the six figures until the 2020 pandemic, leading to houses costing more than 10 times typical salaries by the 2010s.
Dr Oliver says younger people will only be able to be owner-occupiers of a house if governments from both sides of politics kept a lid on immigration to alleviate the housing shortage.
‘Part of it involves keeping a lid on immigration levels or capping population growth to be consistent with the ability to supply new housing.
More bosses could also employ staff outside the major capital cities or allowed work from home.
‘The problem with the capital cities is that they are already very expensive and already very congested,’ Dr Oliver says.
‘We should be looking at ways to decentralise and spread our population better across the country – that would also contribute to more affordable housing.’
This could involve allowing more work from home, so more younger people with city-based bosses could move to regional areas, capitalising on a good idea that took hold during the pandemic before staff were recalled to the office.
‘I don’t think we’ve made the most of it but one way to encourage decentralisation is to encourage more people working from home where they can do that,’ he says.
Our way of life is clearly under threat – and repeating the bad government policies of the past two decades will only kill the great Australian dream forever.
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