The Australian dream of homeownership seems to be slipping further out of reach for millennials, with many questioning if it’s still achievable in today’s housing market.
In this edition, I explore the current state of housing affordability for millennials, particularly focusing on how much one would need to earn to purchase a home in Australia. The last decade has witnessed home prices soaring far beyond the reach of average incomes, leading to an increasing divide between the middle class and the wealthy. With 56% of household wealth tied up in property, it’s no surprise that homeownership remains a priority. However, the returns of previous generations seem unlikely for today’s buyers due to the inflated income-to-house price ratio.
Despite a slowdown in price growth forecasted by KPMG, house prices are still expected to rise by 3.3% nationally. This makes the dream of purchasing property feel more like a gamble than a stable investment. In Western Australia, for example, an individual looking to purchase a median home valued at $800,000 would need an annual pre-tax income of $160,800, far above the median salary of $78,000. While a couple’s combined income might make homeownership more attainable, this doesn’t factor in the challenge of saving for a deposit — a major hurdle for many young people.
The analysis shows that while owning a home may be possible for some millennials, especially couples, it remains a distant dream for many individuals. With housing affordability becoming a more pressing issue in Australia, policy solutions from both major political parties — focusing on supply, affordability, and curbing foreign investment — will be crucial in shaping the future of property ownership for younger Australians.
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