Australian House Prices vs Wages (1975–2026) by Graham Healy
- Graham Healy
- 1 day ago
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Australian House Prices vs Wages (1975–2026)
By Graham Healy Wed 24 June 26
The broad story is clear: house prices have risen much faster than wages for over 50 years, making home ownership dramatically less affordable for younger Australians. While exact figures vary depending on whether you use national averages, median prices, household income, or individual earnings, the long-term trend is undeniable. (WSP)
Year | Approx. Average Annual Earnings | Approx. Median House Price | House Price / Income Ratio |
1975 | ~$6,000 | ~$30,000 | ~5x |
1980 | ~$11,000 | ~$69,000 | ~6x |
1990 | ~$26,000 | ~$194,000 | ~7.5x |
2000 | ~$35,000 | ~$287,000 | ~8x |
2010 | ~$55,000 | ~$600,000 | ~11x |
2020 | ~$73,000 | ~$1.1 million | ~15x |
2026 | ~$85,000-$95,000 | ~$900,000-$1.0 million+ national dwelling value | ~8-10x nationally, much higher in major cities |
In cities such as Sydney and Brisbane, housing now commonly costs 9–10 times household income, compared with around 3–5 times income several decades ago. (Fenro)
Why Housing Is So Much Less Affordable in 2026
A worker in the 1970s could often buy a house on a single income. Today many households require:
Two full-time incomes
Large deposits
Significant debt
Mortgage terms extending to 30 years or more
Meanwhile, wage growth has been relatively slow compared with housing growth. National dwelling values have increased many times faster than average earnings. (GDP.com.au)
For many younger Australians:
Saving a deposit takes far longer.
Mortgage repayments consume a larger share of income.
Home ownership is increasingly dependent on family assistance or inheritance. (Fenro)
Is House Price Inflation Really Hidden Inflation?
There is a strong argument that it is.
Official inflation measures such as the Consumer Price Index (CPI) focus mainly on consumer goods and services. They do not fully capture the inflation of existing assets, such as residential land and established housing.
Consider:
Wages since 1980 have risen roughly 8 times.
House prices have risen roughly 20 times or more in many markets. (GDP.com.au)
If a family's largest purchase is housing, then their lived experience of inflation may be far greater than official CPI suggests.
Many economists distinguish between:
Consumer inflation (food, fuel, clothing, etc.)
Asset inflation (houses, shares, land)
Australia has experienced significant asset inflation over the last 30 years. (Reserve Bank of Australia)
How Governments Helped Create the Housing Bubble
Different governments from both major parties have contributed through a combination of policies.
1. Financial Deregulation and Easier Credit
Beginning in the 1980s and accelerating in the 1990s:
Banks became more willing to lend.
Loan terms increased.
Borrowing capacity expanded.
When buyers can borrow more, house prices tend to rise because more money competes for the same number of homes. (Reserve Bank of Australia)
2. Capital Gains Tax Discount
The introduction of the 50% capital gains tax discount in 1999 increased the attractiveness of property investment.
Many critics argue this encouraged speculation rather than productive investment. (Reddit)
3. Negative Gearing
Australia's tax system allows investors to deduct property losses against other income.
Supporters argue this increases rental supply.
Critics argue it increases investor demand and pushes up prices for first-home buyers. (The Guardian)
4. Population Growth and Immigration
Australia has experienced strong population growth for decades.
When population growth exceeds housing construction, demand rises faster than supply, putting upward pressure on prices. (Fenro)
5. Planning Restrictions and Land Supply
State and local government planning systems often:
Restrict land releases
Limit density
Increase approval times
These constraints can reduce housing supply and contribute to higher prices. (Fenro)
6. Low Interest Rates
Following the 2008 financial crisis and during the COVID era:
Interest rates fell to historic lows.
Borrowers could qualify for larger loans.
This increased purchasing power and contributed to rapid house-price growth. (MacroBusiness)
Counterarguments
Not all economists agree Australia is in a classic housing bubble.
They point out that:
Households now often have two incomes.
Modern homes are larger and higher quality.
Lower interest rates increased borrowing capacity.
Australia's population growth remains strong. (Property Update)
These factors explain part of the increase, but they do not fully explain why house-price-to-income ratios have reached record levels. (Fenro)
Conclusion
The evidence suggests that Australian housing affordability has deteriorated dramatically since the 1970s.
A typical house that cost around 4–6 years of income in the 1970s and early 1980s now often costs 8–10 years of household income nationally and even more in major cities. (Fenro)
The rise appears to be driven by a combination of:
Easier credit
Tax incentives favouring property investment
Population growth
Housing supply constraints
Prolonged periods of low interest rates
Whether one calls it a "housing bubble" or "asset inflation," the result is the same: housing has become far less affordable relative to wages than it was for previous generations of Australians. (MacroBusiness) References (refer footnotes in Document ) https://gdp.com.au/housing-affordability?
