Australia has long prided itself on the dream of homeownership. But for many Australians today, that dream has never felt further away. House prices have surged 240% since 2003 — while wages have grown just 70%. This is the story of a generation being squeezed out.

Chart 1: The Great Divergence — House prices have left wages far behind

Since 2003, residential property prices in Australia have grown at more than three times the rate of wages. What was once a 10-year savings goal has become a moving target for millions of Australians.

Source: Australian Bureau of Statistics, Residential Property Price Indexes (Cat. 6416.0) and Wage Price Index, Australia (Cat. 6345.0). Both series indexed to 100 at 2003.

Between 2003 and 2024, residential property prices rose by approximately 230%, while wages grew by just 72% over the same period. The gap widened sharply during the COVID-19 period (2020–2022), when record-low interest rates supercharged property markets at a time when wages remained stagnant.

Chart 2: The Cost of Living Squeeze — not all prices rise equally (Multivariate)

Rising house prices are only part of the story. Australians are also grappling with surging costs across multiple essential spending categories. Housing costs, food, and health have all risen well above the general inflation rate since 2012.

Source: Australian Bureau of Statistics, Consumer Price Index, Australia (Cat. 6401.0). All series indexed to 100 in December quarter 2012. Click legend items to show/hide categories.

Housing costs — including rent and mortgage repayments — have surged 68% since 2012, far exceeding the general CPI increase of 41%. Health and education costs have also risen substantially, leaving less disposable income for Australian households across the income spectrum.

Chart 3: The State of the Squeeze — housing affordability has worsened everywhere (Multivariate)

The house price-to-income ratio measures how many years of median income it would take to buy a median-priced home. In Sydney, it has reached over 12 times median annual income — a crisis by any international measure.

Source: Australian Bureau of Statistics, Total Value of Dwellings (Cat. 6416.0) and Average Weekly Earnings, Australia (Cat. 6302.0). A ratio above 5x is considered severely unaffordable by international housing research standards (Demographia International Housing Affordability Survey).

In 2014, only Sydney exceeded the “severely unaffordable” threshold of six times income. By 2024, every state and territory in Australia had crossed that line. Tasmania — long considered one of Australia’s most affordable housing markets — has seen its ratio nearly double in a decade.

Chart 4: Mortgage Stress by State — who is feeling it most? (Multivariate)

Mortgage stress occurs when a household spends more than 30% of its gross income on mortgage repayments. With interest rates rising sharply from 2022 onwards, the proportion of households under mortgage stress has climbed to alarming levels across Australia.

Source: Derived from ABS Average Weekly Earnings (Cat. 6302.0), Reserve Bank of Australia cash rate data, and CoreLogic median dwelling price estimates. Mortgage stress threshold of 30% follows widely adopted housing stress definitions (Wood & Ong, 2012).

The 2022–2024 interest rate hiking cycle — the fastest in Australia’s modern history — pushed mortgage stress rates well above the 30% threshold in every state. In NSW, nearly one in two mortgage holders is now in mortgage stress, compared to fewer than one in three a decade ago.

Chart 5: The Affordability Crisis in Context — a state-by-state snapshot (Multivariate)

This final chart places each state in context by comparing wage growth, house price growth and population size together. The further a state appears to the upper left of the chart, the more severe its affordability crisis — house prices growing far faster than wages.

Source: ABS Wage Price Index (Cat. 6345.0), ABS Total Value of Dwellings (Cat. 6416.0). Average annual compound growth rates calculated over the period 2012–2024. Population data from ABS National, State and Territory Population (Cat. 3101.0), December 2024.

Every single Australian state sits well above the “line of equality” — the dotted line where wages and house prices grow at the same rate. NSW and Tasmania show the most severe gap. Notably, WA and SA — historically more affordable states — are now tracking in the same direction.

So, is Australia still the lucky country?

For previous generations, Australia’s story was one of hard work leading to homeownership, security, and upward mobility. Today, that story is fracturing. A young Australian earning the median full-time wage would need to save every dollar for over a decade just to afford a deposit in Sydney. The data make one thing clear: without structural intervention, the Australian Dream risks becoming inherited privilege rather than earned achievement.

Acknowledgements

This assignment was completed with partial assistance from Claude (Anthropic, 2025), an AI language model, which was used to assist with the drafting of narrative text and R code structure. All data visualisations were created by the student using R. All ABS data values were verified against original ABS publications. Use of AI is acknowledged in accordance with RMIT Library guidelines.

Citation: Anthropic. (2025). Claude (Version Sonnet) [Large language model]. https://www.anthropic.com

References

Australian Bureau of Statistics. (2024a). Consumer Price Index, Australia (Cat. 6401.0). https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/consumer-price-index-australia

Australian Bureau of Statistics. (2024b). Total Value of Dwellings (Cat. 6416.0). https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation

Australian Bureau of Statistics. (2024c). Wage Price Index, Australia (Cat. 6345.0). https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/wage-price-index-australia

Australian Bureau of Statistics. (2024d). Average Weekly Earnings, Australia (Cat. 6302.0). https://www.abs.gov.au/statistics/labour/earnings-and-working-conditions

Australian Bureau of Statistics. (2024e). National, State and Territory Population (Cat. 3101.0). https://www.abs.gov.au/statistics/people/population

Demographia. (2024). Demographia International Housing Affordability: 2024 edition. http://www.demographia.com/dhi.pdf

Reserve Bank of Australia. (2024). Cash rate target. https://www.rba.gov.au/statistics/cash-rate/

Wood, G., & Ong, R. (2012). Factors shaping the decision to become a landlord and retain rental investments (AHURI Final Report No. 190). Australian Housing and Urban Research Institute. https://www.ahuri.edu.au