Lots of people have strong opinions about the cost of buying a home in Australia. Research from Ipsos in September 2024 found housing was the second biggest concern among Australian voters, beating out healthcare, the economy, and crime. Many people, particularly younger Aussies, feel property price growth continues to push homeownership further out of reach.
But how much have house prices actually increased over the past few decades? Was it really that much easier for Baby Boomers and Gen X to buy? Here's what the data says.
House prices in Australia: An overview
The median dwelling price in every capital city in Australia has increased significantly since 2019, per the CoreLogic Home Value Index (HVI). For the most part, prices surged to a peak in early 2022, started to drop as interest rates climbed, before defying expectation to climb again through 2023. The pace of growth is far from uniform though - you'll see from the data that dwelling prices in Brisbane, Adelaide, and Perth surged through 2023 and most of 2024, all reaching new all time highs. On the other hand, prices in Melbourne, Hobart, Darwin, and Canberra all are yet to get back to the highs of 2022.
How much have housing prices increased in Australia?
Based on CoreLogic's Hedonic Home Value Index, this is how the median dwelling price in Australia has changed since 1980.
Students of Australian history will be familiar with some of the story behind that graph. For example, throughout the 1980s the average house price in an Australian capital city rose from $59,000 to $142,000 - an increase of about 140%. That decade saw a wave of financial deregulation that allowed lenders to write a lot more home loans. That saw more people in a position to buy, increasing demand - a major factor driving up prices. Looking to more recent decades, you might notice dips around the time of the Global Financial Crisis (GFC) - Australian housing values fell 7.5% over 2008 - and just after the Covid19 Pandemic.
For the most part though, prices have risen dramatically. In January 1980, the average home in an Australian capital city cost about $59,000. As of October 2024, that number has risen to about $895,000 - a rise of around 1,440% over 44 years.
How much have home loan repayments increased?
Unless you’re buying with a suitcase full of cash, a property’s price is only a portion of its total cost. The overall interest bill on a 20 or 30 year home loan can exceed the initial principal balance, meaning interest rates have a major influence on the actual cost of buying a house.
ABS data covers average home loan sizes, but only from 2006. So, purely for illustrative purposes, this is how much average monthly repayments would have changed since 1980. We’re assuming a loan of 80% of the property value and a 20-year loan term (30-year loan terms weren’t as fashionable in previous decades). The interest rate data comes from the average rate given in the RBA annual report for each year. It’s a bit rough – in earlier years interest rates differed between banks and building societies (often called credit unions or mutual banks today). We’ve tried to split the difference.
While these figures are rough around the edges – and therefore should be considered illustrative – they still give a decent impression of how average home loan repayments have grown.
| Year (in January) | Median capital city dwelling price | Loan size (assuming 80% of property value) | Average interest rate | Approximate monthly repayment |
|---|---|---|---|---|
| 1980 | $59,000 | $47,200 | ~11% | $487 |
| 1985 | $81,000 | $64,800 | ~12% | $714 |
| 1990 | $142,000 | $113,600 | ~18% | $1,753 |
| 1995 | $160,000 | $128,000 | ~11% | $1,327 |
| 2000 | $208,000 | $166,400 | ~7.5% | $1,341 |
| 2005 | $331,000 | $264,800 | ~7% | $2,053 |
| 2010 | $446,000 | $356,800 | ~7% | $2,766 |
| 2015 | $536,000 | $428,800 | ~5% | $2,830 |
| 2020 | $658,000 | $526,400 | ~3% | $3,474 |
Mortgage repayments were calculated using the Your Mortgage Home Loan Repayment Calculator.
Housing affordability
But purely looking at prices in abstract doesn’t tell you much about housing affordability.
Are wages growing faster than property prices?
What’s probably most relevant to housing affordability is how house prices compare to wages. There’s been lots of different research done into this. A report from the (left leaning) Australia Institute found that in 1990, the average household dwelling cost about 9.5 times the average annual household income per capita. In 2023, its read was that the average dwelling was 16.4 times the average annual income.
Using data from the Australian Bureau of Statistics (ABS) and the CoreLogic HVI, we indexed wages, inflation and property prices to September 1997 to track the changes since then.
If you aren’t a maths nerd, this graph basically shows how wages, inflation and the average capital city property price have changed relative to one another since September 1997. An index score of 200 means twice as high – for example, once the index score hits 200 on the CPI index (July 2023), it means prices were about double what they were in 1997.
In terms of housing affordability, our index shows wages grew about 226% from September 1997 to June 2024. Property prices on the other hand rose roughly 505%.
House prices adjusted for inflation
Most experts agree inflation is an inevitable consequence of our growth-driven economy, which means property prices will nearly always increase over time. Using the RBA Inflation calculator, we can work out how much prices at the time were in today’s money.
| Year (in January) | Median capital city dwelling price | Adjusted for inflation (using 2023 prices) |
|---|---|---|
| 1980 | $59,000 | $301,000 |
| 1985 | $81,000 | $278,000 |
| 1990 | $142,000 | $332,000 |
| 1995 | $160,000 | $331,000 |
| 2000 | $208,000 | $391,000 |
| 2005 | $331,000 | $536,000 |
| 2010 | $446,000 | $624,000 |
| 2015 | $536,000 | $669,000 |
| 2020 | $658,000 | $761,000 |
Over the 40 years to January 2020, property became about 150% more expensive adjusted for inflation. For first home buyers, this might sound slightly less bleak, but the trajectory is very much upward. From 1980 to 2000, the inflation-adjusted capital city house price rose by $91,000 in 2023 money. Twenty years on from that, the inflation-adjusted price was $370,000 higher.
Buying a home in 2024
This probably hasn’t been a very reassuring read for budding first home buyers. The cost of housing has undeniably been rising much faster than wages can keep up, which in all likelihood means it will probably continue to get harder to buy property.
It’s not time to give up hope yet though – there's a fair bit of assistance out there that might make it easier for you to buy.
Home Guarantee Scheme
One of the biggest challenges in entering the market is saving up a deposit large enough to access lower loan-to-value ratio (LVR) home loans and avoid paying Lenders Mortgage Insurance (LMI). If that’s what you’re struggling with, the government’s Home Guarantee Scheme could potentially help you out. There are 50,000 places available each year, and successful applicants essentially see the government act as guarantor for a certain percentage of their home loan. Applicants for the First Home Guarantee, for example, could have the government offer a guarantee of up to 15% of their home purchase. This means you might be able to buy with a deposit as small as 5% of your property’s price and not pay LMI.
Read more: Home Guarantee Scheme
First Home Buyer Grants
Most states and territories also offer grants to eligible first home buyers. These are one-off cash payments that can go towards the purchase of a first home – although they typically come with the caveat that a buyer must be purchasing or building a new property. The amount available, as well as the eligibility criteria, differ from state to state, but it’s worth exploring whether you could benefit. Learn more about first home buyer grants by selecting your state below, or perusing our guide to first home buyer grants around the nation.
Stamp duty concessions
Stamp or transfer duty can be a significant hurdle to buying. It can add thousands of dollars to the transaction – which can be a big problem if you’ve already emptied the bank for your deposit. However, some states have special concessions for some first home buyers, so again it’s worth taking the time to figure out if you’ll be able to get away without paying.
Read more: State-by-state guide to stamp duty
Image by Tom Rumble on Unsplash
Collections: Variable Home Loan Buying a home First Home Buyer
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