u/Crtical_Bacon — reddlx

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This is important for all Australians and for those who want to call Australia home.

Australia is experiencing a housing and cost of living crisis, we know this already. But I was surprised to learn the extent of it.

Buying or renting a home is more unaffordable than it has ever been before and your money seems to buy fewer groceries with each passing week.

The following is a comparison of the cost of buying and the cost of renting an average Australian home for the years 1980 and 2025

Sources of information are provided at the end.

Buying

Buying a home is widely regarded as the great Australian dream. Every Australian should have the opportunity to own a small portion of the country they love. Sadly, rocketing house prices means the great Australian dream will simply remain that.

As of November 2025, 99% of home loan applications from single income families are being rejected. The rejection rate is 50% for dual income families.

There is a ‘Rule of 28’ amongst financial institutions. Sometimes stretched to ‘Rule of 30’. It states that the cost of servicing a mortgage shouldn't cost more than 28% (or 30%) of your take home pay. If the cost of the mortgage is more than this, the lender will be more inclined to reject a loan application.

But…

How much have things changed since 1980?

Let's look at the average cost of a home in the years 1980 and 2025 comparatively.

Average price of a home in 1980 = $160,000*
Average price of a home in 2025 = $950,000

* adjusted for inflation

On average, properties increased in value between $1500 and $3000 per week. But wages and salaries have increased too. Right?

Yes they have…

So, what are the house prices as a percentage of the average income for their respective time periods?

Cost of an average home in 1980 = 210% of the average household income for 1980
Cost of an average home in 2025 = 1100% of the average household income for 2025

Between 1980 and 2025, wages have increased by just 22.4% when adjusted for inflation but what do these figures look like as a mortgage with interest rates respective to their time periods?

1980 (loan 80% of average home price on a 30 year mortgage @ 12.5% p/a)

20% deposit = $32,000*
weekly repayment = $316*
total repayments = $489,837*

* adjusted for inflation

2025 (loan 80% of average home price on a 30 year mortgage @ 5.59% p/a)

20% deposit = $190,000
weekly repayment = $1006
total repayments = $1,566,154

1980-2025 Comparison

20% deposit = ↑494%
weekly repayment = ↑218%
total repayments = ↑320
Wages = ↑22.4%

Rent.

Renting was seen as the step before buying. You’d rent a home while saving to buy your own.

This is no longer the case. Many Australians are now renting in perpetuity and are unable to save for a deposit due to rent being so high.

Average weekly cost of renting a home in 1980 = $263*
Average weekly cost of renting a home in 2025 = $670

An increase of 155%

* adjusted for inflation

Remember, average wage increase = 22.4%

Why is this happening?

There is no way to answer that question without it sounding political, but I will keep my biases at bay, do try to guess my political leaning for bonus points.

The cost of living in Australia has been steadily increasing over the past three decades. This has caused the birth rate to drop resulting in an ageing population. Remember, an aging population is a sign of a decreasing population. A decreasing population is bad for house values because there is less need for the houses, these are the same houses that politicians (both LNP & ALP) and wealthy party contributors have sizable investment portfolios in. Also, due to the aging population, the fastest growing demographic of voters now are also the largest demographic of home owners. Who also do not want their home values to drop. The fix for the aging population is immigration to supplement the drop in birth rates. 2024/2025 financial year saw a combined (new births and immigrants) population increase of approximately 600,000. At the same time only 160,000 new homes were built.

The Commonwealth (Federal Government), regardless of whether it is ALP or LNP, will not do anything to make houses more affordable because it will do the following:

make them look bad to the largest voting demographic in Australia
reduce the value of the politician's real estate investment portfolios
reduce the value of the real estate portfolios belonging to wealthy party contributors, and people the government are too afraid to upset (billionaires with influence, etc)

Ultimately, LNP are not willing to do anything about it and the ALP are too afraid to do anything about it.

Singapore had a housing affordability problem too so their government actually did something about it and now their house ownership rate is above 90%. I may not agree with the model they went with but it is an example of a country with the same problem and fixing it. I fear housing will continue to get more and more expensive and without a plan to resolve this we will end up like Singapore before they fixed it; married couples living with one of their parents waiting for them to die because moving out is prohibitively expensive.

Australia's housing market is now so universally unaffordable, that five out of the top fifteen most unaffordable housing markets are held by Australian cities. Those being;

Sydney @ #2
Adelaide @ #6
Melbourne @ #9
Brisbane @ #11
Perth @ #14

To put this in perspective, Los Angeles is #5, London is #12 and New York City is #18. The Number one spot is Hong Kong where the average home will cost 1440% the average yearly wage.

There is another side effect of an aging population, healthcare pressure. This is a multifaceted problem but I will try to simplify it for anyone reading:

ageing population means less people paying taxes which means less money going into public healthcare
increased cost of living means people will drop private healthcare and depend on the public system to relieve personal financial pressure
less public healthcare funding means fewer hospitals and staff to fill them
an aging population needs more healthcare who will probably choose public healthcare because private healthcare is now considered an expense instead of a requirement.
people moving further away from the more expensive real estate areas means added pressure to the smaller hospitals in these lesser expensive areas and towns

Both the ALP and LNP will not raise taxes to cover the public healthcare funding shortfall because it is political suicide. So they open the immigration gates and let more people in to take the low paying uneducated work. For two reasons, one; low paid uneducated workers boost the economy because it makes our products and services cheaper for other countries to buy, two; these low paid uneducated immigrant workers will still need to pay taxes. AND, the low paid uneducated immigrant workers will still need a place to live, helping to keep the cost of housing nice and high.

More working class = more competition for employment keeping wages down, and more uneducated minimum wage earners. Keeping business owners and execs happy. Also, Australia doesn't have a lot of farmland for its landmass and the more people we have here the more groceries we'll need to import, making the groceries more expensive.

Inflation: 1980-2025 = ↑538%
Wages: 1980-2025 = ↑22.4%

The first homebuyer grant and the 5% deposit schemes seem helpful on the surface. But where does that money go once the home has been purchased? Into the pockets of the people who have invested in housing. The Commonwealth does have a $43 billion, 5-year, 1.2-million-home building initiative that started in July 2024, but it is behind schedule. Mostly because unionised construction company employees do not work fast. They are incentivised to work slowly because they are paid hourly. So why would they work faster and be paid less overall?

I’ve been hearing “The bottom will fall out of the housing market soon” for 20 years, and it hasn’t. So long as there are more people than there are houses, the house and rent values will continue to increase. More and more people are opting to live in camper vans and tents. I see them in Brisbane and there are more with each passing week.

Unless something is done to combat the cost of living in Australia soon, Gen Alpha may very well be the last working class generation of Australians to actually own a part of Australia.

SOURCES:

Inflation Calculator:

https://www.rba.gov.au/calculator/annualDecimal.html

Average House Prices for 1980:

https://integrityfinanceaustralia.com.au/blog/2020/4/21/guess-what-the-median-house-price-was-in-1980

Home Affordability Report:

https://www.altusfinancial.com.au/blog/comparing-the-affordability-of-australian-property-over-decades

50y History of Australian House Prices:

https://www.savings.com.au/property/australian-house-prices-over-the-last-50-years-a-retrospective

28% Rule:

https://firstfinancial.com.au/mortgage-affordability/

Average House Prices for 2026: