The topic of housing for millennials and baby boomers is constantly being covered in the news and in general media.
Millennials are at an age where settling down and finding a home sounds ideal for many.
However, with the current state of the market, it’s looking like affording a property is becoming increasingly difficult.
The dream of home ownership is starting to feel less exciting and more unrealistic for many young Australians.
In fact, according to new data on property price changes, housing in Sydney is 240% more expensive now for millennials than it was for baby boomers.
In 1986, the median price for a house in Sydney was around $98,325.
Now, you might be thinking that we can’t compare this value to today’s prices because of inflation and you’d be absolutely right.
In today’s money, $98,325 would be worth around $260,437.
However, median house prices in Sydney have been sitting at around $885,000 over the past year.
Even with that conservative estimation, house prices have increased by 240% in Sydney over the past 30 years.
Fortunately, there has definitely been some degree of wage growth.
In 1986, an average full-time adult in Sydney was making about $430 a week.
Once we convert this to today’s money, this becomes $1,140 a week or $59,280 a year.
When we look at the average earnings for a full-time adult today, people are making about $482 more.
This would add up to about $1,622 in a week or $84,344 a year.
However, this only works out to be an increase of 42% whereas house prices have increased by 240%.
The median house price 30 years ago was around 4.4 times the average salary.
Now, the median house price in Sydney is around 10.5 times the average salary.
Therefore, even with the wage growth, housing is still significantly more unaffordable.
Is there still hope?
If you’re a millennial or you’re just hoping to buy a property in today’s market, you might be wondering whether you have any chance at all.
Especially now with increasing living expenses, HELP debt and slow wage growth, millennials may feel like the Australian dream of home ownership is out of reach.
Luckily, it’s not all doom and gloom for those wanting their own property.
For instance, first home buyers grants across Australia have made getting your foot in the door easier.
There have also been interest rate cuts from the RBA and changes from APRA that make getting a mortgage more accessible.
You also have the option of owning a property with a partner rather than putting all the burden on your own shoulders.
However, co-ownership does come with its own challenges and you’ll need to weigh out the pros and cons.
In saying this, owning your own property is definitely still a big feat that will require time and dedication.
Investing in property will always have great advantages and with the market warming up, don’t let go of your dreams just yet.
Guest author: Ellen Orton is the Head of Business Operations at OpenAgent.com.au, an online agent comparison website helping Australians to sell, buy and own property.