Owning a home has long been a central part of the Australian way of life, with the quarter-acre block once holding a sacred place in the public imagination.
For more than a century, Aussies have been more likely to own their home than Britons or Americans, enjoying the economic security that comes with a pile of bricks.
Despite our national obsession with homeownership, the so-called ‘Great Australian Dream’ is statistically becoming just that for many – a pipe dream – especially those aged in their 20s and 30s.
According to the latest Census data, 67% of Australians owned their home in 2021, down from a peak of 71% in 1966.
For people aged 30 to 34, the numbers are grim. Just 50% of people in that age bracket owned their home in 2021, down sharply from 64% in 1971.
Likewise, only 36% of 24 to 29-year-olds could call themselves homeowners in 2021, compared to 50% in 1971.
How the dream has become a nightmare
Housing affordability in Australia is among the worst in the world, with Sydney ranked the second least affordable city on the planet.
Melbourne, Adelaide, Brisbane, and Perth not far behind, according to the latest report by Demographia International.
![](data:image/svg+xml,%3Csvg xmlns="http://www.w3.org/2000/svg" viewBox="0 0 800 450"%3E%3C/svg%3E)
The Great Australian Dream of homeownership is becoming harder and harder. Picture: Getty
Whereas the average Aussie could buy a home for roughly three times their annual income back in 1984, these days they’ll need 10 times what they earn in a year.
Buying a home, while not impossible, “is a reality for a diminishing number of Australians,” said Michael Fotheringham, managing director of the Australian Housing and Urban Research Institute.
“Homeownership does still exist, but the number of households that are able to attain it is falling year by year,” Mr Fotheringham said.
“We’re not getting into homeownership as young as we used to, the average homebuyer is older, and the overall patterns are for less households total to get into homeownership.”
A lack of “land availability” is partly to blame for the price crunch, he said.
“First and foremost, land is expensive. It’s a big continent, but you can't just build any old where,” he said.
“What we have at the moment is a real challenge around supply, in terms of having the right supply in the right location.”
Land for housing is scarce - and thus very expensive. Picture: Getty
Land shortages in Sydney and Melbourne have worsened in recent years, leading to shrinking lots in capital cities and driving up the median price of land by more than 13% in 2021 alone.
Regional areas, where space is typically more abundant, have been squeezed too, Dr Fotheringham said, with an exodus of people from the big smoke post-Covid putting “more pressure on regional markets than ever before.”
Low housing stock has also contributed to rising housing unaffordability.
Australia has about 411 dwellings per 1000 people, which among the lowest in the OECD, according to a recent Productivity Commission review.
But Dr Fotheringham said that number is even worse than it appears because many of those dwellings are used for other purposes, such as short-term letting or as holiday homes.
The fact that federal, state and territory governments are working together to “really tackle” housing unaffordability – the nation’s housing ministers convened in July for the first time in five years, with a follow-up summit in September – is encouraging, he said.
The new era of cooperation and will hopefully bring about much-needed reforms, including a new National Housing and Homelessness Plan.
“But there’s a lot of work to do,” Dr Fotheringham said.
Australia's housing affordability ranks among the worst in the world. Picture: Getty
The biggest hurdle to homeownership
PropTrack economist Angus Moore said the "biggest thing that's changed between now and three decades ago” to make buying a home more difficult is that many first-home buyers can’t scrape together a deposit.
“Today, for most first-home buyers, saving the deposit is the constraint, and that’s why we’re seeing homeownership later in life,” Mr Moore said.
“Three decades ago, the issue was serviceability. When you took out a loan, interest rates were very high, the cost of that mortgage was quite significant, at least for the first few years, and that was the constraint for many people, not saving the deposit.
“But structurally, interest rates are now lower, which means home prices and other asset prices are higher relative to incomes, and that means a higher deposit is necessary.”
The biggest barrier to homeownership for most first-home buyers isn't price - it's the deposit. Picture: Getty
The average deposit needed to secure a mortgage topped $100,000 in 2021, according to data from the Australian Bureau of Statistics – hitting six figures for the first time ever and more than doubling the average deposit from 20 years ago.
“Twenty percent of a median priced dwelling is a very significant sum, and while most first-home buyers aren't purchasing median price homes, and indeed most don't even make it to 20% deposit and borrow at a higher loan-to-value ratio than that, that it is still the constraint for most,” Mr Moore said.
The solution to housing unaffordability is somewhat straightforward, he added – build more homes.
“We haven’t built enough homes over the past couple of decades to accommodate the population and demand for housing, and as a result, housing in Australia is very expensive,” he said.
“If we're serious about trying to make it more affordable, the only way to do that is to build more homes where people want to live.
“Doing that is obviously hard. It's easy to say we need more homes, but where we build and what we build are complicated questions. But we need to at least be asking the right questions.”
The dream is still alive – but it’s evolving
Despite the “doom and gloom” surrounding first-home buyers’ prospects, Mortgage Choice broker Tim Leonard said many young people are still determined to one day own their home.
“I’ve met so many young people who are enthusiastic about buying for the first time, they don’t want to rent forever,” Mr Leonard said.
While most first-timers will be priced out of the inner suburbs of major cities, he said the “opportunities are huge” on the outskirts and in regional growth areas.
“They might need to move out a little bit further. There are still very affordable properties just outside the CBD.
“They just need to make sure they have a realistic budget laid out, a savings plan, and a very strong credit history to satisfy the bank. The lenders look very closely at savings patterns.
“Property prices are softening, the market is a lot less frantic, and buyers are feeling a bit more in control, so that opens the door.”
Higher density living in middle ring suburbs offers hope to first-timers. Picture: Getty
He added to keep the Great Australian Dream “well and truly alive” there should be a shift in mentality away from the fabled quarter-acre block towards denser living, including apartments and units.
“I don't want any young people to give up hope of owning a home. My big fear for the young generation is that they’ll never even try,” he said.
“Owning a home is still the best investment they can make. They need to believe that they can do it.”
How to crack the market
Aspiring homeowners can still get a foot on the property ladder, but they’ll have to work “smarter and harder,” buyer’s advocate Nicole Jacobs said.
“It’s really important that first-home buyers do their due diligence and understand where their financial position fits with increases and decreases in both interest rates and property prices,” Ms Jacobs said.
“They need to make sure they’re across their finance capabilities, and then specifically look at the patch that they want to buy in, because every market is different.
“It’s a buyer’s market at the moment because there’s less competition, so if you see something that you really like, and you can afford it, don’t hesitate – go for it. Now is the time.”
Cracking the market isn't impossible for many - but it's tough. Picture: Getty
While it’s not a possibility for everyone, Ms Jacobs added, there’s no shame in hitting up mum and dad for help, whether with fronting up a deposit or going guarantor on a home loan.
Another option for house hunters who can’t afford their dream home is “rent-vesting”, which simply means buying a property as an investment while continuing to rent where one wants to live, so that they can get a foot in the door.
Although, many government assistance schemes for first-home buyers require them to actually live in their property.
The bottom line is that aspiring homeowners “need to be prepared to make sacrifices”, Ms Jacobs said.
“The dream [of homeownership] is still alive because there are still properties that first-home buyers can buy, they just have to make compromises. We’re not all going to be able to live in the same streets as our mum and dad.
“We’re heading towards a European system where very few people actually own property and there’s a whole lot of landlords and everybody else rents, but that’s a generation away. There are still opportunities now and people should grab them.”
That’s what 25-year-old Annie Stevens and her partner did. In May last year, the couple bought a 350sqm block of land in Armstrong Creek, a booming suburb in Geelong’s south, for $283,000.
Ms Stevens works at retail giant Cotton On and her partner is a gardener. They left their rental and moved in with her partner’s parents for six months to save for a deposit, which Ms Stevens acknowledged isn’t “realistic for everyone.”
“We were super lucky,” she said. “It made the biggest difference in our lives. If we didn’t have that option, we absolutely wouldn’t have been able to put away part of our pay cheque every week.”
Scraping together a 20% deposit is a challenge for many first-time buyers, especially those with young families. Picture: Getty
Even with a deposit saved, getting a piece of turf wasn’t easy.
At first, the couple tried to buy land through a ballot, which Stevens likened to bidding for “festival tickets.”
“We missed the ballot two or three times in a row, and each time we missed it the price of land went up $20,000. It was crazy.”
Eventually, they found a lot in a different estate through a process she described as “first in, best dressed”.
They’ve since locked in a builder and plan to build their dream home in 2023, complete with a big backyard for their Border Collie to run around in – although Stevens said they’ve forced themselves not to “go all out.”
“When we went to the bank and found out our borrowing capacity, I was like, ‘Wow, we’ve got all this money to spend,’ but you need to be realistic about it and make sure you only spend within your needs,” she said.
Experts say Australia needs to build more homes to boost supply. Picture: Getty
Her advice for other young first-home buyers is to “really think about” their financial situation and whether they can afford a large mortgage.
“Just be smart about it. Don’t rush into any big decisions,” she said.
“Take your time, make decisions based on your lifestyle and what’s going to suit it best. It’s better than having a big, beautiful house that you can’t afford.”
Ultimately, she has no regrets about entering the property market and feels “so lucky” to have pulled it off.
“For us, it was a big decision, and it’s taken us a long time to get there, but it was definitely the right thing to do.”