Here’s what a house could cost in Sydney in 2050

Adam Smith 29 June 2016 NEWS

Housing affordability in 2050

House prices in Australia are already unaffordable, but what will they look like by 2050?

Australia is consistently ranked among the least affordable countries in the world for housing. The problem is particularly acute in Sydney and Melbourne. Residents of these two cities devote more than a third of their income to their mortgage repayment, to the tune of 35.6% in Sydney and 30% in Melbourne, according to Moody’s.

The most recent CoreLogic Hedonic Home Value Index showed the cumulative change of capital city home values from January 2009 to May 2016 was an increase of 54.1%. Meanwhile, the mean household income increased just over 18% during the same time period.

House price growth is meant to slow in the year ahead, but income growth has also been in the doldrums, growing at its slowest pace in 18 years last year. If these trends continue, what will the future look like for housing affordability? Let’s check out the numbers.

House prices

According to the latest CoreLogic Hedonic Home Value Index, the median house price across Australia’s capital cities was $580,000. That was up 10% on last year. Sydney and Melbourne also saw some heady gains. Sydney’s median house price was $782,000, a rise of 13.1% on the previous year. Melbourne, meanwhile, saw median prices rise by 13.9% to $590,000.

It’s been an impressive run for Australian house prices overall. During the current growth cycle, capital city home values are up 36.6%.

While the property market has some dramatic peaks and troughs, over the longer term it grows at a much steadier pace. Over the past 10 years, combined capital city home values have grown by an average of 5.5% per annum. Sydney and Melbourne have seen slightly more robust growth, increasing at 6.4% per annum and 7.1% per annum, respectively. Darwin has grown slightly below the average for combined capitals, at 5.5%. Canberra, Adelaide and Brisbane have fared slightly worse at 4.0% for Canberra and 3.7% for both Brisbane and Adelaide. Perth and Hobart have seen anaemic growth, meanwhile, at 2.1% and 1.3%, respectively. If house prices follow this trend, this is how the property market could look by the year 2050.

Current median house price2050 median price at current rate of growth
Combined capitals$580,000$3,581,060

Household income

An important factor to examine when determining affordability is whether or not household income is keeping pace with property price appreciation. Figures from the Australian Bureau of Statistics tell us that the mean weekly household income as of 2013-14 was $998. Much like property prices, mean weekly household income goes through peaks and troughs. But examining trends over the past 10 years, we can see it’s grown by an average of 5.4% per annum.

If we assume this rate of growth continued from 2014 to 2016, it would put the mean weekly household income at $1,109, as seen below.

At $1,109 per week, the mean annual household income would be $57,668. That would put the median capital city house price at just over 10 times the mean annual household income. Of course, this isn’t a perfect measure as we’re comparing a median and a mean, but it paints a picture of house prices being significantly unaffordable for Australians on an average income. The picture is bleaker in Sydney and Melbourne. In Melbourne, the median house price is nearly 10.4 times the mean annual income, whereas in Sydney median prices are an alarming 13.5 times annual income. So what happens if the mean household income increases by 5.4% per annum between now and 2050?

Current mean annual incomePotential mean annual income by 2050

What could the future hold?

Of course it’s impossible to say with any certainty what the future holds for housing affordability, but if we put these pictures together it creates an alarming trend. Extrapolated out to 2050, the gap between mean household income and median house prices widens significantly in Sydney and Melbourne, as seen in the graph below.

By 2050, the median house price across Australia’s capitals has grown relatively in line with mean annual incomes, now sitting at 10.4 times the mean income. Still unaffordable, but not significantly less affordable than now.

The picture is starkly different in Sydney and Melbourne, however. Melbourne’s median house price rises from 10.4 times mean income to 17.6 times mean income. In Sydney, median prices soar even further out of reach, from 13.5 times mean income to 18.7 times mean income.

CityCurrent multiple of median house price versus mean incomePossible 2050 multiple
Combined capitals10.110.4

Meanwhile, house prices appear to become more affordable across much of the rest of the country. A house costing 8.8 times mean income in Perth today could fall to just three times mean income if trends continue. A house in Hobart currently costing 5.8 times mean income could plummet to just 1.5 times mean income by 2050.

Obviously this picture could change significantly. Any number of external factors could see house prices falter or incomes rise. House price growth could boom cities where it's traditionally lagged, while strong performers could see slumps in the future. But if the situation continues to progress as it has, it appears housing affordability in Australia could look drastically different in the future.

Compare your mortgage options now

Rates last updated July 22nd, 2018
Loan purpose
Offset account
Loan type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
$0 p.a.
Get $1,000 cash into a USaver account when you take out a loan of $200,000 or more (new or refinance). Terms and conditions apply. Enjoy flexible repayments, a redraw facility and the ability to split your loan. Plus, pay no application or ongoing fees.
$0 p.a.
Pay no ongoing fees and enjoy a flexible repayment schedule, including the ability to make unlimited additional repayments without penalty.
$395 p.a.
Save on interest with a 100% offset account and save on other ME products with this package loan.
$395 p.a.
Loans over $150k get a discount off an already low fixed rate. Available for NSW, Qld and ACT residents only.
$0 p.a.
Go from application to approval in as little as 20 minutes with a variable rate loan from this innovative online lender. Add a 100% offset account for $10 a month.
$395 p.a.
New borrowers or refinancers from another lender get a discounted rate with this package loan.
$0 p.a.
Pay no application or ongoing fees and get a flexible loan with the ability to split up to 6 times.
$0 p.a.
Pay no application or ongoing fees and get access to a redraw facility and flexible repayment schedule. Get $1,000 cash into a USaver account when you take out a loan of $200,000 or more (new or refinance). Terms and conditions apply.
$0 p.a.
Package your loan and get an interest rate discount, a 100% offset account and help from an HSBC relationship manager.
$0 p.a.
Eligible borrowers can get $900 cashback on this loan with a 100% offset account and a redraw facility.

Compare up to 4 providers

Aussie Home Loans Logo

Enter your details below to receive an obligation-free quote from an Aussie home loans expert today respects your privacy

Applications are subject to approval. Conditions, fees and charges apply. Please note that you need to be an Australian citizen or permanent resident to apply.

Credit services for Aussie Select, Aussie IQ and Aussie Optimizer products are provided by AHL Investments Pty Ltd ACN 105 265 861 Australian Credit Licence 246786 ("Aussie"), and its appointed credit representatives. Credit for Aussie Select products is provided by Residential Mortgage Group Pty Ltd ACN 152 378 133 Australian Credit Licence 414133 (“RMG”). RMG is a wholly-owned subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL and Australian Credit Licence 234945. Credit for Aussie Optimizer products is provided by Perpetual Limited ABN 86 000 431 827 (Lender). Credit for Aussie IQ is provided by Macquarie Bank Limited ABN 46 008 583 542 AFSL and Australian Credit Licence 237502. Home loans issued by the Lender are serviced by Macquarie Securitisation Limited ABN 16 003 297 336, Australian Credit Licence 237863 (MSL).

Aussie is a trade mark of AHL Investments Pty Ltd. Aussie is a subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124. ©2018 AHL Investments Pty Ltd ABN 27 105 265 861 Australian Credit Licence 246786.

By submitting this form, you agree to the privacy policy and the Aussie privacy policy.

Aussie Home Loans is both a lender and a mortgage broker, and offers a range of services.

  • FREE Suburb and Property Report with every appointment.
  • Access 3,000+ loans from over 20 lenders.
  • Get expert help with your loan application, including paperwork and eligibility.
  • Over 1000 brokers who are able to help you in your local area.

Aussie Home Loans Lender Logos

The Adviser’s number 1 placed mortgage broker 5 years running (2013-2017)

Ask an Expert

You are about to post a question on

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms and Conditions and Privacy Policy.
Ask a question
Go to site