Buying a house in the 80s versus now.

We travel back in time to 1984 to compare house prices, average home loan sizes and incomes to see how much things have changed.

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In a recent finder.com.au study, we compared various home ownership factors of 1984 - the average mortgage size in relation to income, mortgage repayments, interest rates, and property prices- with the same factors today to discover that despite the higher costs of living that we currently face, Australians are still taking out mortgages to pursue homeownership.

home loans in the 80s vs today infographic

1. Mortgage Sizes

The average mortgage size for Baby Boomers in 1984 was twice the amount of their average income, whereas today our mortgage size is quadruple the amount that we earn.

The average mortgage size in 1984 was $37 542 with an average annual salary of about $19 000. Whereas today, the average mortgage size is $334 000 with an average annual income of $79 000.

In 1984, 23% of your income would have gone towards your home loan, whereas now 29% of your income will go towards your home loan.

The average mortgage has increased by 790% but the average income has only increased by 316% over 30 years.

This trend has given rise to many borrowers experiencing mortgage stress, which occurs when your mortgage repayments constitute 30% or more of your total annual income.

2. Mortgage Repayments

Monthly mortgage repayments are four times higher than what they were 30 years ago- rising from $372 to $1 896.

3. Interest Rates & Property Prices

In 1984, you would have seen a higher interest rate. Today, on the other hand, the Reserve Bank has continued to ease monetary policy by lowering rates, making home finance cheaper, which has played a part in fueling demand and higher housing prices.

finder.com.au money expert, Michelle Hutchison says: "The concerning part is that interest rates are half of what they were 30 years ago, with the average standard variable rate currently about 5.5 percent compared to 11.5 percent in 1984."

The average Australian property value currently sits at $580 000 compared to $66,042 30 years ago. With the Reserve Bank’s easing of monetary budget, lower interest rates have contributed to the fuelling of Australian property prices.

4. Rent VS Buy

In 1984, 8% of the population rented and now 10% of the population rent. On the contrary, there has been a more significant change in the number of Australians taking out a mortgage, from 4% to 12% over 30 years.

Despite the tough conditions for Australian homeowners, such as increased mortgage sizes in relation to annual income, and escalating property prices, we have still seen a rise in the number of people taking out a mortgage. Four times more households today are taking out a mortgage when compared to 1984.

Michelle Hutchison points out that property is still a worthwhile investment: “If this trend continues, homeowners can expect the average property of $580 000 to be worth $4.6 million in 30 years time.”

“Even if it takes you another five years to save for a deposit, it’s worth getting into the property market when you can if you compare it to the past 30 years of returns.”

Scanning over the past 30 years of returns and with historically low interest rates, property is still a valuable investment in Australia’s market.

*This research is based on projected estimates and actual figures from Australian Bureau of Statistics, Australian Taxation Office, Reserve Bank of Australia and analysed by finder.com.au.

Need a home loan? Start comparing

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years
Name Product Interest Rate (p.a.) Comp. Rate (p.a.) Fees Monthly Payment

HSBC Fixed Rate Home Loan Package P&IHome 2Y Fixed≥ 20% Deposit

HSBC Fixed Rate Home Loan Package
1.88%
2.65%
  • App: $0
  • Ongoing: $390 p.a.
$547
$3,288 refinance cashback offer
Lock in a low fixed rate for 2 years and buy your home with a 20% deposit.Eligible refinancers borrowing $250,000 or more can get a $3,288 cashback. Terms and conditions apply.

UBank UHomeLoan Fixed P&IHome 1Y Fixed≥ 20% Deposit

UBank UHomeLoan Fixed
1.79%
2.18%
  • App: $0
  • Ongoing: $0 p.a.
$540
Fix your mortgage for 1 year with a very competitive rate and no ongoing fees.

loans.com.au Smart Booster Discount Variable Home Loan P&IHome≥ 20% Deposit

loans.com.au Smart Booster Discount Variable Home Loan
1.85%
2.21%
  • App: $0
  • Ongoing: $0 p.a.
$545
Get a low discounted variable rate loan. Requires a 20% deposit. Get your loan processed fast and settle within 30 days.

homeloans.com.au Low Rate Home Loan with Offset P&IHome≥ 40% Deposit

homeloans.com.au Low Rate Home Loan with Offset
1.89%
1.89%
  • App: $0
  • Ongoing: $0 p.a.
$548
A competitive rate with no application or ongoing fees. This loan is not available for construction.

HSBC Home Value Loan P&IHome≥ 30% Deposit

HSBC Home Value Loan
1.97%
1.98%
  • App: $0
  • Ongoing: $0 p.a.
$554
$3,288 refinance cashback offer
This competitive variable rate loan is available for borrowers with 30% deposits. Eligible refinancers borrowing $250,000 or more can get a $3,288 cashback. Terms and conditions apply.

Nano Variable Home Loans P&IHome≥ 25% Deposit Refi Only

Nano Variable Home Loans
1.99%
1.99%
  • App: $0
  • Ongoing: $0 p.a.
$555
Switch to this competitive variable rate with zero fees. Requires a 25% deposit.

Well Home Loans Equity Plus P&IHome≥ 40% Deposit

Well Home Loans Equity Plus
1.82%
1.85%
  • App: $250
  • Ongoing: $0 p.a.
$543
Borrowers with 40% deposits or equity can get this low variable rate loan. 100% offset account included.

Easy Street Standard Variable Home Loan P&IHome≥ 20% Deposit

Easy Street Standard Variable Home Loan
1.95%
1.99%
  • App: $500
  • Ongoing: $0 p.a.
$552
A low, variable rate home loan. Requires a 20% deposit.

Athena Variable Home Loan P&IHome≥ 40% Deposit

Athena Variable Home  Loan
1.99%
1.99%
  • App: $0
  • Ongoing: $0 p.a.
$555
Owner occupiers with 40% deposits or equity can get this competitive variable rate loan. No upfront or ongoing fees.

Macquarie Bank Basic Home Loan P&IHome≥ 40% Deposit

Macquarie Bank Basic Home Loan
2.14%
2.14%
  • App: $0
  • Ongoing: $0 p.a.
$567
Apply for the Macquarie Bank Basic Home Loan - LVR ≤ 60% (Owner Occupier, P&I) and get a low variable interest rate, plus no application and ongoing fees. Requires a 40% deposit.

Beyond Bank Total Home Loan Package P&IHome 2Y Fixed≥ 40% Deposit

Beyond Bank Total Home Loan Package
1.79%
3.73%
  • App: $0
  • Ongoing: $395 p.a.
$540
Lock in a very low rate for two years and get package benefits. Requires a 40% deposit.

Bank of Melbourne Basic Variable Rate Home Loan P&IHome≥ 20% Deposit

Bank of Melbourne Basic Variable Rate Home Loan
2.19%
2.21%
  • App: $0
  • Ongoing: $0 p.a.
$570
$3,000 refinance cashback
A competitive variable rate loan. Refinancers borrowing $250,000 or more can get a $3,000 cashback (Apply by 30 November 2021. Terms and conditions apply). Refinancers Only.

Well Home Loans Balanced Fixed Home Loan P&IHome 1Y Fixed≥ 10% Deposit

Well Home Loans Balanced Fixed Home Loan
1.87%
1.89%
  • App: $250
  • Ongoing: $0 p.a.
$546
Owner occupiers can get a sharp fixed rate for the first year, plus an offset account. Available with a 10% deposit.

Bank of Melbourne Fixed Rate Home Loan with Advantage Package P&IHome 2Y Fixed≥ 20% Deposit

Bank of Melbourne Fixed Rate Home Loan with Advantage Package
2.29%
3.46%
  • App: $0
  • Ongoing: $395 p.a.
$578
$3,000 refinance cashback
Get a competitive home loan rate for two years. Requires at least a 20% deposit. Refinancers borrowing $250,000 or more can get a $3,000 cashback (Apply by 30 November 2021. Terms and conditions apply). Refinancers Only.

Newcastle Permanent Building Society Premium Plus Package Fixed Rate P&IHome 3Y Fixed≥ 20% Deposit

Newcastle Permanent Building Society  Premium Plus Package Fixed Rate
2.34%
3.65%
  • App: $0
  • Ongoing: $395 p.a.
$582
$2,000 cashback for eligible refinancers borrowing $250,000 or more. Lock in this competitive rate for 3 years.

UBank UHomeLoan Fixed P&IHome 3Y Fixed≥ 20% Deposit

UBank UHomeLoan Fixed
2.49%
2.29%
  • App: $0
  • Ongoing: $0 p.a.
$594
A competitive fixed rate loan with no ongoing fees. Requires a 20% deposit.

loans.com.au Smart Booster Discount Variable Home Loan P&IHome≥ 20% Deposit

loans.com.au Smart Booster Discount Variable Home Loan
1.99%
2.47%
  • App: $0
  • Ongoing: $0 p.a.
$555
Home buyers can get a very low discounted variable rate for the first year. Requires a 20% deposit. Add an offset sub-account for an additional 0.10% on your interest rate. Get your loan processed fast and settle within 30 days.

Nano Variable Home Loans P&IInvestment≥ 25% Deposit Refi Only

Nano Variable Home Loans
2.29%
2.29%
  • App: $0
  • Ongoing: $0 p.a.
$578
Investors can refinance this no-fee variable rate loan. You will need a 25% deposit. Fast online approval.

Macquarie Bank Basic Fixed Home Loan P&IHome 3Y Fixed≥ 30% Deposit

Macquarie Bank Basic Fixed Home Loan
3.09%
2.41%
  • App: $0
  • Ongoing: $0 p.a.
$641
Get a low interest rate and a mortgage with flexible, basic features. No application or ongoing fees. Requires a 30% deposit. Refinancers can switch with a convenient digital application.

Well Home Loans Balanced Fixed Home Loan P&IHome 2Y Fixed≥ 10% Deposit

Well Home Loans Balanced Fixed Home Loan
2.05%
1.92%
  • App: $250
  • Ongoing: $0 p.a.
$560
A low fixed mortgage with an optional 100% offset account. Not available for construction purposes.
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