02/06/2026
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House prices have been climbing for a generation. Undoing the damage could take even longer.
Imagine it is 2001, and a young couple are ready to buy their first home, a slice of suburbia with a small backyard and room for their young child.
They have saved diligently, setting aside 15 per cent of their wages for the past six years. Between them, they have accumulated $23,000, enough to cover a deposit on a modest home.
Now in 2026, their eldest is a government worker nearing 30. She and her partner are on the hunt for a home of their own.
Just like her parents, they have saved 15 per cent of their wages for six years.
They earn more than their parents did, so they have amassed a tidy sum of $85,000, about double their parents once adjusted for inflation.
But the house their parents bought for $300,000 in todayโs dollars, and still live in, is now worth $1.5 million.
The home they'd like to buy is simply out of reach. They do not earn enough.
It is Australiaโs familiar housing story, repeated across families and cities. The social contract, where a middle-class job yields a middle-class home, has been left at the bottom of a house price mountain.
Australia has spent decades rewarding capital growth more than wage growth.
That means that existing owners have benefitted but first-home buyers are asked to โearn moreโ in a market where the target keeps moving.
Many economists argue the system is structurally designed to preserve high prices.
If homes are to become genuinely affordable again, either wages must rise materially faster than housing costs for many years, or house prices must fall (or flatline) relative to incomes.
The uncomfortable truth is that a lot of policymakers want โimproved affordabilityโ without meaningfully lower house prices.
If house prices were to flatline and wages were to grow at 3.3% each year, it would take about 25 years for houses to get back to being genuinely affordable (4 times income).
So by about 2051 - and that's if house prices rise at 0 per cent annually for the next 25 years!
https://www.abc.net.au/news/2025-11-02/house-prices-climbing-for-generation/105954416