Is Housing Only for Stars? An Honest Look at Household Income and Affordability
Australia’s housing market has long been a contentious topic, and recent insights from Matusik highlight just how tough it has become for many households—particularly those starting out. The dream of homeownership, once achievable at a few multiples of household income, now feels like it’s reserved for the privileged few—or, as Matusik aptly puts it, “not for starting out, only for stars.”
Let’s take a closer look at the numbers. According to Matusik’s breakdown, the average Australian household earns a median annual income with 59% coming from wages and salaries, 14% from property income, 10% from business ventures, 8% from superannuation, and 10% from government assistance. But even with these diversified income streams, the affordability challenge is clear.
In the past, homes were considered affordable when priced at three to four times household income. Those days are long gone. Today, many regions have dwelling price-to-income ratios exceeding six times household income, crossing into what experts call the “unaffordable range.” On the Sunshine Coast, for example, with its stunning lifestyle appeal and increasing population growth, this ratio is even higher, making it a particularly challenging market for first-home buyers.
Affordability for Younger vs. Older Households
Younger households, often relying solely on wages and salaries, face the brunt of this affordability crisis. They’re navigating sky-high prices without the benefits of equity, established investments, or supplemental income streams that older generations might have. It’s no wonder the data shows that starting out is harder than ever.
For older households, the situation is more forgiving—relatively speaking. Many already own homes or have smaller mortgages compared to their overall income. However, if you’re over 55 and looking to take out a loan, expect the process to be challenging, to say the least. Lending restrictions and scrutiny for older borrowers add yet another layer of complexity to an already difficult market.
Why Affordability Matters Now More Than Ever
The housing market isn’t just about numbers; it’s about people’s lives, their ability to put down roots, and their chance to build wealth through property. Matusik’s analysis underscores the growing disparity between those who have access to property wealth and those who don’t. It’s a sobering reminder that unless systemic changes are made, the gap will only widen.
So, what can be done? For starters, addressing housing supply is critical. As we’ve discussed in previous updates, new dwelling approvals are lagging well behind what’s needed to meet demand. Innovative construction methods and government-backed incentives could help bridge this gap, but action needs to happen sooner rather than later. Additionally, financial literacy and support programs for younger buyers could help them navigate this tough market with greater confidence
