Buying a House Now vs. Thirty Years Ago

Australians trying to break into the property market today face their fair share of challenges. Property prices have risen at a much quicker pace than incomes, and the high cost of living can make saving a deposit seem next to impossible.

Right now, the property landscape seems as unfriendly to first home buyers as it could possibly be, but do younger Australians really have it worse than their parents did? We explore a few key points in the debate below.

Buying a Home 30 Years Ago

Interest rates might have recently risen from their pandemic era lows, but they’re still a far cry from the double-digit interest rates Australians had gotten accustomed to in the late 80s and early 90s.

Back in 1990, high inflation and excessive commercial property speculation were threatening economic stability, and the Reserve Bank lifted the cash rate to 17.50% in an attempt to bring things under control. This ‘bitter medicine’ approach flung the country into a recession and sent unemployment skyrocketing. At its peak, 11% of Australians were without a job, and many among this unlucky cohort found themselves defaulting on their loans.

The ones who were able to keep up their repayments were at one point allocating around 45.5% of their household income towards their mortgage. Fortunately, the pain was short lived — within two years the recession had ended and official interest rates had fallen by ten percentage points.

Challenges Homebuyers Face Today

High interest rates might have been the bane of homebuyers in the 90s, but today it’s sky-high property prices. According to CoreLogic, house values across capital cities have risen 453% in the 30 years to 2022, while units have jumped up 307% over the same period.

House Prices Comparison (1992 vs. 2022):

 Sydney: $221,770 → $1,346,190

 Melbourne: $155,810 → $964,950

 Brisbane: $180,636 → $884,336

 Adelaide: $150,074 → $705,634

 Perth: $138,190 → $587,024

 Hobart: $149,589 → $782,748

 ACT: $197,308 → $1,047,912

While mortgage repayments as a percentage of income are hovering around the same levels older Australians faced in the early 1990s, it’s arguably saving up a 20% deposit that’s the most formidable challenge for buyers. Research from 2023 found it would take households 12 years to save a deposit for the average unit and 16 years for the average house, assuming they can save 25% of their income each year after spending on necessities.

What Can Today’s Borrowers Do?

Would-be buyers might feel that the odds are stacked against them, especially now with rents eating up a greater share of household income. But the good news is that there are several Government initiatives aimed at helping people break into the property market.

Government Initiatives:

First Home Guarantee (FHBG): Purchase a home with a deposit as little as 5% without paying Lenders Mortgage Insurance (LMI).

Regional First Home Buyer Guarantee (RFHBG): Similar to the FHBG, but for regional areas.

Family Home Guarantee (FHG): Available to eligible single parents, allowing them to purchase a home with a deposit as little as 2%

First Home Super Saver Scheme (FHSSS): Allows first home buyers to use their superannuation as a savings vehicle. Up to $15,000 of voluntary contributions can be withdrawn to use as a deposit, with up to $50,000 in total released along with associated earnings.

In conclusion, while today's property market presents significant challenges, there are strategic measures and government support available to help first home buyers. With careful planning and leveraging available resources, breaking into the property market is still within reach.


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This provides general educational information only. The content does not take into account your personal objectives, financial situation or needs. You should consider taking financial advice tailored to your personal circumstances. Life Sumo (Orion Enterprises (Cairns) Pty Ltd) has representatives that are authorised to provide personal financial advice.