By Alan Weiss, Real Estate Agent – 35+ Years of Experience
In the 1980s, owning a home in Australia was achievable for many on a single income. You could buy a house, raise a family, and still afford the occasional holiday. Fast forward to 2025, and the idea of the “Great Australian Dream” has shifted — in both promise and burden. Housing has gone from being a shelter and savings plan to something resembling a financial identity. And for many Australians, it’s an identity that now comes with chains.
Let’s take a step back and look at how we got here.
The 1980s: Affordable Entry, High Rates, Modest Growth
Interest rates in the 1980s hit record highs — peaking at 17% in 1989. That would send today’s borrowers into a tailspin. But the difference was the entry price.
Buying a home back then was about saving a reasonable deposit and managing repayments from a single, often male, income. You didn’t need help from the Bank of Mum and Dad. More importantly, housing was treated as a home first and an investment second.
Capital growth was moderate. Between 1980 and 1990, home values rose, but not in the meteoric fashion we’ve seen since. People weren’t borrowing against equity to buy their second, third, or fourth property. And while rates were high, so too was wage growth. You could pay off a mortgage in 10–15 years, and still get ahead.
The 1990s: Economic Reform, Lower Rates, Equity Awakens
In the 1990s, Australia began to see the seeds of financialisation take root. Interest rates fell significantly, opening the doors to greater borrowing capacity. Capital growth picked up as credit became more accessible.
This was the decade that changed the game. Banks became more aggressive. Dual incomes became the norm. Suddenly, people were using the equity in their homes to fund renovations, buy investment properties, or refinance to unlock cash.
Housing was still broadly affordable — but more Australians began to treat it as a wealth-building tool. And those who bought in the early ’90s rode the rising wave of compound growth. For the average person, this wasn’t speculative. It was a practical financial strategy: borrow, leverage, grow.
The 2000s–2010s: Boom, Bust, and the Rise of the Property Investor
From the early 2000s onward, property truly became a national obsession. Prices surged, driven by:
- Declining interest rates
- Population growth and immigration
- Urban consolidation policies
- Generous tax treatment (negative gearing, CGT discounts)
- Easy access to interest-only loans
This period turned homes into ATMs. Equity was constantly extracted to fund lifestyle, investments, and second homes. By the 2010s, Australia had one of the highest rates of property investment in the developed world.
But this boom came at a cost: affordability. For first-home buyers, the ladder kept pulling further away. Deposit sizes ballooned. Wages did not keep up. Governments offered schemes to “help” buyers into the market — ironically fuelling the very price growth they claimed to contain.
Today: Debt, Stress, and the Illusion of Wealth
We’ve now reached a point where the average Australian household debt-to-income ratio is among the highest in the world — over 200%. And most of that is tied up in housing.
The pandemic supercharged property values again, with ultra-low interest rates and government stimulus pushing prices to all-time highs. But now that rates have risen sharply, reality is biting.
Disposable incomes are falling. Mortgage stress is rising. Rental shortages are pushing people to the brink. In 2025, more Australians are “house poor” than ever — wealthy on paper but stretched thin in day-to-day life.
Many who bought in the past few years are discovering the downside of owning in a high-rate, high-debt world. They may never extract the wealth from their property unless they sell or borrow against it again — assuming they can.
Winners and Losers: The Divide Deepens
It’s easy to say homeowners are the winners — and in raw numbers, that’s true. But wealth trapped in bricks and mortar isn’t always freedom. For older generations who bought in the 80s or 90s, capital growth created equity that could be used to retire comfortably or help their children enter the market.
But for those entering the market today? The reward for homeownership may not be wealth, but worry.
Losers? Young people, of course. Renters, especially single-income households. And surprisingly, even some homeowners — those who over-leveraged, bought at the peak, or were told that “property only goes up.”
Interest Rates: The Hidden Lever Behind It All
Here’s the simple truth: housing booms have followed rate cuts. Housing slowdowns have followed rate hikes.
- 1980s: High rates, low prices.
- 1990s–2010s: Falling rates, rising prices.
- 2020s: Record-low rates, record-high prices — followed by rate hikes and growing repayment pressure.
Cheap credit enabled the boom. But as rates rise, the downside becomes clear: every extra dollar that goes to the bank is a dollar not spent in the real economy. And we’re seeing that now in sluggish retail, low productivity, and household spending paralysis.
Where to from Here?
Housing in Australia is no longer just about shelter. It’s about status, identity, retirement, and family legacy. But the price has been rising living costs, economic rigidity, and increasing inequality.
As a real estate agent, I believe in property. I’ve spent my career helping people buy and sell. But I also believe we need to stop pretending housing is a silver bullet for everyone.
Not every home is a good investment. Not every buyer is better off owning. And not every price is worth paying.
Sometimes the best financial move isn’t to stretch for the dream home — it’s to live within your means, keep your flexibility, and wait for the right opportunity.
Final Thought
Housing made many Australians rich — especially those who bought decades ago and held on. But today’s market is more complex, more risky, and far more dependent on debt.
In the 80s, you paid 17% interest but owned your home. In 2025, you might be paying 6% and own very little of it.
We need to talk more honestly about the true cost of housing — not just in dollars, but in freedom, lifestyle, and opportunity.
And maybe, just maybe, we stop treating homes like lottery tickets — and start treating them like places to live again.
