‘Far out of reach’: Filmmaker highlights reality of buying a house in 1983 versus 2023

An Aussie filmmaker has highlighted the scale of the housing crisis with a video showing just how much things have changed in four decades.

An Aussie filmmaker has highlighted the scale of the housing crisis with a revealing video showing just how much things have changed in four decades.

Arguing that the housing market is “broken”, Jack Toohey takes a trip down memory lane to hit back at the “boomers” who insist earlier generations had it harder.

“Let’s go back in time to buy a house,” he says in the viral video, which has been viewed more than four million times.

The boomers on twitter made me do it: Housing Crisis 1983 vs 2023https://t.co/1fQG1Xm9Qepic.twitter.com/7Tsx13ljV5

— Jack Toohey (@jack_toohey) June 4, 2023

“In 1983, I’m an average person looking to buy an average house. I’ve got this average degree which I got for free, and I work an average job.”

The video notes that in 1983, the average home cost $64,039, higher education was free, and the average annual income was $19,188.

After paying average annual tax of $4377 and rent of $2494, he would be left with $12,315 in disposable income.

“If I saved 50 per cent of the remainder, it would take me two years to save up for the 20 per cent deposit,” of $12,807, Toohey says.

The video has been viewed four million times. Picture: @jack_toohey/Twitter

Fast forward to 2023, when the average home costs $920,100, the average HECS debt is $23,685, and the average income is $90,896.

After paying average annual tax of $28,600, rent of $20,008 and HECS of $5453, he would be left with disposable income of $36,835.

“If I saved 50 per cent of the remainder, it would take me 10-and-a-half years to save up for the 20 per cent deposit,” of $184,020, he says.

“It’s clear that it’s not just lazy, layabout young people sipping lattes that’s causing the problem. In 40 years the average house price has increased by 14 times, whereas full-time salaries have only increased by 4.7 times. Houses used to cost three times your salary, and now they cost 10 times.”

Sydney is one of the world’s most unaffordable cities. Picture: John Feder/The Australian

In other words, a person today would have to be making $300,000 a year to be in the same starting position as a homebuyer 40 years ago.

Sydney and Melbourne consistently rank among the most unaffordable cities in the world to buy a home, alongside the likes of Hong Kong, Vancouver and San Jose.

Toohey added that the average income of $90,000 seemed high due to “CEOs and vice chancellors taking home millions”, and it was even worse when going by the median salary of $48,000.

“If you’re making more than that, you’re making more than 50 per cent of all working people in Australia, and still housing is so far out of reach,” he says.

One user commented, “I heard this boomer on the radio being asked why our generation can’t buy a house and she says it’s because of all these ‘tap and goes’.”

Another said, “It’s crazy how this is the case all over. It’s exactly the same in the UK.”

A third wrote, “This is also ignoring the other random necessary fees we have now (phone/internet etc.) and inflation of food and other services.”

Houses now cost 10 times the average annual salary. Picture: Jonathan Ng

Toohey conceded he had given up on “having a realistic chance of buying a property nearly five years ago” during an interview on Nine’s Today show on Wednesday morning.

“I ran a business for eight years and even still as a successful person in society [owning a home] wasn’t really something that I fully ever truly believed that I could be a part of,” he said.

The filmmaker revealed he had moved back in with his parents in a bid to save money, and called on the federal government to have a “serious conversation” about negative gearing and capital gains tax.

Last week, NSW’s Productivity Commissioner warned that the dream of owning a home was now “out of reach” for many young people, and called for planning reforms to create more high-rise apartments in rich suburbs close to the CBD to increase supply.

Toohey said he would be making a part two video digging into the root causes of the crisis, including interest rates.

Australia experienced periods of very high interest rates in the 1980s and 1990s relative to the past decade — famously peaking at 17.5 per cent in 1990 — a fact often raised by older generations.

But the era of ultra-low rates is now well and truly over, with the Reserve Bank on Tuesday delivering its 12th rate hike since May last year, raising the official cash rate by another 25 basis points to 4.1 per cent — its highest level since 2012.

The RBA’s fastest tightening cycle on record, in an effort to tame persistently high inflation of 7 per cent, means Australian borrowers now face the heaviest mortgage repayment burden in history.

Financial comparison website Finder found that the rate hike will set Aussies back by an additional $1200 every month.

‘Housing is so far out of reach.’ Picture: @jack_toohey/Twitter

Aussies with an average loan size of $577,000 will be spending more than $15,000 extra per year on their mortgage compared to what they were in April last year.

That’s a “huge amount of extra money to be forking out on your mortgage,” said Finder head of consumer research Graham Cooke.

He warned that four out of five of Australians are reducing their spending to cope with rising costs. “The RBA’s latest hike is likely to push that [figure] closer to 100 per cent,” he added.

And RBA governor Philip Lowe has warned further rate rises are on the cards.

“Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable time frame, but that will depend upon how the economy and inflation evolve,” he said in his statement.

Treasurer Jim Chalmers on Tuesday said a lot of Australians would “find this decision difficult to understand and difficult to cop” but added he did not want to “second guess” the RBA.

“The job that the independent Reserve Bank has is to try and get on top of this inflation challenge in our economy without crashing our economy, and we’ve known for some time that is a difficult path to tread,” he told reporters.

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