How Much Does the Australian Dream Actually Cost?

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The ‘Australian Dream’ is something to which many Australians aspire, yet is something that a continually shrinking number of Australians will actually do. What is the Australian dream, and how much would it actually cost to achieve the Australian dream yourself?

What is the Australian Dream?

The Australian Dream is the belief that home-ownership leads to a better life, and is representative of being a success, and of having a degree of security in your life.

While some historians believe the Australian Dream can be dated back to early colonial Australia – with vast swathes of open land being claimed by many individuals and families, it is widely accepted the modern Australian Dream dates to the period of reconstruction undertaken in Australia following the conclusion of the Second World War. Many Australians saw the Dream come true for them during this period, in particular during the 1950’s and 1960’s when numerous factors, including the expansion of the Australian manufacturing industries, came together to help Australia grow and Australians become affluent.

How Has the Australian Dream Changed Since This Boom Period?

There is no question the Australian Dream has evolved since the boom period of the 1950’s and 1960’s, both in terms of what the Dream itself actually is, as well as how Australians are able to achieve it.

How Has the Australian Dream Itself Changed?

The below table highlights some of the key similarities and differences between the Australian Dream of the post war years and today, demonstrating how the Australian Dream has changed in many aspects yet remained consistent in others.

Who is Living the Australian Dream Today?

Today, many Australians live and embody the Australian Dream.

Those who don’t pursue or achieve the Australian Dream, whether by choice or because they’re unable to, may be held back by:

  • Increased house prices
  • Lower overall wages as well as slow wage growth, or in some cases wage reduction
  • A higher overall cost of living
  • A desire to “live a little” before settling down, leading to individuals spending time where they aren’t saving for a mortgage deposit while house prices increase at the same time
  • The changing demographics and cultures across Australia, and attitudes towards home ownership as well as the other aspects of the Australian Dream

How are These Factors Playing a Part in Pursuing the Australian Dream?

The factors above have had a big impact on home ownership in particular, as detailed in the tables below. 

As we can see, home ownership hit its lowest ever level in 2011.

Wages were decreasing in the early part of the decade, too, with the average wage in Australia for the year to June 2014 falling 3.2% to $79,767, as highlighted here.

The tables below, with data courtesy of RP Data, highlight the average house and unit (apartment) costs across Australia for the year to September 2014.

How Much do Australians Need to Save to Achieve the Australian Dream?

Achieving the Australian Dream may simply be too expensive for some, considering that you also need to factor in the cost of buying two cars, running costs of the cars, and taking an annual holiday, all on top of mortgage costs.

Achieving the Australian Dream in Melbourne

For the purposes of this article let’s look at the cost of achieving the Australian Dream if you want to buy a house in Melbourne.

Buying a Home in Melbourne

Let’s start with home ownership. If you take out mortgage insurance you will be able to put down a lower cash deposit of 5% on a property, but will then obviously be lending more over a 30-year mortgage. Without mortgage insurance you will need to put up 20% of the property price as a deposit.

Based on average house prices, if you have mortgage insurance, this means you need to save


for your property deposit.

If you only provide the minimum deposit amount, this would mean you need to borrow the remaining $560,500 from your mortgage provider.

At an interest rate of 5% over 30 years, this would give you a monthly repayment of


Based on this monthly repayment we can already see the value in paying a higher deposit on your house, but that does mean saving for longer. In addition, if house price growth was to continue at previous rates, the amount you’d need to save to have enough of a deposit to get your mortgage payments down would be continually getting further out of reach.

When looking for a mortgage you also need to consider your income, and what you can afford – as a lender will use this as a key criterion – as well as your credit history.

Buying and Running Two Cars

A new Mazda CX-5, one of Australia’s most popular family SUV’s, has a guide price of $29,880, and you need two of these to live the Australian Dream.

If you bought these cars on hire purchase, based on an agreement with an interest rate of 5% with no initial deposit, you would pay


per month for each vehicle.


In Melbourne, running two cars will cost your family, on average


per week in addition to any hire purchase costs based on the latest research.

Taking a Holiday Abroad

We recently looked at how you could achieve your dream holiday on a budget of $10,000, which also highlighted the opportunity to take a family trip to Indonesia for $4,120. As you need to be taking an annual overseas holiday to be living the Australian Dream, lets factor that into our final calculation.

How Much Will the Australian Dream Cost me in Melbourne?

Based on all the figures above, we have put together the below table to highlight what the Australian Dream costs a family in Melbourne, on an annual basis.

As you see, the Australian Dream is definitely achievable, but it can cost a lot of money to do it! Without any additional expenses, and remembering the average salary figure of nearly $80,000 is before taxes are deducted, a couple both earning the average Australian salary will already be eating into a significant amount of their income by trying to live the Australian Dream.

The Alternative to the Australian Dream

The alternative to all this is to live the dream lifestyle you want. As you will have seen if you clicked through to our article about taking your dream holiday above, despite home ownership levels and wages dropping, more Australians than ever before are taking holidays abroad.

This is evidence that Australians are choosing to live the life they want, rather than following a long-held ideal of what the Australian Dream should look like.

It is also entirely possible that the decline in home ownership in Australia is by choice, though we’ll likely never know the full reasons. After all, while owning your own home is great in terms of having an asset and an element of security in your life, it can also make certain things difficult. If you want to move to another area, or wish to take a job in another state or even abroad, having the flexibility of renting is ideal. Anyone who has ever had to turn down their dream job because the person who was supposed to be buying their home dropped out at the last minute will tell you how that feels! A recent study conducted by economists Dominic Crowley and Shuyun May Li demonstrates the extent to which timing can be critical, and that while buying property is often the best financial bet long term, that isn’t always the case at all.

The bottom line is that you can live the life you want and get those things you want in life now, regardless of whether you own your own home.

From your dream wedding, to your favourite car, to that once in a lifetime holiday, the Australian Dream is whatever you decide it is.

If you want to start living your own Australian Dream today but need help doing so, a NOW FINANCE loan may be able to help you. Get your rate here before applying or view our full range of personal loans.

Disclaimer:  This article contains general comments and recommendations only. This article has been prepared without taking account of your objectives, financial situation or needs.  Before taking any action you should consider the appropriateness of the comments made in the article, having regard to your objectives, financial situation and needs. If this article relates to the acquisition, or possible acquisition, of a particular credit product you should obtain and consider the relevant disclosure documents before applying for the product.

Approved customers only. Terms, conditions, fees and charges apply. All applications are subject to NOW FINANCE’s lending and approval criteria. Settlement times may vary depending on circumstances. Loan repayment terms range from 18 months to 7 years. Interest rates range from 7.45% p.a. (9.07% p.a. comparison rate) to 16.95% p.a. (18.53% p.a. comparison rate).

*Comparison rates are based on a loan of $30,000 over 5 years.

WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

EXAMPLE: An unsecured personal loan of $30,000 borrowed for 5 years with the interest rate of 7.45% p.a. (9.07% p.a. comparison rate), would estimate to a minimum total amount payable of $37,741.60 via the weekly payment option (including a $495 establishment fee and $13 per month administration fee). Rates are subject to change.

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