Generation locked out: Young Australians swap property dreams for shares as house prices soar
Average house prices now cost nine times average incomes, versus five times 20 years ago, and young Australians are now looking for alternative ways to build wealth.
Will Brennan has given up on the dream of buying a house where he grew up in Perth’s beachside suburb of Hillarys.
Aged 26, he’s watched the city’s runaway house prices nearly double over the past five years and says his government job salary is a million miles off getting him on the property ladder.
Among the millions of Australians now locked out of buying a home, he’s embraced an alternative wealth creation strategy to outpace inflation. Despite no formal education in finance or investment, he funnels all his savings into shares or exchange traded funds (ETFs).
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By continuing you agree to our Terms and Privacy Policy.“Money in the bank or cash savings is a waste of time, the interest you earn is really nothing,” he says.
“Five years ago $50 was quite a lot of money, but not now, you can’t even get a pint (of beer) for $9 now. The price of everything has gone up so much. And I try to not to go out as much to cafes, as it’s so expensive, going to pubs is hectic as well.”
The economic and house price data shows Mr Brennan is right to be upset at the house price inflation that has heavily outpaced wages growth over the last 20 years.
“Today the average house costs close to nine times average income, five to 10 years ago it was 6.5 times average income, and 20 years ago it was closer to five times average income,” said Dr Nalini Prasad, an economics lecturer at the University of New South Wales.
Different paths to wealth creation
According to the latest Vanguard data, the best-performing asset class over the 10 years to June 30, 2025, was US shares at an average return of 10.8 per cent per annum. Australian shares returned 9.3 per cent, while capital city house prices returned 7.2 per cent.
Cash returned an average of 2 per cent, versus CPI inflation that hit an average of 2.8 per cent to suggest Mr Brennan is also correct to assume cash in the bank loses value over the long term.
He acknowledges he’s lucky his parents are both homeowners in Perth’s booming property market and still lives at home to save money.
In fact at the age of 26 he still has eight years to buy a house ahead of the average first home buyer age of 34 in Australia, according to Dr Prasad.
The economist added that one-in-five first home five buyers are now more than 40 years old, as savings of $231,000 (plus stamp duty of around $46,000) are required to pay a typical 20 per cent deposit for the median capital city house price of $1.15 million.
Share market
After leaving school, Mr Brennan worked different jobs in education support, greenkeeping, and delivery driving. But the one constant through his job swapping was an interest in share market investing.
Investing in ETFs has helped his capital slowly grow to around $50,000 and even given him the financial confidence to spend more time abroad in Japan at a friend’s skiing homestead when he can.
“I’ve invested about six years ever since COVID,” he said. “But if we keep seeing [house] prices soar, I’m going to need a way better job and start saving money a lot faster.”
While he wants a house one day he adds that for now he likes ETFs as he pays minimal fees, versus the significant legal, tax and administrative expenses of purchasing a property.
He mainly invests through the Betashares Direct investment platform selects the ETFs based on what he believes are long-term growth themes such as demand for cybersecurity, or the rise of Asian tech companies linked to advances in artificial intelligence.
He does his own research online and doesn’t see his approach as too risky in terms of the potential for capital losses. He says during Covid-19 some of his mates tried short-term share trading (as the opposite to his approach) in the hope of making quick profits, but all lost money.
“My friends and I are all making bigger financial choices now,” he says. “I’ve spent time to travel and I think the ETFs give me options, but some of my mates are just trying to get whatever house they can and are giving up on their dreams of this, or that location. For holidays we can all go down south, but Europe you’d have to save for years and think 2028 maybe.”
The good or bad news, depending on your point of view, is that Australian house prices are not expected to fall over the short or medium term.
According to to ANZ Bank economist, Madeline Dunk, the national capital city average price is forecast to climb 4.8 per cent in 2026, with Perth and Brisbane expected to leap 10 per cent, well in excess of the average 3.4 per cent of wages growth over the December quarter.
“So, it’s really challenging for young people,” warned Ms Dunk. “House prices have gone up and incomes haven’t kept up, but there’s big differences across the country. Melbourne has arguably become more affordable over the past five years, where they’re still down from their 2022 peak.”
