4 Trends to Ride as Homes Turn Luxury. Miss This, Miss the Decade [AusPropertyStrategy104]

Today, I'm going to share a fact that could completely shift how you see Australian property—Australian homes are shifting from being everyday necessities to becoming luxuries. The Australian Bureau of Statistics just released a historic figure: the average Australian house price has broken through the one million dollar mark for the first time. What does that mean? An ordinary Australian house now costs about what one person would earn over nearly ten years without spending a cent on food or anything else. If you want to save up for a twenty per cent deposit, based on the average Australian saving thirty-eight hundred dollars a year, it'd take a full forty-two years.

With Australian house prices far outstripping what ordinary people can afford, over the next five years, four major trends will emerge, including longer mortgage terms, the disappearance of undervalued markets, differentiation in property types, and the solidification of social classes. This shift will touch different groups in different ways—from new migrants to long-time locals, from wage earners to high performers. Using property investment to jump a wealth tier won't just be about awareness and action anymore. It'll first require an extra decisive factor, and that factor is destined to be held by only a tiny minority.als.

40-Year Mortgages

Ask people of different ages how long a home loan runs in Australia, and you’ll get different answers. Why? Times are different. Over the past two decades, mortgage terms have shown a steady drift upwards—longer and longer loans.

From the late 1990s to the mid-2000s, most banks offered terms of around 25 years. The longer the term, the greater the interest-margin risk the bank carries. Between 2014 and 2018, APRA set limits on investor loans and interest-only loans to cool an overheated credit market, but it didn’t cap total loan terms. From 2010 to 2020, as prices kept rising and affordability worsened, most banks stretched mortgage terms from 25 to 30 years to ease monthly repayments.

In recent months, with prices surging and buyers falling behind, lenders have broken past the old ceilings and rolled out 40-year mortgages. In late 2024, Pepper Money launched the first 40-year term, quickly followed by RACQ Bank, Credit Union SA and Great Southern Bank.

It feels like banks know you’re struggling to repay, so they push the timeline out—pay less each month, hang on to the house, but pay more overall. At 5% per year on a $600,000 loan, a 40-year term adds about $229,000 in extra interest compared with a 30-year loan. That’s not a small number.

After hearing this, I said to a friend: Life here isn’t easy. You spend your whole life working for three bosses—the employer, the tax office and the bank.

At this pace, in the next five to ten years, we may even see 50-year mortgages. Push it further—why not a 60-year, cross-generation loan? The parent passes, the child keeps paying. Not impossible. Why? Because home prices are rising much faster than wages. Relying on a steady job, without extraordinary effort, to buy a home is no longer realistic for ordinary households.

Home-Buying Becomes Mission Impossible

Numbers don’t lie. In 2025, to buy a house in Sydney, you’d need an annual income of $280,000. Yet the city’s median household income is only about $120,000–$160,000. What does it mean? Even middle-income families in Sydney have been pushed out of the market.

In 300 Sydney suburbs, you’d need more than $400,000 a year income to buy in. That means two-fifths of Sydney is now a no-go zone for average buyers.

And Sydney is just the tip of the iceberg. Brisbane, Adelaide, Perth and Canberra aren’t far from the million-dollar club. Especially Brisbane—I expect its median to pass $1 million early next year.

I know a couple, both engineers, with a household income of $150,000. They’ve been house-hunting for two years. Their budget climbed from $800,000 to $1.2 million, and they still couldn’t buy a place they liked. Why? Every time they found a good home, someone else came in higher—and often it was a cash buyer.

This points to a deeper issue—nearly 30% of homes are bought with cash. Who are these buyers? Many already own property and are using their existing equity growth to buy more. Meanwhile, young people saving for a deposit can’t keep up with the pace of price gains.

As it’s getting harder for ordinary people to buy, the wealth of the richest 200 Australians has surged to $667 billion—24.5% of GDP. Twenty years ago, it was only 8%. Over the same period, average household net worth jumped from $530,000 to more than $1.4 million, while disposable income barely moved.

The outcome of this split is clear: those who own property see their wealth compound; those who don’t are pushed to the margins. And the tax system is, in effect, fuelling the gap—capital gains discounts, negative gearing and superannuation tax concessions all make it easier for asset holders to build even more wealth.

Geographic Arbitrage Gone

Remember a few years ago when people kept saying, “Leave Sydney and Melbourne—buy in second-tier cities”? Those so-called value pockets (undervalued markets or properties) have been completely filled. Look at the numbers and you’ll see how dramatic it is. Perth, once considered “cheap,” rose 17.6% over the past 12 months. Adelaide climbed 12%, Brisbane 11%. Perth’s median price has now overtaken Melbourne’s—for the first time in a decade.

Regional cities are performing well too. In Queensland, Mackay jumped 18.7% in a year, handing owners around $100,000 in paper gains. Townsville followed at 17.4%. Gladstone 16.5%, Rockhampton 13.2%. You may barely know these places, yet their gains beat Sydney and Melbourne. Why? Affordability. When a Sydney home is $1.7 million, a $600–700k house in the region looks like a bargain.

A friend of mine is an IT engineer in Brisbane. He planned to buy there, but as prices went higher, the financial and mental stress was too much. He ended up moving two hours away to Toowoomba. And what happened? Toowoomba still rose 11.6% in the last year.

In the first half of 2025, regional price growth outpaced capital cities in most states. NAB reports regional city and town medians now at $670,000—58.7% above pre-pandemic levels.

What's driving this? Interstate migration and relocation. The pandemic changed how people work—remote options let more people choose areas with lower living costs. But the issue is, when everyone gets the same idea, those areas stop being "cheap."

What does this mean on a deeper level? It signals that Australia no longer has any true value pockets. No matter where you flee to, house price increases are outrunning ordinary income growth. That era of using low deposit through "geographic arbitrage" to build wealt is over.

Property Type Differentiation

Price gaps between different property types in the same area are widening dramatically. In Sydney, the difference between detached houses and apartments has hit a historic high—detached houses are now 105% more expensive than apartments. If an apartment goes for $800,000, a detached house in the same area would be over $1.6 million.

This split is happening across the country. Since the pandemic, national detached house prices have risen 44.5%, while apartments are up just 20.7%. The price gap widened from $46,000 pre-pandemic to $207,000 now. But here's the key question: is this divide temporary, or permanent? I lean toward it being a structural shift. The pandemic made people realize the value of living space—they want bigger homes, private gardens, more privacy. At the same time, Australia's urban planning restricts new detached house supply, while there are many apartments available.

In Brisbane's West End, on the same street, a three-bedroom detached house sells for $1.2 million, while a three-bedroom apartment goes for $650,000. That $550,000 difference is the "land premium." But for many first-time buyers, this choice doesn't even exist anymore. They can't afford apartments, let alone houses. The latest data shows Brisbane's apartment median has broken $700,000. High-end apartment projects—those with full amenities, in prime locations, with high scarcity—their price rises aren't lagging behind detached houses at all. Meanwhile, older, poorly located mass-produced apartments could face greater devaluation risks.

This property type split also carries a sociological weight: it's creating a new form of class division. People who own detached houses not only get a better living experience but also faster asset growth. Those forced into apartments have limited living quality and relatively slower wealth accumulation. From an investment standpoint, it's changing the game rules. In the past, you could start with an apartment and then upgrade to a detached house. Now, that "ladder effect" has vanished. Once you buy an apartment, stepping up to a detached house becomes nearly impossible.

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Class Solidification

Here, I have to touch on a sensitive topic—Australia is going through an unprecedented wealth divide, and a big part of that shows up in the wealth differences between immigrants and locals.

The data shows Australia is about to see the biggest wealth transfer in history—totaling between 3.5 and 5.4 trillion dollars. This wealth mainly comes from the baby boomer generation, and over the next 20 years, it'll pass to their children and grandchildren. The problem is, this wealth isn't distributed evenly at all. In Sydney's wealthy areas like Rose Bay and Vaucluse, the average inheritance is close to 3.75 million dollars. But in many outer suburbs, young people might inherit less than 500,000 dollars. That's not a small difference. Right now, 59% of people under 30 need help from their parents to buy a home, compared to just 3% back in 2010. But the key issue is, not every family can provide that kind of help.

I've noticed an interesting pattern: many first-generation immigrant families, especially Chinese and Indian ones, really want to buy property and are willing to take on higher risks. Parents and kids pay the mortgage together, or even sell assets from back home to put together a deposit. In contrast, some local Australian families, particularly the younger generation, rely more on government welfare and inheritances. Seventy percent of baby boomers aren't willing to sacrifice their own lifestyle to help their kids buy a house, and 80% don't want to downsize their homes.

This creates a fascinating situation: groups with strong motivation to buy—mostly immigrants—are driving up prices, while local young people, with lower earning power and parents who won't help, find it harder and harder to afford homes. Then, those local young people vent their frustration on immigrants, blaming them for pushing up prices. In fact, they just hate competition.

But the reality is much more complex. Australia's tax and social security systems actually favor people who already have assets. If you already own a house, you can enjoy negative gearing benefits, capital gains tax discounts, and various tax breaks. But if you have no assets, you face higher tax burdens. The result of this system design is that the rich get richer more easily, while the poor find it hard to cross class lines. Working hard to create wealth, and then buying property—that's become the necessary path for the poor to turn things around.

Three Major Strategies

Facing this new reality, different groups are choosing different ways to cope. I've summed them up into three paths, each with its own risks and opportunities.

First path: The working-class compromise route

This is the road most young people are taking—since you can't afford a detached house, buy an apartment; since you can't afford the city center, buy in the suburbs; since you can't afford a new home, buy an old one. But reality is harsh. Even with these compromises, the threshold keeps rising. A single person earning 80,000 dollars a year in Sydney can only afford apartments in 14 suburbs. And most of those suburbs are over 30 kilometers from the CBD. People on this path are facing a "debt trap." High mortgage pressure means they don't dare quit their jobs, start businesses, or get sick—they're completely tied to their work. On paper, they own property, but their quality of life is dropping.

Second path: The breakout route for successful people

These are usually high-income professionals, successful entrepreneurs, or investors who already own multiple properties. Their strategy is using gains from existing assets to buy more. In other words, you have to become a successful person first to deserve investment properties. This is totally different from before 2025, when as long as you had awareness and drive, you could spend little money grabbing a few regional properties, make a fortune in the last 2-3 years, and escape the working class. I've met plenty of these types—mostly people who started with nothing but got lucky, bought cheap houses in the past few years, and made some money. When they talk, they hold their heads high, feeling like big successes. Simply put, their wealth doesn't match their position. If they don't work to improve themselves, money earned through luck will be lost through lack of skill. The next five years are different—you have to first become successful in some field, earn money, then enter the property investment circle to create more wealth. That's the element I mentioned at the start of the video, destined for only a tiny minority.

Third path: New immigrants surviving in the cracks

This might be the toughest group. They've just arrived in Australia, with no credit history, no local income record, making it hard to get bank loans. At the same time, they don't have a local family support network. Many new immigrants are forced to become lifelong renters. They've had higher education, decent assets back in their home country, but in Australia, they're shut out of the property market. But there are exceptions. Some capable immigrant families enter the market through family cooperation. Like three generations pooling to buy a big house, or parents providing the deposit while kids handle repayments. Once you're on the train, moving forward gets much easier.

No matter which path you choose, one thing is certain: the time window is closing fast. With changes in interest rates, policy adjustments, and market sentiment shifts, 2025 might be the last chance for ordinary people to get on board. In another two years, if prices keep rising like this, 90% of young people will be permanently squeezed out of the market.

See the Big Picture, Act to Win

When we put all these pieces together, the picture becomes clear: Australia's property market is undergoing a fundamental change, and the impact of this will last 10 to 20 years. From a macro view, this isn't just happening in Australia—it's a wealth redistribution that all developed economies around the world are experiencing. Technological progress, globalization, population aging, urbanization—these big trends are together pushing asset prices up, while wage growth stays relatively slow. For ordinary people, there are now three core choices.

First, face reality: the golden window for property investment is closing. That era where you could achieve financial freedom just by simply buying a house might be over, because you can't afford it. If you haven't gotten on board yet, you'll need to work harder, smarter, and take bigger risks to catch up.

Second, adjust strategies: don't pin all your hopes on property. You might need to think about other ways to make money first, like starting a business or building skills, then buy property. Diversified wealth-building strategies are becoming more important.

Third, seize opportunities: if you still have the ability and chance to enter the market, now is the time. But it requires your drive and ability to handle pressure, because you'll need to endure longer commutes, smaller spaces, and bigger mortgages.

Five years from now, ten years from now, when you look back at today's numbers and choices, which side of the wealth divide do you want to be on? Will you keep waiting or do whatever you can to get on board?

Watch the video version of the blog on YouTube.

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