0491 104 251 [email protected]
Select Page

To answer the question, we need three things:

1. Average Australian house price from 2000 to 2020
2. The average yearly increase in house prices from 2000 to 2020
3. Average full time earnings

### 1) Australian house prices from 2000 to 2020

Below is a table of average house prices in Australia from 2000 to 2020.

House prices in Australia increased from approximately \$200,714 in the year 2000 to approximately \$690,200 by March 2020.

### 2) Average yearly increase in house prices from 2000 to 2020

What percentage increase would we need each year to go from \$200,000 in year 1 to \$690,000 in year 20?

To find out let’s plug the data into a compound calculator:

We will use the above figure of 6.4% for the average yearly increase in house prices from 2000 to 2020.

### 3) Average full-time earnings

For this we need to look at Average Weekly Earnings from the Australian Bureau of Statistics (ABS) – series 6302.0

The latest data release from the ABS is November 2019.

Full-time adult average weekly ordinary time earnings were \$1,658.40 in November 2019.

\$1,658.40 times 52 gives us a yearly figure of \$86,237.

So average full-time earnings in November 2019 in Australia was \$86,237.

## If house prices in Australia increased by 6.4% for one more year, what would the increase be in dollars?

\$690,200 = 100%

X = 6.4%

(690,200 x 6.4 ) / 100

=44,172.80

Therefore, the increase would be \$44,172.80

## For a worker on \$86,237 per year, what wage increase do they need so they have an extra \$44,173 in their hand at the end of the financial year?

First we calculate the after tax income on \$86,237.

From the ATO rates table below, \$86,237 – \$37,000 = \$49,237.

32.5% of \$49,237 is \$16,002.

\$16,002 + \$3,572 = \$19,574

Therefore the after tax income is \$86,237 – \$19,574 = \$66,663

Source for the above image: ATO website > Rates > Individual income tax rates

Now we take 2% of \$86,237 for the medicare levy, which is \$1,725.

\$66,663 – \$1,725 = \$64,938

Add our after tax income of \$64,938 to the one year increase of \$44,173 and we have:

\$64,938 + \$44,173 = \$109,111.

This gives us the after tax income of \$109,111 but we need the gross figure now.

Using numbers (excel for pages) and the settings from above we find the gross wage required below.

The gross wage required is \$158,374.

So what’s the percentage wage growth increase from \$86,237 in 2020 to \$158,374 in 2021?

( \$158,374 x 100 )? / \$86,237

=183.65

Therefore, the answer to the question is 83.65%.

Wage growth would need to be 83.65% over the next 12 months for a worker earning the average wage of \$86,237 for it to be possible to keep up with house prices increasing from \$690,200 by 6.4% for one more year.?