To answer the question, we need three things:

- Average Australian house price from 2000 to 2020
- The average yearly increase in house prices from 2000 to 2020
- 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.** **