In this discussion paper, we estimate the total cost of a mortgage as a proportion of wages over the 30-year life of a standard home loan. To do this, we compared home prices, mortgage rates, and wage changes to see what proportion of a median income would go to covering the cost of the median mortgage.

The results reveal a significant increase in the lifetime expenditure on the median mortgage over three decades, and a consequent reduction in the spending capacity of average Australian households.

For a Silent Generation family buying in 1970, the average repayment cost over the course of the mortgage was 11.2% of their gross income.

For a Baby Boomer family buying a home in 1985, the average repayment cost over the life of the mortgage came out at 19.5% of gross income.

For a Generation X family though, who bought in 2000 and have approximately nine years left to go on their mortgage, we estimate they will spend 25.5% of their gross income on servicing mortgage debt.

That is a 130% increase in the lifetime cost of owning a home over 30 years.

The household debt of the Silent Generation family was worth around 3.7 years of median full-time male annual earnings in the first year of the mortgage, but after five years over half of the debt had been inflated away, to just 1.8 times annual earnings.

Thirty years later, the initial mortgage debt taken on by the Generation X family equated to 5.6 times median full time male annual earnings, and was still at 4.1 times after five years.

We estimate the Gen X family is paying $1425 per month on their mortgage in 2021. If they were on the same repayment trajectory as the Boomer family their monthly bill would be $910, while if they were on the Silent Generation trajectory it would be just $440 a month.

For the individual family, this is a huge loss of income – almost $1,000 a month – that would be far better directed toward education, health or day-to-day living expenses. For the nation, it represents a significant constraint on household consumption, which accounts for more than half of Australia’s economic activity.

With an increasing proportion of household wealth tied up in unproductive assets rather than circulating through the economy, the high cost of buying a home is likely to be an ongoing handbrake on Australia’s economic recovery from the COVID-19 pandemic.

Read the full report here.


Per Capita is an independent progressive think tank, dedicated to fighting inequality in Australia. They work to build a new vision for Australia based on fairness, shared prosperity, community and social justice.