Home prices adjusted to inflation expose huge baby boomer wealth

Hopeful Sydney homebuyers are paying substantially more money for properties relative to the cost of everything else than any recent generation before them, alarming new analysis has revealed – rubbishing claims baby boomers had it harder because of higher interest rates.

The exclusive PropTrack study showed current prices were four times higher than in 1980 once adjusted for inflation, with a typical house back then costing $65,000, the same as $338,000 in today’s money.

It’s a far sight from the $1.47 million Sydney houses are typically selling for in 2025.

The research measured housing costs across each decade, showing property prices over the 1990s, 2000s and 2010s were also markedly cheaper than today when compared to other living costs at the time.

Sydney’s $187,000 median house price in 1990 was equivalent to $447,300 in today’s money, while the $285,000 median in 2000 was worth $544,000 in 2025 dollars.

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This Castle Cove home sold in 1987 for $415,000, equivalent of $1.2m in today’s spending power. It sold again this year for $4.6m.

Even buyers who snapped up homes in 2010 paid significantly less than today in real terms. The average house back then cost $600,000, which would translate to about $874,300 once adjusted for inflation.

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REA Group economist Eleanor Creagh said the incredible differences in the real cost of housing over the decades showed current first-home buyers faced challenges like no generation before them.

“To boil down the challenges for first-home buyers to overspending on travel or smashed avocado is narrow and simplistic,” she said.

“Every generation has its own unique struggles but on the whole today’s buyers are navigating a fundamentally different landscape with structural housing barriers baby boomers did not have.

“The deposit and stamp duty burden is much higher, affordability is more stretched and prices have vastly outpaced wage growth.”

Home prices in each decade and what they cost in today’s dollars. NSW real estate.

Ms Creagh said home prices in 2025 were significantly more expensive than the real costs of housing in the 1980s, 1990s and 2000s because of sweeping cultural, social and economic changes.

These included the rise of dual income families as the predominant class of buyers and an interrupted run of economic growth between 1991 and 2020 that saw Australia stave off a recession.

Markedly lower interest rates than in the 1980s and 1990s, and the resulting boost in spending power this gave buyers, was another factor that drove up prices, Ms Creagh said. Building costs have also risen.

“There are a lot of factors,” she said. “The Australian population has grown by about 10 million since the 1980s and most of that growth has been concentrated in city markets where the supply of new housing has been constrained.

“There’s also been a cultural shift. Property is a much more popular vehicle for wealth creation and when you combine that with economic deregulation and tax incentives, it’s helped push prices up.”

Home prices adjusted for inflation across each decade. NSW real estate.

PropTrack economist Angus Moore said the lower prices paid by previous generations, even once adjusted for inflation, indicated younger people had a harder entry into the housing market.

“The deposit hurdle is just unequivocally harder than it was four or five decades ago, and that has manifested in home ownership rates which have fallen over those years,” Mr Moore said.

Young people were taking longer to enter the market, relying more on family support to stump up a deposit, or making use of government incentives to buy with a smaller deposit, Mr Moore said.

McGrath Hunters Hill agent Antonios Kanis said decades of price gains, while being an incredible wealth creator for owners, have come with a downside.

“Some homeowners want to move but can’t because if they sold they wouldn’t be able to get back into their own area. There’s always a shortage of stock and that keeps prices high,” Mr Kanis said.

Malcolm and Georgia Clark, with kids Sloane, 9, Elle, 6, are selling their Wareemba house. Picture: Justin Lloyd.

Among the homeowners in this position are Wareemba residents Georgia and Malcolm Clark: they wanted to upsize from their current duplex to a house in the area but prices have exploded in the eight years since they bought.

“We love it here, it’s got such a great community, but we’ve become priced out,” Ms Clark said, adding that they were now selling up their home at 345 Great North Rd and planning to relocate to a cheaper area.

“Those recent rate cuts will help with borrowing power but we also think it might heat up prices. We just hope that because we are buying and selling in the same market it will balance out.”

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