Three generations of this Melbourne family tell the story of Australia’s skyrocketing house prices.

When Neil Cornish was a little boy in the 1950s, he and three friends built a model village in their backyard.

For fun, the boys began trading houses for imaginary coins.

Over the course of two years, the village became larger and larger, and the young owners became more and more ambitious.

“We started building roads and moss gardens,” Neil recalls.

And then one day four boys decided to introduce more “coins” into the system.

Suddenly everything became too expensive, the game was no longer fun, and the city was abandoned.

“It just seemed to blow it all away,” Neil says.

Now in his 70s, Neil wonders whether the game was prophetic.

This thought is caused by the unification of three generations of his family.

He and his wife Jenny sit at one end of a large gray sofa at a right angle in their daughter Megan’s home. The group discusses their experience of buying their first home.

First generation: Jenny and Neil

It was the mid-1970s, Jenny and Neil were newlyweds and looking for a place to raise their family.

The first house they looked at was a “beautiful” house in Mulgrave, in Melbourne’s south-east.

It was advertised along with a eucalyptus tree, a rock garden and an antique plow decorated in the colors of the era.

“The toilet had purple curtains, black and white wallpaper, lime green and orange,” Jenny recalls. “That was great”.

But at first the couple did not want to buy the first house they came across.

“I think the real estate agent was very smart because he took us to about five or six other houses and they were terrible, and we rushed back to this one and said, ‘He’ll get us,’” Jenny says.

The couple bought the house in 1974 for $24,975, spending 19 months saving a $5,000 deposit.

According to CoreLogic, the same property (after some renovation) is now valued at $1 million—an “incredible” price, according to Jenny, for a small home.

“We should have kept it,” Neil jokes.

Second generation: Megan and Damian

The couple’s daughter, Megan Templeton, shared the same sentiments about her family’s first home.

“Having a place to call home was very important,” she says.

“Having two children, juniors and juniors, we wanted to settle down and be able to create a little paradise for ourselves.”

She and her husband Damian bought the Ringwood home in 2003 for just over $370,000.

The three-bedroom property is currently listed at $1.22 million.

According to Megan, little has changed in the house, although the yellow exterior walls, which she insists were taupe, have been repainted.

It took Megan and Damian six years to save up a deposit while raising two young children, but Megan says there was never a concerted rescue effort.

“I think we were happy with the rental…there was no rush for us.”

Third generation: Daniel and Emma

Not so for their son Daniel Templeton and wife Emma, ​​who were desperate to escape the increasingly expensive rental market when they bought the property in mid-2024.

“Prices went up and up,” says Daniel.

The couple’s lease was running out and it took three months to find a three-bedroom townhouse in Croydon, which they bought for $770,000.

“It was the only house we went into and I thought, ‘Oh, this fits the bill,’” says Emma.

Even though Daniel diligently saved 20 to 30 percent of his salary, he says the “bank of mom and dad” was integral to keeping his home secure.

“Without help, it would have taken us about five years (to save the deposit),” he says.

All three generations started out buying a three-bedroom home in Melbourne’s eastern or south-eastern suburbs, but with each successive generation saving a deposit and servicing the mortgage became increasingly difficult.

Megan’s brother Jonathan Cornish is a Melbourne-based mortgage broker who, over the past 15 years, has seen Australians accept increasingly complex financial arrangements to get their foot in the door.

“The percentage of applications that involve a government scheme, or a parental guarantee, or a gift from a parent can be 80 percent or higher,” he says.

In many ways, the Cornish-Templeton family reflects the wider market.

ABC analysis shows that even with rising wages and interest rates, young Australians are having a much tougher time than previous generations.

Housing crisis reflected in data

Based on his childhood game of trading model houses for “coins,” Neil Cornish may have always been destined to become an accountant who kept meticulous financial records.

He can show that when he and Jenny bought the house in 1974, the cost of the house was three times the couple’s annual salary. The mortgage rate was 8.25 percent, and mortgage payments ate up about a quarter of the couple’s income.

Our analysis shows that this share has increased dramatically in recent decades.

By 2003, when Megan and Damian bought their home, about 35 percent of the average household’s income was going toward paying off the mortgage.

By 2024, when Daniel and Emma bought a home, that figure had risen to 46 percent—almost double what their grandparents spent.

To model the situation facing the average family, the analysis used CoreLogic median house price data, median household disposable income data from the Australian National University’s Center for Social Policy Research and historical home loan interest rates.

The time it takes to save up for a down payment on a home has also increased dramatically.

According to the ABC model, in 2003 it would have taken the average family 8.4 years to save a 20 percent deposit on the average home.

By 2024, the time required to maintain a deposit has increased to 10.4 years.

It takes 13 years to save a deposit in Australia’s most expensive city

The more expensive the city, the longer the deposit accumulates.

At the start of 2024, it took the average Sydney family nearly 13 years to save up a deposit on an average-priced home.

At the other end of the spectrum, it took the average Darwin household just over five years.

In Brisbane and Adelaide it took approximately 11 years, in Melbourne and Hobart nine and a half years, and in Perth just over nine years.

The same pattern is evident in how much first home buyers spend to pay off their mortgage.

Property data company CoreLogic has similar availability metrics, and research director Eliza Owen says the results roughly mirror ABC’s analysis.

By mid-2024, CoreLogic’s model showed the average Australian household was spending half their income on their mortgage when they bought an average-priced home, and it took them just over 10.5 years to save up for a 20 per cent deposit.

How housing affordability affects the country

Ms Owen says declining affordability has meant Australians are having children later and spending less on education, skills development, leisure and entertainment.

“This is contributing to a slowdown in economic activity and growth in certain sectors of the economy,” she says.

The growing dependence on the bank of mom and pop is also worsening inequality because not everyone has wealthy parents, she said.

Ms Owen does not predict housing affordability will improve anytime soon, as any relief from interest rate cuts is likely to be offset by rising house prices resulting from the same decline.

She says the ideal long-term outcome would be a slow, ongoing decline in home prices that doesn’t cause panic or push owners into negative equity, but does increase affordability.

“We need to sort of wean Australians off the wealth growth that comes from property, and that means providing other investment alternatives and other ways to build wealth,” she says.

A children’s game played out in reality

Remembering how he and his friends ruined their childhood game by littering the toy village with coins, Neil wonders if the same mistake was made in the real world.

“You could argue that this is exactly what is happening now, that sooner or later this bubble will burst,” he says.

Independent economist Saul Eslake says the Nile toy village, although simplistic, reflects exactly what happened.

“We have 60 years of evidence showing that anything that allows Australians to pay more for housing than they would otherwise lead to more expensive housing, not more people owning that home.”

This includes grants for first home owners, stamp duty relief, tax breaks for property investors, mortgage deposit guarantee schemes, lenders’ mortgage insurance and equity schemes, he said.

Another injection of cash into the property market came in March 2020, when the Reserve Bank of Australia (RBA) pumped $188 billion into the economy through its Term Financing Facility (TFF).

The money was intended to help businesses through the pandemic, but an RBA audit found large sums went towards housing construction.

The program review acknowledged that monetary policy “contributed to rising home prices” and that home loans rose more than during any low-interest-rate phase of the last five economic cycles.

Eslake says that by relying on rock-bottom interest rates, TFF has pushed prices higher.

Its launch coincides with a house price boom that has seen the total value of homes in Australia rise by 50 per cent since the program began, from almost $7.3 trillion to just over $10.9 trillion.

The impact of this boom hit first home buyers – Daniel and Emma’s generation – hardest.

Even though their journey was very different from previous generations, the couple says the experience of moving into their first home was likely much the same.

“We got the keys on Friday night and went there with a picnic blanket, pizza, a bottle of wine and our dog. It was just surreal looking around,” says Daniel.

“I’m very glad that this is all ours,” adds Emma.