I was 12 years old in 1999. Like most kids, I had hobbies and interests, but I was also fascinated by numbers. I always have been. While some kids memorised football statistics, I found myself paying attention to house prices, business stories, economic news, sales figures, interest rates and anything else that involved trends and numbers. If there was a graph, a table or a statistic, I was interested.
Growing up in Adelaide, I remember sitting at the kitchen table flicking through the real estate section of the newspaper dreaming of which house I’d buy when i moved out of home. Back then, property advertisements were everywhere. Entire pages filled with family homes, acreage properties and new developments.
What stands out to me now is not the houses themselves.
It is the prices.
I vividly remember our neighbours selling their four-bedroom family home on a large suburban block for around $90,000.
My father was impressed by the value.
At the time, that felt like a lot of money to me. I was 12 years old. Ninety thousand dollars sounded enormous.
Today, $90,000 won’t buy a lot.
I also remember regularly seeing advertisements for respectable middle-class homes priced between $80,000 and $150,000. If a property was particularly large, architecturally impressive or located in a desirable suburb, it might be listed for $200,000 or more. I would own that $250,000 2 storey family mansion one day I proclaimed pointing at the ad.
Back then, a $250,000 house felt expensive.
Today, in many parts of Australia, $250,000 barely buys a vacant block of land.
As someone who has spent decades watching markets, analysing trends and following economic news, I often find myself wondering whether we have reached a point where Australian house prices have become disconnected from reality.
Because when I compare what I saw in 1999 to what I see today, the question becomes difficult to ignore.
The year that changed Australian housing
Looking back, 1999 may prove to be one of the most important years in modern Australian housing history.
It was the year the Howard Government introduced significant changes to capital gains tax.
The reforms reduced the tax payable on capital gains by introducing the now-famous 50 per cent capital gains tax discount for individuals.
The intention was not specifically to fuel a property boom.
The policy was designed to encourage investment and simplify the taxation system.
However, many economists argue the changes had unintended consequences.
Combined with negative gearing, lower interest rates and growing population pressures, property became an increasingly attractive investment vehicle.
At around the same time, governments were also introducing and expanding various first-home buyer initiatives designed to help younger Australians enter the market.
John Howard’s First Home Buyer Grant
The logic seemed sensible. Help first-home buyers save a deposit. Help them enter the market sooner. Help more Australians achieve home ownership.
My dad always taught me never pay full price for anything. He was a master negotiator. Easily 30% off retail of anything. Houses? Real estate agents hated him! He had a knack for being the only viable buyer and was able to push the price down. For me, I do the same. But, I have always seen first home buyers ready to pay a premium, even in a quiet market they’ll ‘pay the asking’ out of excitement.
I think too many people got excited and bought too quick, paying without negotiating too much.
But economics often works differently from politics.
When demand increases faster than supply, prices tend to rise.
And that appears to be exactly what happened.
One house that tells Australia’s story
Sometimes broad economic discussions become easier to understand when viewed through a single example.
The house next door to my childhood home tells a fascinating story.
In 1999, it sold for approximately $90,000.
In 2006, it sold again for around $170,000.
In 2015, it changed hands for approximately $420,000.
Today, in 2026, it is estimated to be worth around $750,000.
That represents growth of more than 733 per cent.
Think about that for a moment.
The house did not become seven times larger.
The land did not increase sevenfold.
The number of bedrooms remained the same.
The physical asset changed very little.
Yet its value exploded.
That single house mirrors a broader trend that has played out across Australia.
Anthony Albanese admits the problem
One of the most striking developments in recent years has been hearing politicians openly acknowledge the scale of the issue.
Prime Minister Anthony Albanese recently made headlines by admitting that the current trajectory of house prices is unsustainable.
He stated:
“Since 1999 house prices have risen by more than 400 per cent, more than two times as fast as average incomes in the same period.”
That figure alone is remarkable.
Four hundred per cent growth.
Not over a century.
Not over several generations.
Over roughly 25 years.
Albanese went further, arguing that changes introduced in 1999 had unintended consequences.
“The changes that the Howard government made to capital gains tax in 1999 were meant to boost investment in the share market. Instead, they turbocharged property investment year after year.”
Whether you agree with his politics or not, it is difficult to ignore the underlying mathematics.
If house prices rise at more than twice the rate of incomes for long enough, affordability inevitably deteriorates.
The Prime Minister also pointed to declining home ownership among younger Australians:
“The rate of home ownership among Australians aged 25 to 34 has fallen by 7 per cent.”
That statistic perhaps tells the story better than any property chart.
The impossible question politicians cannot answer
One of the most revealing interviews I have seen recently involved Housing Minister Clare O’Neil.
She was repeatedly asked a simple question. Do you want house prices to go up or down? The answer should be straightforward. Yet politically, it is almost impossible.
O’Neil repeatedly responded that she wanted:
“Sustainable growth.”
The interviewer kept pressing.
Did that mean up?
Or down?
Again, the answer was sustainable growth.
Eventually, O’Neil acknowledged:
“I don’t think we want to see a 400 per cent growth over 20 years which is what we’ve seen. But I do want to see property prices grow. I want to see them grow sustainably for the country.”
That exchange perfectly captures Australia’s housing dilemma.
Most homeowners do not want prices to fall.
Most aspiring homeowners need prices to become more affordable.
Governments are attempting to satisfy both groups simultaneously.
My own property journey
This issue feels personal because I have lived through it myself.
In 2011, I purchased my second home for $220,000.
At the time, it felt like a significant financial commitment.
In 2019, I subdivided the property.
Fast forward to 2026 and each resulting property is worth close to $900,000.
From a financial perspective, I have benefited enormously.
I would be lying if I pretended otherwise.
But here is the uncomfortable truth.
If I were a first-home buyer today, trying to purchase those same properties at today’s values, I would struggle.
Perhaps I could not buy them at all.
That reality creates mixed emotions.
As a property owner, rising values increase net worth.
As someone who remembers the market of the late 1990s and early 2000s, I cannot help but wonder what opportunities are being lost for younger Australians.
Have we reached the limits of affordability?
Economist Shane Oliver has noted that Australian housing experienced one of its best buying opportunities during the mid-1990s when property prices were significantly below their long-term trend.
He described that period simply:
“This was a great time to get into Australian property.”
The years that followed created one of the strongest housing booms in Australian history.
According to Oliver:
“This set the scene for the start of the current long-term boom in property prices in the second half of the 1990s.”
The consequences are visible everywhere.
House price-to-income ratios have surged.
Deposit requirements have ballooned.
Mortgage sizes have exploded.
And younger Australians increasingly require either family assistance or exceptionally high incomes to enter the market.
The question nobody wants to ask
The difficult question is not whether house prices can continue rising.
History shows they probably can.
The real question is whether society can sustain it.
If the neighbour’s house that sold for $90,000 in 1999 eventually reaches $1 million, who buys it?
If my former $220,000 property reaches $1.2 million or $1.5 million one day, who can afford it?
At what point do prices become disconnected from the incomes of the people expected to buy them?
At what point does home ownership become increasingly dependent on inheritance rather than earnings?
These are not political questions.
They are mathematical ones.
Final thoughts
I was 12 years old when I watched a four-bedroom Adelaide home sell for $90,000.
Since 1999, I have watched Australian housing transform from something many working families could realistically aspire to own into something that increasingly feels out of reach for many young Australians.
I have benefited from rising house prices.
Many Australians have.
But I also recognise that the next generation faces challenges that simply did not exist when I was growing up.
Maybe house prices do not need to crash.
Maybe they should not.
But if incomes continue to lag while housing continues to surge, something eventually has to change.
Because the Australian dream was never supposed to be about watching property values rise endlessly.
It was supposed to be about giving ordinary Australians a realistic chance to own a home of their own.
