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While houses in Australian capital cities were becomingly fantastically expensive, another economic phenomenon was quietly bubbling away, and now one of the all-time classic pieces of budgeting advice has lost its potency.
“You’ll never own a home if you keep going on all those holidays!” exasperated parents tell their Millennial children who are busy packing for another exotic adventure. You might have found yourself on the giving or receiving end of these words more than once.
But travel has become so cheap, relative to property, that it has become somewhat of a consolation prize for younger Australians who have temporarily surrendered their home ownership goals.
Just have a look at how the calculation has changed over the course of a generation.
Travel versus property over time
In 1981, return airfares to London cost the equivalent of $6900, according to Flight Centre, while a 20 per cent deposit on a median-priced house in Melbourne was $33,900 in today’s money.
It’s actually extraordinary, now we have many people who are not to be considered rich who travel overseas frequently.
--- Simon Kuestenmacher, director of research at The Demographics Group
Now that return flight costs about $1300 and the 20 per cent deposit in Melbourne is $180,700 – around $235,000 in Sydney.
That means, for Melbournians, a deposit was equivalent to five trips to London back then, and now it’s between 139. A Sydney deposit is worth 180 flights to London.
While property was becoming astronomically expensive, travel was becoming (relatively) cheap.
Travel has nowhere near the financial impact for current first homebuyers as it did for the previous generation. It’s not even close.
Of course, travel still means a backwards step for any saver on a budget – the point is, when it comes to property, it’s a much smaller slice of a much bigger pie than it used to be.
Meanwhile, it’s not actually the youth of Australia who are going travel-mad.
Who’s making the most of cheaper travel?
In the early 1970s, return flights from Sydney to London cost around three months’ wages, now it costs less than one week’s pay, according to Flight Centre and ABS data.
Older Aussies can really feel that difference, which might be why they’re so keen on heading overseas.
The latest household expenditure data from the Bureau of Statistics, released late last year, shows a weak rise in overseas travel spend from 25-43-year-olds in the past decade, but a boom in spending from those aged over 50.