Australia’s recent property boom has been fueled by strong immigration and a chronic shortage of new homes—factors often held up as justification for further price rises. But with prices now reaching record highs, even the lure of Australia’s “free” social benefits—Medicare, the NDIS and our world-class education system—may no longer outweigh the steep cost of living. Government budgets are under mounting strain, household debt is at unprecedented levels, and the Australian way of life still comes with a sizable admission fee.

In many respects, these strains mirror the conditions in the United States on the eve of the 2007–08 Global Financial Crisis. The question now is: how do today’s Australian household-income, debt and house-price ratios stack up against those critical pre-GFC peaks in the U.S.? Let’s dive into the numbers.

Australia’s Housing Metrics vs. US Pre-GFC Peaks

Current Australian Household Indicators (2024)

• Household Income (Average): Australian households have a high income by OECD standards. The average gross disposable income per household is about A$139,000 per year (2021–22)comparethemarket.com.au. On a per-person basis, this equates to roughly USD 37,433 net disposable income per capita, well above the OECD average of ~USD 30,500oecdbetterlifeindex.org.

• Household Debt-to-Income Ratio: Australia’s household debt is extremely elevated relative to income. In 2021–22, total household debt was about 1.88 times annual disposable income (i.e. 188% of income)comparethemarket.com.au. This is near record highs; by 2018 the ratio had already reached ~190% after decades of climbingrba.gov.au. (By comparison, the ratio was only ~70% in the early 1990srba.gov.au.) Such a high debt-to-income level is among the highest in the developed worldabc.net.au.

• House Price-to-Income Ratio: Australian home prices are very expensive relative to incomes. As of the latest data, the median dwelling price is around 9–10 times the median household income (a house price-to-income multiple ~9.7×)morningstar.com.au. This “median multiple” has surged to record territory – up from an average ~6–7× two decades ago – making Australia one of the least affordable housing markets globallymorningstar.com.au. (For context, housing is considered “severely unaffordable” once this ratio exceeds 5×.)

U.S. Household Indicators at 2007–08 Peak (Pre-GFC)

• Household Income (Median): Just before the 2008 Global Financial Crisis, U.S. incomes were lower than Australia’s are today. Median household income in 2007 was about $50,200 (USD) per yearepi.org. (In real terms this was roughly unchanged from the 2000 levelepi.org, reflecting stagnation in the mid-2000s.)

• Household Debt-to-Income Ratio: U.S. households ran up substantial debt prior to the GFC, peaking at about 130% of disposable income in 2007frbsf.org. This 130% debt-to-income ratio was an all-time high for American householdsfrbsf.org, fueled by easy credit and a housing boom. Notably, Australia’s current debt burden (≈188%) far exceeds that U.S. peak.

• House Price-to-Income Ratio: U.S. housing became very overvalued by 2006–07, though not to Australian levels today. At the height of the bubble (2006), the median house price reached over 7× the median annual household incomelongtermtrends.net. This ~7:1 price-to-income ratio was well above the historical U.S. norm (~5:1)longtermtrends.net. It began to revert when the housing bubble burst in 2007–2008. (For comparison, Australia’s price-to-income multiple ~9× is significantly higher than the U.S. peak.)

Key Indicator Comparison: Australia (2024) vs. U.S. (2007)

	Metric	Australia (Latest)	U.S. Pre-GFC Peak
1	Household income (annual)	~A$139,000 avg. per household (≃USD 37.4k per capita)comparethemarket.com.auoecdbetterlifeindex.org	~$50,200 median per household (2007 USD)epi.org
2	Household debt-to-income	188% (debt = 1.88× disposable income, ~2022)comparethemarket.com.au	130% (all-time high in 2007)frbsf.org
3	House price-to-income	~9.7× (median house price ≈9.7× median income)morningstar.com.au	~7× (at peak of 2006 housing bubble)longtermtrends.net

Table: Comparison of household income, debt, and house-price affordability indicators.

OECD Cost of Living & Standard of Living Context

To put these figures in context, Australia has both a high cost of living and a high standard of living relative to other OECD countries. On one hand, Australian households enjoy relatively high incomes and consumption levels: average disposable income per capita is about 22% above the OECD averageoecdbetterlifeindex.org (though still below the U.S., which is ~67% above average at USD 51k per capitaoecdbetterlifeindex.org). Material living standards in Australia are among the world’s best by measures like Actual Individual Consumption per capita and the OECD Better Life Index.

However, Australia also endures a high cost of living. According to OECD purchasing-power data, consumer prices in Australia are roughly 20–25% higher than the OECD average – on par with the United States (which is ~25% above average) and exceeded only by a few expensive countries (e.g. Switzerland, Israel, Iceland)oecdstatistics.blog. In other words, many goods and services cost a premium in Australia. High living costs, especially housing, erode some of the benefit of those higher incomes. For example, Australian households spend about 19% of their disposable income on housing costs on average (mortgages, rent, etc.), which is similar to other OECD nationsoecdbetterlifeindex.org but significant given their large mortgages.

Bottom line: Australia’s standard of living (incomes and consumption) is high by international standards, but so is its cost of living. This combination means that affordability is a challenge, particularly in housing. When we compare Australia’s current situation to the U.S. on the eve of the GFC, the contrast is striking – Australia’s economic fundamentals in 2024 resemble, or even exceed, some of the risk indicators of the U.S. housing bubble period.

Housing Market Vulnerability Insights

The data above highlight potential vulnerabilities in Australia’s housing market today. Key risk factors that analysts worry about include:

• Record-High Household Leverage: Australian households are carrying debt loads (≈190% of income) far higher than U.S. households did at the peak of the credit bubble (130%)frbsf.org. Such high leverage leaves families more sensitive to income shocks or interest rate increasesabc.net.au. The IMF notes that Australia’s household debt-to-income is one of the highest in the world, contributing to the country having among the greatest housing market risks globallyabc.net.au.

• Stretched Affordability Ratios: House prices relative to income are extremely elevated (near 9–10× income)morningstar.com.au, well above levels seen in the U.S. before its housing crash (7×)longtermtrends.net. This suggests Australian housing may be overvalued and prone to correction. Young buyers find it increasingly difficult to enter the market as price growth outpaces income growthaustraliainstitute.org.au.

• High Cost of Living & Low Wage Growth: Australia’s high cost of living, combined with recent slow wage growth, means real incomes are strained. Essential costs (housing, energy, etc.) consume a large share of incomes, leaving households with less flexibility to weather financial stress. Any uptick in unemployment or interest rates could force heavily indebted households to cut spending or default.

• Interest Rate Exposure: A large portion of Australian mortgages are on variable ratesabc.net.au. With interest rates rising from historic lows, debt-servicing costs are surging, squeezing household budgets. Economists warn that economies with high debt and variable-rate loans are especially vulnerable to defaults if rates continue to climbabc.net.au – and “both of those statements describe Australia’s situation”abc.net.au.

These factors have led observers to draw parallels between Australia’s current housing market and the conditions in the U.S. prior to 2008. While Australia’s banking standards and loan quality have generally been better (mitigating immediate financial contagion risk), the combination of sky-high house prices and debt is a point of concern. International organizations have flagged Australia’s housing market risk: for instance, the IMF in 2023 ranked Australia as the second-highest among developed countries for overall housing market risk (only behind Canada)abc.net.au.

In summary, Australia’s housing market appears vulnerable. Household debt and price-to-income metrics are at levels that exceed those of the US just before the GFC, underscoring the potential fragility. When paired with a high cost of living and rising interest rates, these indicators support the view that Australia faces significant housing affordability and stability challenges moving forwardabc.net.auabc.net.au. Stakeholders and policymakers are increasingly wary that without careful management (e.g. prudent lending standards and perhaps macroprudential measures), Australia’s housing market could be at risk of a painful adjustment.

Sources: Current Australian data from ABS and RBAcomparethemarket.com.aumorningstar.com.au; historical U.S. figures from Federal Reserve and Census datafrbsf.orglongtermtrends.netepi.org; OECD Better Life Index for incomesoecdbetterlifeindex.orgoecdbetterlifeindex.org; OECD/IMF reports for cost-of-living and risk contextoecdstatistics.blogabc.net.au.