Younger Australians have been significantly disadvantaged, struggling to save for home deposits, a situation often referred to as “the lost decade.” Research from the think tank Per Capita reveals that low wage growth from 2012 to 2022 has had lasting effects on young people’s financial stability. Their analysis indicates that the average wage is nearly $12,000 lower than it would have been had wage growth adhered to historical averages.
Over this ten-year period, real wages increased by a mere 0.2 per cent annually. This stagnant wage environment has combined with soaring house prices to effectively lock Millennials and Generation Z out of the property market. Emma Dawson, the report’s lead author, emphasised the importance of wage growth in facilitating housing affordability. She pointed out that if today’s homebuyers had experienced wage growth comparable to that of their parents, they would collectively have earned an extra $54,000 during the lost decade, sufficient to secure a 20 per cent deposit on a home.
The Per Capita Australian Housing Monitor found that, by late 2022, nearly two-thirds of young Australians believed they could only afford a home through inheritances. Per Capita estimates this lost income totals more than $600 billion for the decade, painting a bleak picture of social mobility in what was once viewed as a land of opportunity.
Dawson highlighted that the prevailing belief among young Australians is that they must wait for a loved one to pass away before they can purchase a home. This sentiment starkly illustrates a decline in social mobility, a critical aspect of fairness in the nation. While initiatives to increase housing supply remain essential, Dawson noted that improving wage growth is equally vital for enhancing housing affordability.
Statistical data underscores troubling trends, with homeownership among individuals in their early 30s falling from 60 per cent in the 1980s to just above 40 per cent today, according to the Australian Bureau of Statistics. Additionally, the number of first-home buyers nationwide decreased by 3.2 per cent in September 2024.
This scenario not only highlights the economic challenges that younger Australians face but also instigates broader discussions around wage policy and housing market strategies essential for fostering a more equitable society.