For Mady, a mother of four living in Rockhampton, Central Queensland, the daily reality of managing a household has become a “pressure cooker.” To cope with rising interest rates and the increasing cost of living, her family has been forced to cut subscriptions, pause home renovations, and reduce spending on children’s school sports.
The financial strain is compounded by urgent maintenance needs at her home, including termite control and addressing “concrete cancer” in the house stumps. To help rebuild their savings, Mady and her neighbours are planning a community garage sale this June.
A Widening Intergenerational Divide
Mady’s struggle reflects a broader, systemic issue identified in recent research from the Actuaries Institute. The study suggests that inequality between younger and older Australians is widening and could reach record levels within the coming years.
While all generations have seen improvements in wealth since 2000, outcomes for younger people are worsening in three critical areas: the economy, housing, and the environment. Dr. Hugh Miller, a lead author of the report, noted that this trend creates a significant equity issue when compared to older generations.
The housing market has become a primary driver of this inequality. According to economist Saul Eslake, home ownership for those under 35 has regressed to levels seen in 1947, while those aged 35 to 44 are seeing ownership rates similar to 1954.
In contrast, home ownership among those aged 65 and over has remained near its 1966 peak. This disparity is reinforced by the fact that it now takes an average of 11 years to save for a 20 per cent deposit, with mortgage servicing consuming roughly 45 per cent of weekly income.
“The issue is whether young people will continue to have access to the same sort of ladder of wealth accumulation that others have had,” said Dr. Miller.
Stagnant wages have further hindered the ability of younger Australians to build wealth. Dr. Miller noted that wages have remained “very flat” for over a decade, failing to consistently rise above inflation as they have in previous historical periods.
Environmental Risks and Insurance Costs
The crisis is not limited to wages and housing. environmental factors are also playing a role. Adverse climate-related indicators, such as rising CO2 and temperatures, are creating a crossover effect that impacts housing affordability.
As extreme weather events increase, the costs of adaptation or insurance premiums may rise. Data from Finity shows that home insurance premiums have already increased by 51 per cent over the past five years.
Dr. Miller warned that certain communities may become particularly vulnerable if they lack the economic resources to move or afford these escalating insurance costs.
Vulnerabilities in Older Generations
While the housing gap primarily affects the young, inequality also manifests in older age. Mr. Eslake highlighted a growing cohort of older women living near or in poverty, often due to a lack of home ownership following family breakdowns or career breaks taken for caregiving.
This gender gap is reflected in superannuation balances. Data from AFSA shows that in June 2022, the median superannuation balance for men aged 60 to 64 was $205,385, while for women in the same age bracket, it was $153,685—a difference of 25.2 per cent.
economists point to emerging concerns regarding the affordability and suitability of access to aged care for older Australians.
Looking Ahead
As economic and environmental pressures continue, the gap between generations may continue to expand. Increased frequency of extreme weather events could lead to further increases in adaptation costs and insurance premiums.
The federal government has introduced legislation to change the capital gains tax discount and negative gearing, which may impact how housing inequality is addressed in the future. Whether younger Australians can regain access to the wealth-accumulation tools available to previous generations remains a critical question for the nation’s economic stability.
Frequently Asked Questions
Why is intergenerational inequality increasing in Australia?
Inequality is growing due to worsening outcomes for younger people in the economic, housing, and environmental domains, contrasted with the relative stability of older generations.
How has the housing market affected younger Australians?
High dwelling value-to-income ratios and stagnant wages have made home ownership difficult, with ownership rates for those under 35 falling back to 1947 levels.
How does climate change impact housing affordability?
Climate change and extreme weather events can lead to increased costs through higher insurance premiums and the need for home adaptation.
How might these shifting economic patterns change the way your own family plans for the future?
