The Lost Decade
Over the last ten years or so, from 2012 to 2022, Australia has experience very little wage growth. These ten years are now referred to as “the lost decade.” Furthermore, the Australian housing crisis has left a grim future for young Aussies. According to researchers at Per Capita, wage growth has not kept up with its historical pace. In the ten years leading up to 2022, real wages only increased by about 0.2 percent each year.
This poor wage growth, coupled with quickly increasing housing prices, has effectively prevented young Aussies of the Millenial and Gen Z demographics from being able to afford a home.
First Time Homebuyers
The average home-buyer in Australia is a mid-30s couple looking to borrow under $500,000. If wages had gone up in a manner consistent with the historical data, these home-buyers would have made an additional $54,000 over the last ten years. This amount would have been sufficient to cover the down-payment of 20 percent on their home.
When Per Capita’s Australian Housing Monitor asked young Aussie adults about purchasing a home, about 75 percent of them believed the only way they’d ever be able to afford one is if they received a large inheritance. Additionally, even for the people who did manage to buy a home in the last decade, the Australian Housing crisis has left many families in a situation where they are unable to upgrade their home.
Data Shows Grim Future
Since 1980, home ownership among Australians in their 30s has dropped 60 percent to around 40 percent. Additionally, during the lost decade, young Australians did not see a significant increase in their wages compared to what their parent experienced from 1991 to 2011. To make matters worse, property prices have exploded. However, according to Per Capita’s report, there’s more variation in the price of property than there is in wages.
Furthermore, “the data do not suggest that bigger wage increases drive higher home prices or vice versa,” the paper states.
The total number of homeowners nationwide has dropped by about 3.2 percent according to figures taken from September 2024.
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