- Older generations accuse Millennials and Gen Z of poor spending habits, while younger generations argue that Boomers benefitted from cheaper housing and policies that driven up property prices.
- Homeownership rates have declined over successive generations, with Millennials three times less likely to own a home today than Baby Boomers when they were the same age.
- Home prices rising faster than wage growth has made it significantly harder for today's younger generations to enter the property market.
- While Baby Boomers faced sky-high interest rates for a couple of years, they borrowed much less relative to income.
- Young generations have to take on far larger loans, leaving them vulnerable to rising rates.
Meanwhile, you'd hear young people say that Boomers buying all the good properties when they were cheap, refusing to downsize, owning investment properties, and negative-gearing their way to retirement have all but inflated house prices and made it harder for them with their stagnant wages to ever become homeowners.
Then we have Gen X, the forgotten middle child, many of whom entered the market with brighter prospects rates-wise only to be hit with a brick when home values soared rapidly and any kind of government assistance was next to nil.
The debate over which generation had it harder to buy a home in Australia depends on various factors. We have to look at interest rates, house prices, wages and jobs, and overall accessibility of debt and compare the cards each generation has dealt with to understand why everyone is complaining.
It's a decades-long debate, and frankly, you may not get a definitive answer if you raise the topic at the next family dinner.
'The Australian Dream': How buying a home has changed over the years
The Australian property market has undergone massive transformations over the past few decades. In a study published by the Australian Housing and Urban Research Institute (AHURI), the country's homeownership rate was approximately 68% in the late 1970s. This is around the time when the oldest Baby Boomers (born between 1946 and 1964) were starting a family
Owning a home was the dream and the goal for most Baby Boomers who saw their parents in the 50s and 60s, and later themselves, owners of "a detached house in the expanding suburbs or regional towns and cities of Australia".
But that dream was relatively more attainable then.
An analysis of Census data from 1991, 2006, and 2021 by the Australian Bureau of Statistics (ABS) showed that homeownership for those aged 25-39 years old has decreased over successive generations.
It found that 55% of 25-39 year old Millennials (born between 1981 and 1996) are homeowners, lower compared to 62% of Gen X (1965-1980) and 66% of Baby Boomers when they were the same age.
"The 25-39 year old Baby Boomers in 1991 were three times more likely than the 25-39 year old Millennials in 2021 to own their home outright," the ABS stated.
House Prices: When was it more affordable to buy a home?
In the 1970s and 1980s, the average house price in Australia was three to four times the median household income.
To illustrate, the average adult wage in the '70s was around $4,100, while an average Sydney house cost $18,700. Without accounting for inflation, it would take 4.5 times the average pre-tax income to become a homeowner in Australia's most expensive capital city. In inflation-adjusted dollars, that goes up to 5.2.
By 1981/82, the price-to-income ratio was close to 3, with an Australia-wide median after-tax household income of $15,000 (per the ABS) and a median dwelling price of around $48,000.
"The younger generations, having to start from scratch in a market where prices are proportionately much higher than they were generations back, face the biggest obstacle in saving for a home deposit," Sydney-based buyers agent Dean Berman told InfoChoice.
The price-to-income ratio of a home in Sydney has ballooned over the years that it would take a couple an average of 6 years and 8 months to save for a 20% deposit. (Image courtesy of Berman Buys on Facebook)
"In 1970 I believe you could buy a house for about $19,000 in Sydney, with wages at the time around $6,000 per year. Whereas in 2024, the median house price here was around $1.65 million with an average wage of around $70,000 per annum.
"That's x3 versus x23 annual income," Mr Berman pointed out.
Yikes.
Domain research found that it would take couples ages 25 to 34 an average of four years and nine months to save for a 20% deposit on an entry-level house. Stretch that to six years and eight months if you and your partner are buying in Sydney, or five years and five months if you're looking to become homeowners in Melbourne.
Ideally, today's homebuyers must save for a deposit equivalent to 20% of the full value of the home to avoid taking out a lenders mortgage insurance (LMI).
Indeed, to save for a deposit, many Millennials had to work two jobs.
"Me and my partner worked overtime, and I worked two jobs for more than two years to save enough deposit," Melburnian Michael Williams related.
"The current market is really worse for the younger generation as new prices of homes have gone up a lot compared to yearly increments of wages," Mr Williams added.
According to the ABS' wage price index (WPI), wages rose 3.2% over the 12 months to December 2024. Meanwhile, the median dwelling values nationwide in the same period rose 4.9%, per CoreLogic.
And it certainly didn't help that his partner doesn't have a "secure job".
However, their desire to become homeowners trumped their obstacles to getting there. Even if it meant they had to buy a house 50 kilometres away from the city centre.
"It's hard to go to work in the city and it takes a long time [to commute]. When public transportation isn't available, it's worse and you have to pay $80 for Uber," Mr Williams shared.
Michael Williams worked two jobs to save for their house deposit. (Image supplied)
"We always prefer to go back closer to the city and find a good house around it. However, it takes a long time to save that much."
Fortunately for the couple, their cleaning business helped them save for the deposit.
Based on data, expert opinions, and anecdotes, it does seem the hardest point for many young buyers - Millennials and Gen Z (1997-2012) - is saving enough towards a deposit.
But this doesn't mean Baby Boomers didn't have their share of challenges.
"I'm a Boomer and we had to work two jobs to save enough for a home deposit," Ron Lee shared.
The finance consultant added that if we are comparing experiences across generations, perhaps we should consider each other's priorities.
"We didn't cry and say, 'Nobody will give me a house. Boo hoo.'," Mr Lee said.
"Of course, there's the cliche of giving up smashed avocado on toast, which the last time I saw on the menu was $22. I still don't buy takeaway coffee locally, and instead of paying $5 to $9 each, I make it on my home espresso machine for less than 60 cents.
"It's all a matter of priorities, entitlement, and other factors," he said.
Who had it worse?
Smashed avocados, takeaway lattes, and $80 Uber fare notwithstanding, younger generations are the clear losers in this regard. Millennials and Gen Z are dealing with sky-high house prices relative to their incomes, requiring more dual-income households to afford a mortgage.
But here's the rub: the rise of two-income households has created another problem. Not only has it induced demand, which makes it much harder for single homebuyers to enter the market, but it also places dual-income households into a more vulnerable financial position.
As put forth by Elizabeth Warren (the former one-time US Presidential candidate) in her book The Two-Income Trap, families with two earners translate to bigger household expenses like childcare and commuting. And if one of them was laid off or dropped off the workforce because of injury or childbirth, it could potentially stretch their household budget and push them into bankruptcy unless they have built up a big financial cushion.
Read Also: Why You Need an Emergency Fund
Interest Rates: Who felt the biggest mortgage squeeze?
A mention of this debate will almost certainly prompt Baby Boomers to use the 17% interest rate card to justify their moaning. Surely they are well within reason, but let's look at it closely.
When the Reserve Bank of Australia (RBA) raised the cash rate to a crippling 17% in 1989, it made homeownership for many Baby Boomers a financial nightmare.
At the time, a $100,000 loan at a 17% interest rate would require monthly repayments of around $1,425 (or $3,692 in today's money). With an average full-time wage of around $26,000 per year, it meant that mortgage repayments consumed over half of a single pay.
However, it took only three years for sky-high interest rates to go down. By 1992, rates had stabilised to about 11% and further tracked downward.
Had they held off on their purchase for a few years, they could have secured a lower rate and forked over lower monthly repayments. The 8.75% rate in 1994, for instance, would only require $787 in monthly repayments ($1,757 in today's money).
It's all about timing.
Millennials and Gen Z on the other hand are dealt with historically low interest rates, with an RBA cash rate of just 0.10% in late 2020, making mortgage repayments cheaper - on paper. As house prices soared, however, buyers had to take on much larger mortgages.
A buyer in 2020 with a $1 million mortgage at 2.5% interest would have monthly repayments of around $3,950. Because of high loan balances, many younger buyers are paying more in total mortgage repayments over time, despite the lower rates.
As home loan interest rates rose rapidly since 2022, climbing above 6%, Millennial and Gen Z homeowners who bought at the peak of the property boom were squeezed and pushed into mortgage stress.
To illustrate, for someone with a $700,000 loan at 6.5%, repayments are now around $4,400 per month.
Who had it worse?
While Baby Boomers dealt with extremely high interest rates, they borrowed less relative to income. Meanwhile, Millennials and Gen Z are stuck with far larger loans that take decades to pay off. The mortgage squeeze looks different across generations, but the affordability crisis today arguably presents a tougher long-term challenge.
Government Handouts: Who had more support?
Concessions also play a pivotal role in making homeownership easier - and this is arguably where the younger generations fare better.
In the 1970s and 1980s, direct government assistance for homebuyers was relatively limited, whereas the late 1990s and early 2000s saw the introduction of more structured assistance programs.
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First Home Owner Grant (FHOG), introduced in July 2000, provides a one-off payment to those buying or building their first new home.
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Home Guarantee Scheme (HGS), launched in 2020, includes several initiatives that allow eligible buyers to purchase a home with as little as a 2% deposit without incurring LMI.
In addition to these programs, each state and territory offers specific initiatives, stamp duty concessions, and other incentives. These have helped many aspiring homeowners get onto the property ladder sooner and with fewer hurdles than they would typically have.
Millennial (39-year-old) homeowner Rose Bishop, for instance, was able to buy a home in 2022 with the help of the Victorian Homebuyer Fund. This program allows buyers to purchase a home with just a 5% deposit without having to pay LMI, with the government chipping in up to 25% of the purchase price in exchange for an equivalent share in the property plus equivalent capital gains.
"I don't currently struggle with my mortgage because I used the Victorian Government Homebuyer Fund scheme, and because I only bought a modest one-bedroom apartment," Ms Bishop shared.
Millennial homeowner Rose Bishop used the Victorian Homebuyer Fund to purchase her one-bedroom apartment. (Image supplied)
"Without the Fund I don't know if this would have been possible because I only have a mid-level government day job, I'm single, I bought without any family money or guarantor, and will never receive an inheritance."
However, homebuyers in this instance will have to weigh up the value of the government having an equity share in their home and ask what would happen if prices fell, or what happens if they can't pay their home loan anymore.
While these programs help reduce the entry barriers into Australia's housing market, their effectiveness in improving affordability remains a topic of ongoing debate. The main argument is that these government handouts, though they do what they are intended for, induce demand which then pushes prices up further.
Who had it worse?
You'd think Baby Boomers are the losers in this fight. However, despite the limited access to direct government assistance, they benefitted from a more affordable housing market with more favourable price-to-income ratios.
Meanwhile, Gen X buyers entered the market when interest rates were going down but property prices were going up, all with little to no government support to assist them onto the ladder. The forgotten middle child truly sits in the middle of a generational housing struggle, making them the transition generation in Australia's housing crisis.
The Cost of Living Crunch: Who had it easier?
Another complaint from younger people is that not only did the older generations, who have been accusing them of not making sacrifices, enjoy more affordable properties during their prime homebuying years but they also had more favourable circumstances.
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For one, university education was more accessible financially for Baby Boomers. In the mid-1970s, the Australian government abolished university tuition fees to allow more Aussies to pursue higher education without incurring significant debt.
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During the 1970s through 1980s, Australia experienced periods where wage growth outpaced inflation, leading to increased real wages.
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In the '70s, the labour force was growing steadily at an average of 3% every year on the back of the expanding Australian economy and growing population entering the workforce. Per the ABS, the participation rate rose from 60.2% in 1967 to 62.2% in 1974.
On the other side of the ring, Millennials and Gen Z contend with skyrocketing prices and are saddled with debt even before they enter the property market.
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The reintroduction of university fees and the establishment of the Higher Education Contribution Scheme (HECS) in 1989 - after the government felt the financial strain of free education - have resulted in significant debt for many Millennials and Gen Zs. HECS has since been expanded into HECS-HELP which includes additional HELP loans for certain courses and institutions.
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While the younger generations enjoy higher wages than their parents and grandparents 30 to 40 years ago, even accounting for inflation, wage growth has slowed since the Global Financial Crisis. Housing prices and living expenses rising faster than paycheques have led to reduced purchasing power.
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The modern job market has also seen a rise in casual and gig economy positions, leading to less job security and inconsistent income streams for younger workers.
Who had it worse?
Millennials and Gen Z are the undisputed losers here. The unfavourable economic landscape, marked by stagnant wages, substantial education-related debt, and increased living expenses collectively contribute to the difficulties younger generations encounter in achieving homeownership, let alone financial stability.
Additionally, the cost-of-living crunch not only impacts the homebuying power of the younger generations, it also makes it harder for them to build savings.
The InfoChoice State of Aussies Savings Survey published in July 2024 found nearly one-fifth of Gen Z have less than $1,000 in savings, and more than one-third have no more than $5,000. Meanwhile, nearly a third of Baby Boomers have $100,000 or more saved for a rainy day or whatever they please.
So who really had it harder when it came to homebuying in Australia?
Indeed, there is truly no one answer to this debate, considering that buying a home encompasses several factors. Everyone, regardless of age and the time when they decided to enter Australia's housing market, has had to overcome different hurdles.
Baby Boomers had a low-cost, high-interest era, while Millennials and Gen Z are facing high-cost, low-interest struggles.
And sitting between this affordability debate are the Gen X buyers who had a mix of advantages and challenges. They didn't face the astronomical house prices of Millennials and Gen Z, but they also weren't buying in an era of single-income affordability like Boomers.
People in the know also have varying views.
Property services firm director Alex Haddad believes Baby Boomers had it the hardest, followed by Gen X.
"Not only did the Baby Boomers grow up with uncertainty, but they also grew up working hard to survive and formed a great deal in Australia and society as we know today," Mr Haddad said.
Property services agency director Alex Haddad (Image supplied)
"The next hardest generation would be Gen X, as when they started entering the market, the late '80s and '90s, is when we saw the first property boom. There was no government assistance, wages were not met with the prices, interest rates were high and usually you had to have a 20% deposit, and loan terms were 25 years."
Huw Williams, a moving company founder, believes Millennials are winning the "who's the biggest loser" debate, hands down.
"I'd say each generation faced unique challenges. But if I had to pick, Millennials seem to have had the most difficult path, given the combination of high prices, stagnant wages, and strict lending practices," he said.
But maybe it's not the Boomers, Gen X, Millennials, or even Gen Z who had it harder. Perhaps the worst is yet to come - for Gen Alpha (born between 2010/13 and 2024/25).
"If the housing market continues at a growth rate of say 5% per annum, by the time you are 20 years of age (if you were born in 2020) a median house price of $1.65 million [in Sydney] could literally have doubled, meaning the median price could be over $3 million," Mr Berman said.
"For most 20-year-olds in today's market, a $3 million house doesn't seem that realistic to achieve as a first purchase."
Well, better make it big on social media - or whatever would be the next big thing in a few years.
Header image by Freepik
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