Key takeaways
For a lot of the twentieth century, there was a robust perception: every technology could be higher off than the final.
That contract—higher monetary prospects, simpler homeownership, earlier retirement—is now unsure for Millennials and Gen Z.
The youthful generations aren’t essentially worse off, however they’re following a special, usually delayed, path.
For a lot of the twentieth century, there was a extensively accepted social contract: every technology could be higher off than the one earlier than it.
Dad and mom labored arduous so their youngsters might go additional, financially, socially, and personally.
And for many years, that deal held true.
However in the present day’s youthful Australians, notably Millennials and Gen Z, are questioning if that contract has been quietly ripped up.
It’s not assured that your youngsters will personal a house sooner, retire earlier, or accumulate extra wealth than you probably did.
So are they worse off? Or simply strolling a special path?
Let’s talk about what’s actually happening.
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Australia’s wealth seems spectacular — however seems might be deceiving
Based on the 2024 UBS World Wealth Report, Australia now ranks second on the planet when it comes to median grownup wealth, and our nationwide family wealth grew by 11% within the final 12 months alone.
On paper, that’s trigger for celebration.
However as Simon Kuestenmacher factors out in our newest episode of Demographics Decoded, this determine comes with some hefty asterisks.
“Australia seems artificially fantastic in wealth experiences,” Simon says. “Why? As a result of we embrace superannuation in our web wealth, which many international locations don’t. And since our housing is so costly, property values inflate our wealth statistics, however that’s not cash you may simply spend.”
In different phrases, our wealth is basically locked up in properties and retirement funds, not liquid belongings.
And whereas the nation is rich, that wealth is concentrated.
Child Boomers, who signify simply 25% of the inhabitants, management round half of the non-public wealth within the nation.
That’s a results of many years of homeownership, compounding property development, and beneficial tax insurance policies.
It’s not unfair; they performed the sport that existed.
But it surely’s left youthful Australians feeling just like the goalposts have moved.
Millennials: extremely Educated, financially strained
One of many hanging shifts between generations is training.
At the moment’s youthful Australians are extra seemingly than ever to complete faculty and attend college. That’s often seen as factor: extra abilities, extra alternatives.
But it surely’s not fairly that easy anymore.
“A uni diploma used to place you within the mental elite,” Simon explains. “Now, 50% of individuals have one. And whereas the price of levels has gone up, their worth, when it comes to profession outcomes, has gone down.”
We’ve created a system the place levels are sometimes required for entry-level roles that by no means used to wish them, making them much less an emblem of distinction and extra a fundamental filter for job functions.
On the similar time, college graduates are coming into the workforce later and with vital scholar debt, delaying their skill to avoid wasting, make investments, and purchase property.
Paradoxically, many giant companies – the likes of NAB, Deloitte, and PwC – have now realised that formal training is not all the pieces.
“Employers are more and more assured in their very own coaching,” says Simon. “They’re saying, ‘We’ll train you the way in which we would like issues finished.’ So, for a lot of younger individuals, a grasp’s diploma is not well worth the time or the debt.”
The takeaway? Schooling nonetheless issues, but it surely’s not the automated ticket to a greater life it as soon as was.
Stagnant incomes, rising prices
Millennials – these born roughly between 1980 and 1995 – additionally entered the workforce underneath robust financial situations: post-GFC uncertainty, the winding down of the mining growth, and sluggish wage development.
Even those that began their careers with stable pay quickly noticed revenue stagnation, notably these underneath 40.
On the similar time prices, particularly housing, rose sharply.
The end result? A rising hole between revenue and affordability, making wealth accumulation more durable than ever.
Homeownership: the nice generational divide
Maybe the largest and most seen shift is in homeownership.
Charges amongst 20- to 34-year-olds have fallen dramatically over the past twenty years.
What was as soon as a ceremony of passage, shopping for a house in your 20s or early 30s, is now out of attain for a lot of.
Even when incomes are respectable, housing prices have far outpaced earnings.
And that’s earlier than we even get to the problem of saving a deposit whereas renting.
However Simon factors out, it’s not nearly affordability.
“We’re delaying all the pieces – partnerships, marriage, infants, house purchases. Once you delay shopping for, you delay the wealth-building advantages that include proudly owning.”
In the meantime, renters miss out on capital development and safety.
And with out a lovely downsizing market, many Child Boomers maintain onto their giant properties, additional constraining housing provide.
This creates a cascading impact: youthful individuals hire longer, enter the market later, and construct fairness extra slowly.
Is Gen Z higher positioned?
Regardless of the challenges, Simon affords a glimmer of hope, particularly for the youthful Gen Z cohort (born after 1996).
“Gen Z is coming into the workforce at a time when labour is in demand,” he explains. “They seem to be a smaller technology, which implies they’ll negotiate increased wages early of their careers.”
That alone might make a significant distinction over time.
And in just a few many years, when child boomers go on their estates, we’ll see the biggest intergenerational wealth switch in Australian historical past, an estimated $4 to $6 trillion in belongings, a lot of it in property and tremendous.
Nevertheless, not all of this can circulate on to Gen Z.
A lot of it’s going to go first to their Gen X mother and father, who themselves are underneath monetary strain, supporting each ageing mother and father and grownup youngsters, the traditional “sandwich technology.”
Nonetheless, Gen Z could profit not directly, particularly as Millennials improve their properties, liberating up inventory on the city fringe for youthful consumers.
As Simon places it, we’re not speaking about low-cost properties, however about much less unaffordable properties.
Know-how: a double-edged sword
After all, in the present day’s younger Australians get pleasure from alternatives earlier generations couldn’t have imagined, due to digital expertise, versatile work, and world connectivity.
However this, too, comes at a value.
“Know-how gave us smartphones, but it surely additionally introduced social media habit,” says Simon. “Younger ladies particularly are dealing with plummeting psychological well being scores. Younger males, in the meantime, are being affected by on-line playing, gaming and pornography.”
These aren’t fringe points.
They’re widespread, they usually’re reshaping how youthful Australians expertise the world, from self-image and relationships to profession focus and resilience.
There may be some excellent news, although: consciousness is rising, and governments are starting to behave.
South Australia, for instance, is shifting to ban social media for under-16s, a transfer backed by analysis, even when it ruffles feathers in Silicon Valley.
Simon argues that we’ll modify over time: “Dad and mom have gotten extra conscious. The subsequent technology will probably be higher guided. We received’t maintain repeating the identical errors.”
So… are they higher off?
The brief reply: it’s sophisticated.
Sure, youthful Australians have entry to raised training, longer life expectancy, and the world’s data of their pocket.
However additionally they face:
- Greater monetary hurdles
- Delayed life milestones
- Elevated psychological well being challenges
- Higher uncertainty within the job and housing markets
This isn’t essentially a story of decline, although.
It’s extra a narrative of delay and divergence.
They’ll nonetheless construct wealth, simply later.
They’ll type households, however maybe not within the conventional mould.
They’ll succeed, however on completely different phrases.
They usually’re doing it in one of many most secure, freest, most affluent international locations on the planet.
As Simon places it, “We’re nonetheless shifting ahead. We’re simply adjusting to a brand new regular.”
Remaining ideas
Australia stands on the sting of a demographic turning level.
The alternatives we make in the present day, about housing, training, taxation, and tech regulation, will form not simply the subsequent technology’s prosperity, however the type of society we depart behind.
Sure, the sport has modified. However the alternative to win continues to be there, if we’re ready to play a better, longer-term sport.
And that’s the place strategic considering, monetary literacy, and dare I say high quality property funding recommendation come into their very own.
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