MYTH – Young People Can’t Buy a House Because They Waste Money – BUSTED

MYTH – Young People Can’t Buy a House Because They Waste Money – BUSTED


The myth that young people can’t buy a house
because they’re lazy, or waste their money, is busted. According to a new report by the
Grattan Institute, young Australians are simply not as wealthy as their predecessors were
three decades ago. This graph shows that older households (65
years and older), have almost four times as much wealth as younger households (34 years
and younger) on average. This is compared to only 2½ times 30 years ago. Relative income
and expenditure has also increased. When it comes to government benefits, older
households are getting a lot more than they used to increasing from about $17,000 30 years
ago, to about $28,000 per year now. (Note: all these figures have been adjusted for inflation).
Younger households are unsurprisingly the ones funding all of this. If you could conclude
one things from this graph, it would be that the tax and transfer system has become increasingly
generous to older Australians, which leaves Millennials and Generation Z to carry the
burden threatening the sustainability of the so-called ‘Generational Bargain’. What is the Generational Bargain? It basically
is an implicit contract between generations where working-age families pay more in taxes
than they receive in benefits. This helps support older Australians who are no longer
in the workforce. The bargain is sustained by a sense of fairness and generosity between
generations, with the goal (for most people) to leave the world a better place for future
generations. Just a quick aside for those not hip with
all the generational lingo. Gen Z (or Centennials as they are sometimes known) are the youngest
generation aged under 24. Millennials are aged between 24 and 38. Generation X are between
39 and 54. Baby boomers are aged 55 to 73. And the oldest generation is referred to as
the Traditionalists or the Silent Generation. Looking at this chart, we can see that the
wealth gap between young and old is growing. Most of Australia’s increase in wealth has
gone to the older generations. The richest age-bracket, 65 to 74-year-olds, now has about
$1.3 million in wealth, which is up from about $530,000 in 1994 in real terms. They are significantly
richer than they once were. However, if you look at the younger generations, their gains
have been modest at best, with the youngest generation having seen almost no improvement. Putting these figures into equivalised terms
(that is, taking into account varying household size and composition), the results are equally
gloomy. The net wealth of older Australians has grown much more than the younger generations. Most of the wealth growth has occurred in
property and superannuation. Booming house prices has favoured long-term property owners,
turning many of the older generation into unexpected millionaires. They didn’t work
hard to become millionaires. They just bought a cheap house three decades ago and held onto
it. Consequently, we have a younger generation that are finding it increasingly difficult
to buy a house — not because they’re lazy or wasteful of their money — but because
society has been set up that way. They just can’t afford it. This graph shows that young people are unlikely
to enjoy the same windfall gains in asset prices. People who own property or have a
large super account will see greater wealth increases than those that just work full-time.
In other words, it doesn’t matter how hard the younger generation work, they’re constantly
behind the eight ball. This chart shows that rich young Australians
are faring okay, but other young people are going backwards with the most disadvantaged
group being the poorest young Australians who are losing wealth at a mighty rate. Do
you notice that the poorest old people are doing very well indeed in terms of gains in
household wealth. We can see here that the Baby Boomers won
the demographic lottery having a large number of young people supporting them in their retirement
years, but the population in Australia is ageing. A typical 40-year-old today contributes
much more towards the retirement of others through taxes than did his or her baby-boomer
predecessors. Unfortunately, Generation Z has already lost this lottery with only half
as many younger people there to support them when they eventually retire. They better hope
that helper-robots become a real thing. I could go on and on showing you more graphs
to back up my point, but what’s the point? You get the idea, right? Inequality in Australia
is rife and unfortunately we’re letting richer older Australians dictate where the
wealth should go — into their back pockets. But what can be done about it? Well, the report made a number of recommendations.
The ones that would have the biggest impact include: Improving the efficiency of taxation;
Improve labour force participation and productivity; and Make strategic investments in infrastructure. Housing affordability is also a big issue,
but unfortunately, it’s a difficult political challenge. Rich people don’t want house
prices to go down. Age-based tax breaks could also be modified
to help the situation, but again, it’s a political challenge. Intergenerational transfers is also on the
agenda, but good luck getting that passed in parliament. So what are your thoughts? Is our generational
bargain at breaking point? Do we really want young Australians to become poor Australians?
I don’t think so, so let’s fix this mess.

10 Comments

  1. Josiah Bomford says:

    We're moving to an inland town that has everything you need. House price is about a quarter of avg Sydney house price for the same size house same condition with 2 hectares of land. I think people have bought into the lie that somehow they need to live in one of the big cities. Now that everythings moving towards online and most large inland towns literally have just about everything you need (besides trendy night clubs and large clothing stores etc) You can enjoy virtually everything you did before – Without the mile long lines of traffic at every intersection. You can actually own a yard (a real yard) not a shoe box duplex or match box apartment in the city. Still they'd have you believe you're on the winning team because you own a small space in the city that isn't even big enough for you to roll over in bed. Live like a mountain lion not a slave rat in a cage. Be free and roam around your acreage in your underpants why not! Be a man!

  2. Karlstens says:

    Would love to see a sister channel called “Daily Whinge” which covers the same broad topics but delivered with more of a nasal higher voice, street slang and incorrect inflection.

  3. Tony Neville says:

    Buy a house in Morwell still buy a house for 120k and live on welfare comfortable

  4. INVEST for the future says:

    When the biggest question on your mind is how to get back into government next time, most politicians have little regard for the blatantly obvious. Many are members of the myopic ruling elite, a group who have no intention of only being really wealthy rather than really, really wealthy so that the 5 million or so Aussies who are doing it tough can have a bit more than vegemite on toast for breakfast – just saying.

  5. Evil Ant says:

    Wealth is based upon smoke and mirrors.

  6. Aposematic Scopophile says:

    It will all be corrected in the great crash of '19

  7. Cognitive Roo says:

    It is obvious houses are expensive NOW. Just compare house prices now to the 80's 90's to annual household income.
    Young family could buy a good starter home for 3 or 4 times annual household income, this ratio in our big cities is now >6 times and up to 9 times. Ridiculous speculation encouraged by Govt policy has blown a massive bubble, like all bubbles it will deflate.

  8. Chris Yorke says:

    We don't need to be told there is a problem with house prices, but our government does. Ask the PM to deny he believes in expensive housing. Making this out as an outcome caused by age is poor reasoning.

  9. Donna Anderson says:

    Bash boomers why not it’s their fault that greedy speculators and foreign buyers pushed up the price of housing, not to mention the stamp duty charges etc that our government steals . Our population is being divided, young against old, straight against gays, women against men etc etc . Divide and conquer whilst the real enemies of the people our so called leaders destroy society, the economy and our morality

  10. Savage Bushranger says:

    Children were designed for cheap labour and caring for us in our old age. Why the heck would I care about their future? I'll be dead then, lol.
    Maybe grow a brain and make your own child slaves to exploit, duhhh… 😂

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