Generation Y and Housing Affordability

Monday, October 24, 2016


As Australia’s leading social researchers, the senior research team at McCrindle are actively involved in media commentary. Last week our Principal, Mark McCrindle and Team Leader of Communications, Ashley McKenzie were featured in the media about Generation Y and their ability to access the housing market in Sydney.

Generation Y are today’s 22 – 36 year olds, and make up 22% of the Australian population (5.22 million). They also make up the largest cohort in the current workforce (34%). Gen Y’s are comprised of today’s parents, senior leaders, influencers, and increasingly wealth accumulators. With 1 in 3 being university educated (compared to 1 in 5 Baby Boomers), they have grown up in shifting times and are digital in nature, global in outlook and are living in accelerated demographic times.

While Generation Y are often accused of living a lavish lifestyle, which supposedly locks them out of the property market, it is important to remember that traditional expense categories such as food, transport, health and housing costs are higher for younger people today than that experienced by their parents at the same age. A generation ago the average house price was 5 times annual average earnings while today the average house price is 13 times the average annual full-time earnings.

Here is a quick snapshot of last week’s media coverage:


Housing Affordability Debate

"From the Baby Boomer perspective, they worked hard, they earned what they had but I can also see the Gen Y perspective. The reality is that it's a lot harder to buy a home, the costs have gone up. Gen Y do have to pay off the debt of their degree and there are new categories of spend; technology, internet and phone, costs that their parents didn’t have."  


Parental help becoming essential for young people trying to buy property

"Ms McKenzie, who works for social researcher Mark McCrindle, said borrowing from parents was becoming Sydney’s “new normal”. “Baby Boomers control about 50 per cent of the nation’s wealth so it makes sense young people look to their parents for help,” she said." 












For any media enquiries please email us at info@mccrindle.com.au, or call our offices on +61 2 8824 3422. To arrange a media interview or if you are a journalist and would like to receive our media updates, please email kim@mccrindle.com.au.

Income and wealth distribution by state

Monday, September 12, 2016

High wealth, high income

What are the high wealth, high income states? Western Australia is leading in terms of both income and wealth, with $133,224 and $952,500 respectively, which is well above the average household annual gross income of $107,276 and average household net worth of $809,900.

However, over the last year particularly, the impact of the mining slowdown has affected earnings and also wealth. The reliance on the mining sector and the fluctuation of income and wealth based on the fortunes of this one sector are highlighted in the fact that between 2012 and 2014, the household incomes of those in Western Australia rose by 21% which was almost double that seen in the leading east coast state of New South Wales, and the wealth in this 2 year period increased by 24%, again almost double on what we saw from the best performing east coast states.

Top performing states

New South Wales is the most consistent performer in wealth and income, and the only other state to have both income and wealth about the national average (12% on income and 13% on wealth). It has a stable economy, with the largest infrastructure investments in the nation, a broad base of industries and consequently solid forward forecasts.

The Northern Territory, like Western Australia has been fluctuating, and while it has average income above the national average, its wealth is below the national average. Queensland, while improving in both income and wealth is below the national average on both as well. And Victoria while seeing solid gains in both income and wealth, with wealth largely due to the housing market above the national average, its income has still not quite reached the national average.

Worst performing states

The worst performing states are Tasmania, with incomes 26% below the national income and wealth average, as well as South Australia which is 19% below the average household income and 20% below the national net wealth.

While household income gains have been low in some states (a total of 6% gain since 2012 in South Australia, Tasmania and the Australian Capital Territory over the last 2 years), at least all of the states have had an increase in incomes, but such has been the change in property prices and the rise in living costs, the Northern Territory, South Australia, Tasmania and the Australian Capital Territory have all seen a slight fall in average household wealth since 2012.

The New Australian Dream

Thursday, September 01, 2016


Owning your own four bedroom house on a decent block of land with a big backyard and outdoor swimming pool used to be the quintessential 'Great Australian Dream'. But with rising property prices and increased living costs, that dream is being redefined.

what is the Average Australian Profile?

The average full time annual income in Australia is $80,000, which is bumped up a bit because of high income earners. Even though we are living longer now than a generation ago, the average retirement age is little changed, at 61.5 years.

The cost of housing is up with average rent prices per week at $485/week and the average house price (capital city) is $765,730. In Melbourne it is well above this and in Sydney it is around $1 million. This is where the challenge is for Australians: 40 years ago the average house price was around 5 time’s average earnings and now you can see it is almost 10 times the average annual fulltime earnings.

Other than affordability, what else are Aussies looking for?

Lifestyle is key. People are opting to live in higher density areas for the sake of convenience and location- within close proximity to transport, restaurants – the café culture as it has been called. Our Urban Living Index shows a strong correlation between the most urban/densified suburbs and those with the highest liability ratings.

Australians are opting for a lifestyle of Minimalism - we are 'decluttering' our lives and putting more value on the intangibles like travel. Generation Y aren’t opting for a big home with garages to store all their stuff but more of a focus on the easy-livability of apartment living. Indeed many baby boomers are downsizing from their larger homes in the suburbs to this style of living too.

Renting, as opposed to buying, what some of the benefits?

The ability to change locations easily is well regarded – the average Australian renter stays just 1.8 years per home. Our research shows that 1 in 3 renters are actually 'choice renters' and they choose to rent for lifestyle reasons, not primarily for affordability reasons. These choice renters are twice more likely to be living in medium and high density housing than the average Australian and they are almost 10 years younger than the average Australian. The ability to upsize and downsize easily and the flexibility to travel for extended periods of time is a driver for them. ‘Rentvesting’ is also becoming a ‘thing’. This is where people choose to rent in an area they like, but buy somewhere more affordable and use this as an investment

Generation Y are struggling to attain the Great Australian Dream – are they going to be ok?

There is a challenge emerging of "generational inequity" as shown by this infographic:

Gen Y’s have the least wealth of the working generations and their proportion of Australia’s wealth is less than half their demographic share, while the Baby Boomers who are a quarter of the population, own more than half of Australia’s wealth. (More information on this topic can be found here)

This is why Gen Y is reinventing the Aussie Dream and while they do still like the idea of owning something of their own, it is not just the big home with the back yard in the suburbs. But many in this generation will be absolutely fine thanks to the massive intergenerational wealth transfer set to happen in the next 20 years as those aged over 65 transfer much of their total wealth of $2.5 trillion.

Australia’s Generations by Wealth and Income

Wednesday, June 01, 2016

This infographic is based on analysis of the ABS Household Income and Wealth data released in late 2015 and 2013. It gives a picture of how both income and wealth is distributed across the generations of households in Australia and how it has been changing.

Generation Y: High incomes, low wealth

While Generation Y aged 25 to 34 are income rich, earning in gross household terms $113,152 per annum, their net worth is modest, at $268,800. As they enter their mid-30’s, they are getting closer to their key earnings years however such has been the low wages growth over the last two years, their household incomes have only increased by $5,356, or 5% since 2013. While Gen Y households on average earn more per annum than the older Boomers aged 55-64 who are rapidly easing out of their full-time working roles, these Boomers managed income increases almost three times that of the younger generation over this period ($14,040). This 14% increase in annual household incomes came about because the older Boomers were reliant not on wages growth but investment income which has seen solid increases over the last two years.

Generation Stagnation

It is ironic, and unfortunate that the emerging generation of wealth accumulators, moving up the career ladder have seen far smaller income increases (amounts just keeping up with inflation) than the generations that are easing out of employment or having ceased employment. Indeed, the generation aged 65+ managed much higher income increases (16%) than the younger working age Gen Y’s.

Wealth compared across the generations

The generational financial inequities are even more pronounced when analysing net wealth by generational cohort. While Gen Y have a household net worth of $268,800, it is less than half that of the Gen Xers who are just a decade older. The highest net worth generation in Australia are the Boomers aged 55-64 who not only have a net wealth almost 5 times that of the generation of their children (Gen Y) but they still have a decade or more of earnings and wealth accumulating ahead of them.

The $1 million households

While Gen Y have seen a wealth increase of 9% since 2012 ($21,647), the mid 50’s Boomers have seen a 14% wealth increase ($153,335) with their wealth rising since 2012 from $1,086,365 to $1,239,700. Therefore, not only does the average Australian household aged over 55 have a net worth exceeding $1 million, but, due largely to rising property prices over the last few years, it is also seeing the fastest wealth increases. When the demographic size of each generation is compared against their corresponding economic share, the differences are stark. Australians aged 25 to 34 are equal in size to the Over 65’s at 3.6 million, or 15% of the total population of 24 million. However, the net wealth of Generation Y is well below this population share at just 7% of the national private wealth compared to the Builders generation who have a share of 26%, almost twice their demographic proportion.

The quarter who own more than half

In total the Baby Boomers (45 to 64) are a quarter of the population (25%) but own more than half of Australia’s national wealth (53%). Their economic footprint is twice as large as their demographic footprint. While the Gen Y’s have decades of wealth accumulating ahead of them which will grow their net worth footprint, it is unlikely that Australia will ever see the likes of today’s Boomers again where a quarter own more than half. The Boomers have been the beneficiaries of a near 50-year economic miracle, and they are unlikely to ease out of this accumulating any time soon.

The $3 trillion wealth transfer

But there is some hope for the emerging generations who have stagnated in wealth and have been priced out of property. The households of Australians aged 55+ currently own a combined $2.8 trillion and over the next two decades will pass on much of this. By the time they move from the growing to the spending side of this accumulation, it will have exceeded the $3 trillion level. Therefore, the decades ahead will see the biggest intergenerational wealth transfer in Australia’s history and many of the younger generations will be the main beneficiaries.

Welcome to our blog...

We have a passion for research that tells a story, that can be presented visually, that brings about change and improves organisations. And we hope these resources help you know the times.

Our Social Media Sites

Facebook | McCrindle Research Social Media YouTube | McCrindle Research Social Media Twitter | McCrindle Research Social Media Flickr | McCrindle Research Social Media Pinterest | McCrindle Research Social Media Google Plus | McCrindle Research Social Media LinkedIn | McCrindle Research Social Media Mark McCrindle Slideshare


Last 150 Articles


Tags

intern omnibus Research Executive Australian communities huffington post house earn skills social change moderators guide presentation media activity sydney speaker baby boom Geoff Brailey curiosity trend tuesday technology Generation Y bureau gender states capital cities year 12 2012 property market Australia Day generations high density living slideshare youth unemployment newspaper thought leadership mccrindle tea lifestyle Wodonga Real Estate Institute of Victoria mentor woolworths Christchurch water commute JOMO English dare to dream office space crows nest real culturally diverse census offenders jobs urban taskforce online Aussies life suburbs sentiments February 16 living weekly earnings identity aussie culture data visualisation ipswich internet office engagement generation public speaking personalities future of work focus group experience entrepreneurial church social employment celebration graphs cold residents menai summer Mark McCrindle car children greatness youth narcissism FPA NEETs sector child care politics Adelaide 2013 language Merry Christmas emerging trends 10 years media release video rain product leader Christmas presents university degree social commentator Australian Dream cost of living focus groups ABS 2016 meetings selfie list data social life ageing population Gen X 2015 New Zealand Wellington program leadership workshop long weekend Queensland: QLD daily commute house price networking workplace culture educated Melbourne 1994 mortgage ACT sector wide divorce rate VIC hornsby cash mccrindle shbc sydney hills panel business local rise of local award winner sector wide study social enquiry the average aussie pharmacy Channel Seven ageing megatrends ultimo pharmacies Queensland Channel 7 national private wealth social research cloudy days consumer participants shopping January 26th charity millionth Western Australia geomapping optimistic the hills financial independence Hornsby Shire Council NT Crime Rates communities the hills shire repayments Financial Planning Association of Australia online shopping IT Specialists work-life Births australia interactive ACF Christmas season leadership goals media Christmas lunch year 7 cultural diversity crime snapshot TDE World Water Day google for education aged care puzzle jobs of the future brands toys resource financial future urban living award retirement princess charlotte townhouses challenge village 40 million #censusfail sun perth Australian demographics social shifts fears report teachers government shopper's pick storytelling eliane The ABC of XYZ generation Z city motivate socialites royal criminal house prices land of the middle class vegemite national wealth innovation social researcher 24,000,000 training Do It Yourself researcher Wagga Wagga area renter of the future learning high density conference school aged care prince george royal family divorce mccrindle in the media new york times Northern beaches Event changing face of sydney click affordability conference speaker housing trends survey demographic transformations mobile Australian Families baby boomers sunburnt country wealth distribution poker master capital city healthy future Australians university financial wealth and income brisbane gen z System's Architect global financial crisis presentations parenting Charlotte Real Estate nfp workforce 1975 australians staying home more visual Kirsten Brewer domestic 1968 professional development Caregiver in the media quote religion australian communities trends report community organisational culture Love 2017 baby name internships communicate TAS investing tableau alpha sunny days suburb society trends Australian Census career tattoos norwest mythbusting workplace sustainable plans responsive baby names resilience ideas learning styles Australia Day 2017 unemployment housing hobart christianity population map holidays insights Myth census results facts ferry increasing densification WA sydney event ACF 2016 DIY 2020 fresh Assistant Store Manager new office deloitte publication optus office opening travelling renting Duchess of Cambridge wealth kate middleton mateship change authenticity qualitative research 24 million gen alpha cancelling event travel Kiwi poor weather schools australian social research Word Up Deaths professional speaker housing growth litter baby name predictions relevant socialising South Australia ease of travel grandparents research visualisation economy wellbeing wages typical australian tips internship future-proof education future New South Wales work education men relational rich tea Australian schools keynote visualisation trends of 2016 2014 millennials blaxland community event young australians data analyst transport marriages cancel plans 23 million careers twentyseventeen environment priorities educhat spend Generation X ethnography builders clothing family "know the times" organisations safe mccrindle research communication local communities non profit survey design future proofing earning christmas brand experience census fail 2016 census bus social researchers teleworking school satisfaction keynote speaker Northern Beaches consumerism finance Gen Y proactive monarchy infographic wall salary generation alpha teach friendship housing market REIV Conference rising house prices engage HSC research pack trends of 2017 cars social lives optus my business awards unaffordable Northern Beaches Christian School statistics customer GPO debt the australian dream learner shifts analysis population growth annual income Aussie social impact high school investment holiday dream forecast cancelling plans census 2016 income parents hills shire teacher energy households growing population Australian Bureau of Statistics cost know the times eliane miles debate urban living index events earnings social analysis the changing face of stay home staying in overcast home owner social commentary entrepreneur communications ashley fell sydney metro winter blues tertiary education housing affordability baby name trends students Population Clock going out Bathburst middle class Scouts baby innovative etiquette high density apartments couple goal global generations forecasting news entertainment wedding Netflix rent easy rider house price rise conference presentation victoria Valentine’s Day rule keeper The Daily Edition neutral bay young people society Tasmania vegetarian public speaker digital NSW tuesday world friends follow wolloomooloo bondi happiness social issues group study business index small business winter Canberra volunteers speakers daily telegraph royal baby collaborative faux-cilise workshop budget Financial Planning Association moreton bay Australian Trends easter demographics marrickville McCrindle Speakers australian communities forum household equip gold coast schools students royal influence home acf15 mother's day Res Vis dreaming hopes population 1980 medicine results mythbusters staff demographic financial dreams story define Northern Territory marketing Education Future Forum train lalor park owning a home names culture darwin professional services DESTEL ashley mckenzie pyrmont forum research services global Territory property price case study dessert outsourcing SMSF seasons faux-ciliser marriage Social Trend demographic trends home ownership waverton brand urban generational trends affordable cooking community engagement hello fresh Tuesday Trend education future report social trends growth cartodb balance public holiday Engineering Manager meals trends emerging generations supply and demand apartment women professional Sydney keynote speaker not-for-profit conferences property wage wealth and income distribution FOMO futurist mining boom logan event not for profit in depth interviews national crime rates sports entrepreneurs of today millenials commuters demographer student media commentary future tv collaboration trends analyst Sydney environmental scanning trend rental stress sydneysiders manly google financial fears infographic research data mover and shaker future of education CBD school students personal growth sydneycity father's day insight research potts point anzac education research 2016 census results EFF families population milestone Tuesday Trends thrive economic market research world youth day stats group session Royals social media emerging technologies future proof post rationalism christian Australian Home state low density employers PSI Financial Planning Week work mates faux-cilising recap teaching SA suburban living buildings investor average aussie food learn education sector paying to work New Zeland coffee contiki REIV National Conference Australian Communities Trends

Archive