Some older Australians may find it hard to comprehend because it’s so different from their lived experience.
But when younger people say it’s impossible to save for a house deposit these days, they’re not lying.
According to researchers, the budgeting strategies younger generations use to try to save for a deposit are “increasingly insignificant” in modern Australia.
They say house prices are rising too quickly, and the proliferation of precarious forms of employment since the 1980s, and stagnation in wages for younger workers, mean many younger Australians are facing the prospect of being locked out of home ownership altogether.
They say the sharp decline in homeownership among younger people is not a result of them being work-shy, or because they’ve forgotten how to save and make sacrifices.
It’s that the old Australia has disappeared.
Australia And The Modern Globalised Economy
When you read press releases from the Hawke-Keating Labor governments of the 1980s and early 1990s, it’s impossible to miss the “narrative” they were promoting.
Overwhelmingly, they talked about the new and exciting Australia of the future, where workers would be highly skilled and living standards and wages would rise on the back of surging productivity and export competitiveness.
The old post-war Australia, they said, where it was common for people to leave school after year 10 and join the workforce, was not going to cut it in the modern globalised economy.
“During the 1960s, only about one-third of young people completed 12 years of schooling,” Paul Keating said in 1992.
“Most teenagers left school early and obtained an unskilled job. These early school leavers received little formal vocational training unless they were able to obtain an apprenticeship in one of the traditional trades.
“In the mid-1960s, nearly six in 10 15-19-year-olds had a full-time job. This now stands at two in 10.
“On the other side of the coin, 30 years ago only one in three 15-19 year olds were attending education full time, compared to almost two in three now,” he said.
That old economy Mr Keating was talking about, where a large number of young people joined the full-time workforce out of school in the 1950s and 1960s, was obviously radically different from today’s economy.
But in that post-war era, Australia’s social welfare model relied on widespread home ownership and housing was more affordable for unskilled workers.
It is fascinating to see what type of property price rises made Australians anxious 50 years ago. According to the late professor Patrick Troy, here’s how things were viewed in the early 1970s:
“The cost and price of housing continued to be a source of social and political concern. Over the period 1969-1973 the number of years’ average earnings required to buy a house site increased substantially. In Sydney, it increased from 1.7 to 2.7 years, while in Melbourne it grew from 1.2 to 1.8 years.”
Compare that to what modern researchers have to say about Australia in 2023:
“Since 2001, the national ratio of median house price to median income has almost doubled to 8.5, and the time required for the accumulation of a deposit for a typical property has increased from six years median earnings in 1994 to 14 years currently.”
In the story Australians were told in the 1980s and 1990s about the need to have a more flexible and productive workforce, the future significant decline of home ownership among younger workers, and what that would mean for this country’s post-war social compact, was not really part of the vision.
The Emergence of Generation Landlord
By now, many of us are familiar with the term “Generation Rent,” which refers to the generation of younger Australians who will never own a property and be locked into renting for life – with the wealth implications that will follow.
But researchers say the corollary of that phenomenon is “Generation Landlord.”
They say the emergence of Generation Landlord has been partly fuelled by the growing financialisation of housing, reflected in the large increase in investors owning multiple properties in recent decades.
They say it’s also been supported by an ideological shift in politics during the past 30 years, which has seen landlordism promoted as a welfare strategy for the market-thinking, self-responsible, investment-ready individual.
They say debt-financed landlords have been reframed in Australia as “mum and dad investors” who are valorised politically as enterprising, self-reliant, and providing essential housing for others, but who, upon closer inspection, are predominantly middle-aged and older, wealthier and higher-income.
They say this valorisation of landlords has created tension in Australia, given the winners-and-losers element.
“By privileging the investor class to boost their welfare into retirement, others are denied the opportunity to secure their own housing, and therefore retirement security, at all,” they say.
They say the tension between Generation Rent and Generation Landlord is compounded by the shift in employment arrangements in Australia that has undermined the ability of younger workers to earn and save a 20 percent deposit.
They say the break-up, in the 1980s and 90s, of the arbitration system that underpinned the relatively high wage rates of Australia’s post-war settlement was a crucial milestone on the path we took to get here.
“More recently, the rise of the ‘gig economy’ has signified a shift to more flexible work arrangements in which employment is undertaken on a time-limited, contract or temporary basis,” they wrote in March.
“This re-emergence of flexible or non-standard work practices has crystallised the concept of the precariat, which is characterised by economic insecurity. A recent paper by the Melbourne Institute noted that non-standard employment now accounts for more than half of all employment.”
They say the modern unpredictability of household finances for younger Australians is now a “key constraint” on their ability to plan and control their spending.
And when combined with reforms to Australia’s tax system, through the 1990s and beyond, that have increasingly privileged current homeowners over aspiring homeowners, it means it’s become harder for younger Australians to be able to buy a home by simply working hard, they say.
Undermining The Model Of Post-war Citizenship
So, when thinking about the working and saving habits of younger people, we need to keep these things in mind.
Researchers say the traditional pathway to home ownership simply doesn’t exist for a huge number of young Australians these days.
They say the modern reality of precarious and polarised labour markets is “inextricably linked” to these changed housing dynamics, and it’s challenging the idea of what is it to be Australian.
“The existence of a ‘typical’ life course, in which people become educated, attain employment, leave home, form a new household with a long-term partner, and buy and pay off a house during their working lives to underpin a decent standard of living in retirement, is becoming increasingly uncommon,” they say.
“With the intertwined nature of employment and housing, such shifts potentially signal a major break in key ‘pillars’ of the post-war model of citizenship.
“In particular, they indicate a crumbling of previous support frameworks as people move into retirement,” they say.
Which begs the question: where does Australia’s self-image of egalitarianism sit in all of this?
This article was originally published on ABC News.
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