History Timeline – How Financial Times Have Changed from Each Generation

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It is common for one generation to blame a previous generation when discussing finances, or living or housing costs. Perhaps blame is even too strong a word. Maybe it is more correct to say that the Gen Y generation, or Millennials, look back enviously at previous generations. In particular this is often driven by the housing market. Millennials’ parents or grandparents often own their own homes, while for some members of Gen Y today the Australian dream and specifically home ownership has been written off entirely.

Before we look at the main differences, let’s look at some of the reasons why these differences may have occurred.

More Australians are Staying at Home in Later Life

Instead of downsizing when their children leave home or as they approach retirement age, increasing numbers of Australians are continuing to live in their family homes. They undertake home renovations to ensure their home meets their needs as they age. From their personal perspective this is great for them, however what it does mean is that the supply of housing today is lower than it would have been in the past when we would expect ageing generations to sell up and downsize.

In turn, this trend pushes up the prices of property due to the dynamics of supply and demand, thus leaving some millennials feeling like home ownership is always out of reach.

Australians are Inheriting Wealth Later

Not only are Australians staying in their own homes for longer, in many cases they stay there until the end of their lives, and they are also living for longer. While our parents dying isn’t ever something we like to think about, it’s a relevant point in this case, as many Australians won’t now inherit anything until they’re approaching 60 and thinking about retirement themselves.

For those who, for whatever reason, may be relying on their inheritance to help them become a homeowner – either by moving to live in the family home or by using the cash gained by selling it – this means living a huge portion of their lives renting while perhaps saving before they’re going to be able to buy a home.

As a positive, at least people facing this scenario will be able to look forward to an element of security in their retirement.

How Does Gen Y Compare with the Baby Boomers?

Now that we’ve looked at a couple of the potential underlying reasons that are pushing the trends we’re seeing today, let’s look at how Gen Y and the Baby Boomers compare in terms of some of key economic indicators.


In terms of earnings, Gen Y definitely has it better than the Baby Boomers did. The average annual salary for a full-time worker in 1984 was $19,000, which is the equivalent of around $56,000 today. By comparison, the average annual salary for a full-time worker today is $80,000.

Is Education Why Salaries are so Much Better?

Education, and in particular higher education, is certainly likely to play a part.

1 in 5 Baby Boomers are University educated, compared to 1 in 3 of today’s generation. Numerous studies have been conducted highlighting how a degree can help to inflate an individual’s earning potential, so with a much higher percentage of degree educated individuals in the workforce it is little wonder salaries are much better.

Housing Costs

So, Gen Y earn more relative to their Baby Boomer counterparts, and because they are more likely to be educated at a higher level, their lifetime earnings potential is also higher. Why can’t they afford to purchase a home?

It will come as little surprise that inflation in housing costs are the ‘elephant in the room.’

The average house price in 1984 was $69,000. While it was actually more difficult for Australians to borrow back then, the Baby Boomer generation was much more orientated towards saving than even Gen X were, let alone Gen Y, which meant that even with lower earnings they were still able to buy. While $69,000 in 1984 is worth around $190,000 today, the average house price in Australia today in excess of $650,000 according to Business Insider (March 2017).

While salaries have grown, they clearly haven’t grown to the extent that house prices have done. To put this into further contrast, the median property price in Australia today is 13 times average earnings. In 1984, it was just five times average earnings.

There’s no question that the Baby Boomers and Gen X have been the biggest beneficiaries of the house price boom. As the Australian economy performed strongly from the early 1990’s to the late 2000’s, these generations benefitted massively from already being in the property market. They already had assets which could grow in value, however those assets have now become a bigger reach for Gen Y, and are likely to be so for future generations, too.

How Have Financial Circumstances Changed Gen Y’s Outlook?

Although there are many millennials who maintain an ambition to own their own home, many now have no intention of saving in order to try and do so. Instead, they are redefining what the Australian Dream means, taking holidays and enjoying different experiences rather than being driven by the ambition of home ownership.

There remains plenty of millennials who do want to own their own home one day, but it remains to be seen whether they will be able to do it without needing a helping hand from wealth inherited in the future.


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