Generations compared show improvement in Australian cost of living

LIFE’S luxuries have never cost so little, with plummeting prices and cheap credit creating a Lucky Country lifestyle for working Australians, most of whom have never had it so good.

Millennial Georgia McGrath’s experience of the cost of living differs from those of her father Gregg MGrath and grandmother Tess McGrath. Picture: Tim Hunter

LIFE’S luxuries have never cost so little, with plummeting prices and cheap credit creating a Lucky Country lifestyle for working Australians.

As the economy accelerates out of the global financial crisis, low unemployment, ­record low interest rates and price deflation means most Australians have never had it so good.

Even moaning Millennials are on a good wicket compared with Gen X and Baby Boomers, who enjoyed cheaper housing yet found it harder to find work, get a mortgage or buy a car.

A typical Australian kitchen domestic scene in 1980.

Holidays, entertainment, fashion and timesaving gadgets have never been cheaper.

Social researcher Mark McCrindle branded today’s youth the “lifestyle generation’’, saying: “In many cases they’re supported by their parents and are able to live at home longer than in previous generations.

“Many enjoy living at home rent-free with free food and the use of the parental car when needed.”

Despite higher property prices, Millennials are much more fussy about where they want to live.

Mr McCrindle said “expectation inflation’’ meant first home buyers wanted bigger homes in swish suburbs, instead of working their way up from smaller or cheaper properties on the city fringe.

The average weekly wage in 1993 was $1124 in today’s dollars, compared with current earnings of $1533.

“Many young people expect to start their working life in the manner their parents ended it — in a nice home in a nice part of town,’’ he said.

“The Baby Boomers and Gen Xers started off on the outskirts of town, with a milk crate for a coffee table.

“Now people want a spare room, a bigger space and all the quality fixtures.’’

Record low interest rates also mean young home buyers today would pay about the same as their parents did 20 to 30 years ago, when home loan repayment rates were as high as 17 per cent.

An exclusive analysis by The Saturday Telegraph shows the repayments for a median-priced home in Sydney are on par with the cost three decades ago.

Graph: Daily Telegraph

What things cost for (from left) millennials, Generation X and baby boomers.

The monthly mortgage ­repayment on a typical $687,000 unit in Sydney today is $2903 — based on borrowing 80 per cent of the cost at a 4 per cent interest rate over 25 years.

Back in 1989, an apartment buyer only had to borrow $116,800 but interest rates were 17 per cent, so monthly repayments were $1682, or $3426 today.

Home hunters today need to borrow $720,000 for a typical house in Sydney, repaying $3800 a month. In 1989 a mortgage for the average house was $124,800, with monthly repayments of $1797 — or $3661 in today’s money.

Jobs were harder to find in the recessionary 1990s, when the unemployment rate was double today’s rate of 5.8 per cent. Youth unemployment was 21 per cent, compared with 12.6 per cent now.

Workers also earned less. The average weekly wage in 1993 was $1124 in today’s dollars, compared with current earnings of $1533.

A worker in the ’70s required three weeks’ pay to buy a colour TV.

“Different generations have faced different challenges when buying homes,’’ CoreLogic research analyst Cameron Kusher said.

“In 1989-93, although prices were relatively low, interest rates were high.

“This means saving for a deposit was much easier, but ­servicing the mortgage and ensuring you were employed was a big challenge.’’

Maria Bellissimo-Magrin and husband Daniel bought their first home at Glenmore Park, at the foot of the Blue Mountains, for $365,000 in 2000 before trading up to a townhouse in Drummoyne.

“We had to make sacrifices and worked long hours,’’ she said yesterday. “There were times when we wouldn’t eat out or go out.’’

Housing was cheaper and trousers flarier in 1980.

New cars are more affordable now than for the past 40 years. Someone on the average wage needs to work 21.7 weeks to buy a new Holden Commodore. A decade ago a worker took 31.5 weeks to pay for a Commodore with inferior safety features, while Baby Boomers took 20 weeks to buy a basic Holden in 1976.

Leisure costs less than ever, with historically low prices for everything from holidays to entertainment and fashion.

A return Qantas economy flight to Europe cost $2300 in 1989 — the equivalent of $4685 today, three times more than today’s discount fares.

A worker in the ’70s required three weeks’ pay to buy a colour TV — yet it would take today’s worker just three days to buy a flat-screen TV.

A basic home computer cost more than five weeks’ wages in the early 1990s, but powerful laptops can be bought now for a day’s pay.

A decade ago only 7.5 per cent of homes could access the internet, compared to 86 per cent today, providing free entertainment on tap.

Australian National University economics professor Bob Gregory says Australia is still the “lucky country”, despite high housing prices and stagnant wage growth.

“You’re better off here than you would be in any other country,’’ he said.

‘I’LL HAVE TO STAY AT HOME FOREVER’

MILLENNIAL Georgia McGrath thinks her generation is doing it tough. She’s haunted by the terrifying prospect of living at her parents’ place forever.

“I’m a law student and all I hear about is how there’s no jobs for grad students,” said Georgia, 23.

Georgia McGrath, 23, discusses generational change with father Gregg MGcrath, and grandmother Tess McGrath, at home in Caringbah South. Picture: Tim Hunter

“Increasingly, I feel like I’m going to be a really over-qualified checkout chick for the rest of my life.”

But speak to previous generations of the McGrath family in Sydney’s Sutherland shire and you’ll find each had their growing pains.

Dad Greg McGrath said Sydney house prices were much lower in the 1980s but interest rates were the killer.

“It meant that early on in married life, so much of our income was committed to paying interest on the loan,” Greg said.

Grandmother Tess McGrath battled persistent inflation in the post-WWII era.

“There were mass shortages after the war. You’d have to travel across Sydney if you wanted to buy a car,” she said.