How the housing crisis is killing a generation’s ambitions
Boomers may dismiss them as lazy, but an alarming new study has shed a sad light on what’s really going on with young Aussies.
“Young people today are lazy!”
That’s what they say, the Boomers. It’s mean, it’s cruel, it’s unkind, and they have no idea what it’s like to be young in 2025.
But… what if there was a germ of truth to the criticism? Not for all young people, but for some.
That’s the conclusion of two American academics who have analysed the US economy and concluded that some young people have simply given up on giving a damn.
The reason? They have no chance whatsoever of ever owning a house.
“Abandonment of major life goals is becoming increasingly common worldwide, particularly among younger generation,” say the boffins in their newly published research paper. And the big thing young people are giving up on is saving for a house.
“The share of Millennial renters saving nothing for a down payment rose from 48 per cent in 2018 to 67 per cent in 2023,” the paper says.
The study comes from two Chicago-based researchers who tried to discover if rising unaffordability is killing hope among young people.
MORE: Alarming shift in first homebuyer age revealed
Importantly they are not simply unearthing a correlation. They have looked for causation: the fall in the chance of buying a house comes first and triggers the “financial nihilism” where young people stop trying.
They found that for a renter without much in savings, if house prices in their area go up, that renter does not save more. In fact the opposite may happen – they spend more. And they work less.
This then becomes a self-fulfilling prophecy where the once-dreamt of home slips entirely out of reach. And their wealth ends up falling far below where it would have been had the house price rise not happened.
“These dynamics underscore the powerful role of hope: belief in the attainability of home-
ownership shapes savings, work effort, and investment decisions in compounding ways over
the life cycle… ” the researchers write, “…with profound implications for long-run wealth inequality.”
What do you do if you can’t save?
The US researchers found that a group of young American renters with low chance of buying a home tended to “spend more on credit cards, exert less effort at work, and participate more in cryptocurrency markets.”
They interpreted this last fact as meaning the young people saw cryptocurrency as their one chance to make it big.
The study has come to light even as the ABS releases the national savings rate and reveals it has risen. What this study does not talk about is the national average – after all, someone’s buying all those homes.
MORE: Australia’s secret growth suburbs revealed
Millions of young people are indeed saving very hard, doing without and putting money aside. What it does show though is the divide: Some realise the task of saving for a house has become too hard. The rising cost of living and the soaring cost of a home are like a vice with young people caught in its grip.
Generation Z are very likely to set themselves financial goals for the year ahead, but 89 per cent of them anticipate challenges in meeting those goals, a 2024 ASIC survey found. The cost of living is certainly squeezing young people.
According to an earlier survey arranged by the Australian Securities and Investments Commission, one in four members of Generation Z (ages 18-26) had under $1000 in savings in 2023.
The fading home ownership dream
The following chart shows just how far the home ownership dream has faded for the least wealthy 20 per cent of Australians. In 1981, almost half of the poorest people aged 25-34 owned a home.
Now it is just over 20 per cent of that cohort who own. At the other end of the wealth spectrum, but still looking at young people, home ownership rates have fallen from about 70 per cent to 55 per cent.
That is a much smaller fall and it indicates that the story these researchers are telling is likely to apply in Australia too.
The data is from the US but the story rings true worldwide. I’ve read so many stories about China’s “lying flat” generation, but there’s rumours of it happening in Australia too.
I certainly know people who rent and hit Bali hard. Their lifestyles are pretty enviable! But of course the biggest source of poverty in Australia is among elderly people who rent. The pension is generous unless you also need to rent a property.
The importance of this study is for society overall. Even if you’re safe, even if you have a deposit building nicely, even if you have a home, and especially if you have a home paid off, living in a society where some people are locked out is not healthy.
Ask the South Africans or the Brazilians what it’s like to live in a society where some people feel hopeless. Wealth there gets invested in defences.
We are all better off if we live in a society where people believe in their chance of making progress – a society where they want to work and can see the upside of working, and where hard work pays off.
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The data would suggest that in Australian cities where house prices are surging, more young people are giving up.
Places like Brisbane, which is now the second-most expensive city in Australia. A young person who started saving a few years ago could easily find their nest egg shrinking as a proportion of the price of a house in Brisbane.
Young people aren’t actually lazy. They’re just facing financial hurdles that are frequently far higher than the generations before them.
