Lucky for some: the older get richer in the worst wealth divide in two decades

Inequality across the nation has climbed to its highest point in more than two decades as the incomes of high-paid Australians grow faster than those on lower wages and homeownership levels among young people collapse.

Data from the long-run HILDA (House Income and Labour Dynamics in Australia) survey conducted by the University of Melbourne and the Melbourne Institute, which has been tracking 17,000 people since 2001, shows the end of pandemic-era financial support to the nation’s less well-off has been the driving force behind the lift in inequality.

The end of pandemic-era assistance has contributed to Australian income inequality reaching its highest level this century.Credit: Jason South

While still well below the inequality levels of countries such as the United States and Britain, the survey’s results are a challenge for Prime Minister Anthony Albanese, who has focused throughout his term on the government’s efforts to help the less well-off.

Inequality fell to its lowest level in HILDA’s history in 2020 as support for low-income workers was delivered by the Morrison government to offset the financial pain caused by closing down parts of the economy to deal with COVID.

But as that assistance, including increased welfare payments, came to an end, inequality increased. Incomes for the top 10 per cent of the population grew faster than middle-income earners while incomes for the lowest paid declined relative to the rest of the population.

HILDA co-director, Roger Wilkins, said it now appeared inequality was at its highest point since the survey began.

“After the initial effect of the pandemic, higher incomes in Australia have grown faster relative to middle incomes,” he said.

“At the same time, the relative growth of lower incomes has declined, which drives inequality up and makes it harder for poorer Australians to move into higher income groups.”

Average incomes for individuals, taking into account the size of their households, reached a record $71,335 in 2022. Average incomes can be distorted by large swings, particularly among those on the highest incomes.

Median individual incomes, however, fell by more than $330 to $61,863.

Median incomes for empty nesters yet to retire are now almost $85,000, about $20,000 a year more than any other group tracked by HILDA. The lowest median incomes are for single, older women who have suffered a fall over the past two years to about $31,000.

The survey also revealed the growing disparity in wealth across the country, with older Australians enjoying a 157 per cent surge over the past 20 years. HILDA found the median household wealth of this group is now almost $1.4 million.

The second-wealthiest group are couples not yet retired at $1 million, up by 69 per cent since 2022. Couples with dependent children have enjoyed a 96 per cent lift in their median wealth to $959,000.

The least wealthy are single parents at just $153,000, up by 58 per cent.

The wealth has been driven largely by higher-priced housing which is increasingly beyond the reach of young Australians.

In the mid-1970s, the homeownership rate among 25- to 28-year-olds was around 26.5 per cent. It has fallen consistently since then. Just 18 per cent of the same age cohort, born between 1994 and 1997, now own a home.

There have been collapses in homeownership rates across almost every age cohort since the HILDA survey began.

Among 29- to 32-year-olds, the proportion owning a home has fallen from 40.4 per cent to 32.7 per cent. Among people in their early 40s, it has slipped from 66.1 per cent to 55.6 per cent.

One of the largest falls has been among those aged between 49 and 52, which has dropped by 12.2 percentage points to less than two-thirds.

Only one group, people in their late 60s and early 70s, has not experienced any change over the past two decades.

The largest fall in homeownership by region has been Brisbane where it has dropped by 8.1 per cent since 2002. Ownership rates in Melbourne have fallen by 7.4 per cent, although it remains the capital city with the highest ownership rate in the country.

Sydney, the most expensive capital city, also has the lowest ownership rate at 45.9 per cent. In 2002, it was 48.2 per cent.

As house prices have climbed, ownership rates among young Australians has collapsed.Credit: Jessica Shapiro

Hopes to buy into the property market for young Australians have been hampered not by just high prices, but by their increasing debts.

The average debt for all households climbed by 95 per cent to $227,469 between 2002 and 2022.

The single largest debt remains the mortgage which climbed by 112 per cent over the two-decade period. But the single largest increase was recorded for HECS or HELP loans, held predominantly by younger people, which increased by 182 per cent.

In a sign of the changing nature of financial payments, average credit card debts fell by 64 per cent, from $1805 to $645, over the period.

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