The housing challenges of poor, forgotten gen Xers

They might be the forgotten generation stuck between two big personality eras, but a gen X spending boom is coming as they get set to inherit just as their kids stop depending on them.

It’s no coincidence that Xers took on the working from home revolution during the pandemic lockdowns with ease. Picture: NCA NewsWire / Jeremy Piper

We label the cohort born between 1964 and 1981 as gen X. Poor, forgotten gen X. Sandwiched between the huge baby boomer and millennial generations, gen X got used to being ignored – they are the middle child of Australia.

Why is gen X such a small generation? When they were meant to be born, the contraceptive pill was introduced. That kept a lid on things. From its introduction in 1961, the pill helped to push birthrates from 3.15 in 1964 down to 1.94 in 1981.

Migration intake during the 1970s was about half of what it used to be in the 1960s. It was only in 1975 that no-fault divorce was introduced in Australia, and fewer younger siblings were added to families.

The crude divorce rate shot up fourfold during 1976, and then settled at a new normal that was two-and-a-half times higher than before the legal changes.

From a housing perspective, a divorce initially translates to a doubling of homes needed to house that family unit. More divorces, more dwellings, higher house prices.

Xers were not only the first generation where a sizeable number of kids lived through their parents’ divorces, but also the first generation whose mums joined the workforce at scale.

Gen X saw advances in gender equality in action in their own homes. They are the first generation who thinks it’s normal for women to be part of the workforce, and gen X has been pushing for more gender equality ever since.

TV played a big role in the upbringing of the latchkey generation who came home to an empty home after school. Both parents were at work and the TV offered ready-made entertainment.

Advances in gender equality meant many generation Xers returned home from school and switched on the TV for entertainment as both mum and dad were still at work.

Colour TV came to Australia in 1975, and gen X, when at home, had constant access to US culture through Hollywood movies and TV shows as well as the newly introduced US fast- food restaurants. Gen X, therefore, tapped into a US-centric, but global view of the world.

Their parents forewent family time for family income, and in some cases that resulted in divorce. Observing this led gen X to being determined to put family happiness before family income once they grew up.

While the baby boomer lived to work, gen Xers work to live. Sure, a fulfilling career and tons of money still sound appealing, but time with the family has an even better ring to it. This obsession goes so far that we see a dip in entrepreneurial energy among gen X men. Running your business almost guarantees that you have less time available for your family. That’s a trade-off gen X men weren’t willing to make, and fewer of them than we would statistically expect became business owners.

Gen X are the only generation in Australia that grew up largely unsupervised. Both parents worked and we hadn’t established a nation-spanning childcare network yet. Their parents had them on a very long leash. “Just come back home when the streetlights turn on.”

Xers are also a bit cynical, sarcastic, and sceptical in their world view and dislike authorities or hierarchies. This generational cynicism was famously captured by Friends’ Chandler Bing (actor Matthew Perry was born in 1969).

This collective cynicism forged them into a very pragmatic generation. Xers don’t really connect to the high-mindedness of the two generations they are sandwiched in between.

Gen Xers research every feature of every leaf blower they purchase to death. When selling to them (goods and ideas alike), use facts, highlight product features, but don’t moralise.

From 2024 to 2034, the share of the population that are Xers will fall from 22 per cent to 19 per cent. In the workforce, we will see Xers fall from 34 per cent to 20 per cent.

Clearly this means this small generation becomes even less influential over the coming decade, right?

Well, not so fast.

We must not underestimate the influence of gen X. In many aspects, the 2020s will predominantly be shaped by Xers. There is a level of seniority built into leadership positions in Australia. You become prime minister at 52 and chief executive at 54. The mid-50s are gen X’s territory during the whole of the 2020s. The 2020s are gen X’s decade.

Generation Xers are a pragmatic bunch who might seek to downsize earlier in life in order to free up money to spend on leisure and health.

This observation alone makes me very optimistic about our efforts to close the gender pay gap (different to the gender income gap, but that’s a topic for another column).

Gen X leaders will also push for better work-life balance. It’s no coincidence that Xers took on the working from home revolution during the pandemic lockdowns with ease.

Due to their position in the life cycle, many gen Xers are financially overstretched now. Their kids are still financially dependent on them, and the mortgage isn’t paid off yet.

Many Xers made use of the super low interest rates during the pandemic years and upgraded or renovated their family home with the intention of creating a bit of space between parents and teenage kids. Sure, gen X has already had quite a few promotions at work, and are treated to their highest career incomes, but the expenses just keeping coming at you quite mercilessly in your 50s. If something goes wrong, the house of cards might well collapse. In your 50s, health scares might well diminish your capacity to earn an income.

The kids will continue to depend on you financially, even after they moved out; your ageing parents will likely increase your own financial and/or time commitments; plus the unexpectedly high interest rates create real financial pressure.

Gen X really is burning the candle from three ends this decade (I know, it’s a weird ­candle).

The older half of gen X is especially vulnerable as their retirement savings aren’t quite as juicy as they could have been.

The younger half of the generation only started their careers after superannuation was introduced.

Let’s say you were born in 1970 and started work straight after university in 1992; you should have a sizeable super balance to retire with since every pay cheque you ever earned contributed to your super.

Young gen Xers will start to retire in the mid-2030s and their super account will be filled nicely.

While the coming decade will see lots of financial pressures, gen X is set to inherit money once their parents die, about the same time their kids stop depending on them financially. There is therefore a gen X spending boom waiting for us in the mid-2030s.

As a pragmatic generation, they might well look to downsize much earlier in life than previous generations to free up money to spend on leisure and health. I expect Australia’s middle child to act more calculating and data-driven in retirement.

This would in turn increase the ability of the housing market to right-size in a more efficient manner. Further, I predict that by the 2030s, stamp duty will have been replaced by a land tax which would make downsizing even more attractive.

Don’t discount gen X based on their small size, they are changing Australia in a lasting way as we speak, and their impact on the housing market will increase in about a decade.

Simon Kuestenmacher is co-founder and director of research at The Demographics Group.