Boomers are three times more likely to own a home than Millennials

A new report from the Australian Bureau of Statistics (ABS) confirms the Boomers have had it easier, aptly named 'Back in my day' . 

The ABS looked at Census results from 1991, 2006, and 2021, when the last three generations, the Baby Boomers, Generation X, and Millennials reached the ages of 25 to 39, an age cohort which is “commonly associated with key life transitions such as completing study, establishing relationships, marriage, having children and purchasing a home.” 

At the ages of 25 to 39, the Baby Boomer cohort was three times more likely to own their own home than Millennials today. ‘Ownership’ includes those with a home loan, alongside those who own their house outright. 

According to the report, 55% of Millennials are homeowners, compared with 62% of Gen X and 66% of Baby Boomers at the same life stage. 

Cost of living bites in 2022

With the current cost of living pressures nibbling at people’s wages, inflation devaluing their cash, and the steep, 30-year-long rise in house prices, Millennials are on the backfoot compared to Generation X and the Baby Boomers. 

A lot of this is about timing. Property prices have risen significantly since 1991, making a high income necessary for those wanting to enter the market in 2022. 

In fact, the Australian housing market has grown over 381% over the past 30 years, according to the Aussie 30 years of property trends report.

The most disturbing factor has been the average wage versus the median property price, runaway trains travelling in opposite directions from each other.

Millennials in 2021 earned 0.7% less than the personal median income of all Australians over 15 years old, while Gen X earned 5.6% more in 2006 and the Boomers earned 8.3% more in 1991.

According to the ABS , the average full-time Australian worker is paid $1,769.80 before tax, taking the average annual salary to a pre-tax total of over $92,000. However, as of the June Quarter of 2022, the mean price of residential dwellings sat at $921,500 – over ten times the annual salary.

Looking back in time, the average salary in 1991 was approximately $29,500 . If the median house price in 1991 was $114,000, according to Aussie’s report, that would come in at just over three times the average annual income. 

Granted, those with a home loan in the 90s had to deal with higher interest rates which stayed above 10% until about 1995 . 

Home loans were cheaper back in the day

Still, the average home loan repayment was likely cheaper in the 90s than they are today, purely due to the inflated price of property in Australia. 

For example, at the median house price today, a $921,500 home loan at 4% p.a. over 30 years results in a monthly repayment of $4,399. In 1991, a $114,000 home loan at 10% p.a. Over 30 years results in a monthly repayment of $1,000.

However, making repayments isn’t the only hurdle to homeownership for younger generations. There’s also the matter of saving for a deposit.

There are several government support schemes available, such as the First Home Buyers Grant, but prospective homeowners will still need to save up a significant amount to get their foot in the door.

You don’t have to be an economist to know that a higher income makes saving up for a deposit much easier.

How education can help with a higher income

Data tells us that a good education can help with your income.

To this end, the 2021 Census data suggests that Millennials are the most qualified generation, with 79% having earned a non-school qualification (a certificate, diploma or degree) compared to Gen X (64%) and the Baby Boomers (48%).

The ABS says Millennials are more likely to have a bachelor's degree or higher, with 40% having a tertiary education qualification. Almost 25% of Gen X had a higher education qualification, while Baby Boomers lagged behind at 12% – despite free tertiary education being offered from 1974 to 1989 thanks to Whitlam’s Labor Government.

Ah yes, another way the Baby Boomers won the birth lottery – no student loans that eat into your income, like the rapidly engorging HECS debt.

The ABS actually notes that the importance of a university degree to earning a high income (defined as the top 15% of earners) has increased with each generation, with 65% of high-earning Millennials having a bachelor degree or higher, compared with Gen X (52%) and the Baby Boomers (38%).

It’s important to note that the levels of qualifications required for employment have changed since 1991.

So, while it’s getting more expensive to purchase a home in Australia, it’s not impossible. In fact, 48.9% of Millennials as of the 2021 Census had a home loan. Still, the number of those who own their home outright has dropped off noticeably compared with Boomers and Gen X at the same age.

In 2021, 5.7% of Millennials aged 25 to 39 owned their home outright. In 2006, 8.4% of Gen X owned their home outright. In 1991, almost 20% of Baby Boomers owned their homes outright.

At the end of the day, homeownership isn’t easy - but starting with the right home loan at a good rate of interest can help. Compare home loans with Mozo and make sure you keep up to date with the latest home loan news.