The more I examine the 2016 Household, Income and Labour Dynamics in Australia (HILDA) survey, which was released yesterday, the worse it looks for Australia’s younger cohorts.
As noted in yesterday’s post, the HILDA survey revealed a rapidly growing wealth divide, whereby median wealth over the period 2002 to 2014 increased by 61% for those aged 65 and over, and by 39% for those aged between 55-64, but rose by just 3.2% for those aged between 25-34 and by only 7.4% for those aged between 35-44 (see below table).
However, while the percentage changes are damning enough, the actual real dollar change in wealth is even scarier.
As shown in the next chart, the oldest two age cohorts – 65 and over and 55-64 – have experienced a massive increase in real wealth of $249k and $233k respectively over period 2002 to 2014, whereas under 25s have experienced an increase in real wealth of just $4,175 and those aged 25-34 years old just $4,497 over the same period:
The fundamental driver of the gulf in wealth is rising home values. As shown in the next chart, the older age cohorts have experienced huge increases in home equity, whereas 25-34 year old’s home equity actually went backwards over the period 2002 to 2014, due in no small part to a huge rise in mortgage debt:
While young home owners have gone backwards in real terms, the HILDA survey also showed that actual home ownership has collapsed for younger cohorts, whereas those aged 65 and over have experienced stable ownership whereby roughly 75% own a home:
To add further insult to injury, entry level homes skyrocketed in value between 2002 and 2014, making the dream of home ownership even more difficult for younger Australians. As shown in the below table, the 10th percentile of homes – i.e. the cheapest homes on the market – had grown in value by 108% between 2001 and 2014, compared to 47% growth for 90th percentile properties at the top of the market:
Moreover, the older cohorts have increased their share of investment properties, thus helping to shut-out younger Australians from home ownership (see below table).
Overall, this HILDA release paints a picture of the systematic pillage of Australia’s youth and should be a rallying call to arms.