Millennials in Australia are growing increasingly angry about being priced out of the housing market which could end up having a huge impact on the rest of the country, a leading UK expert has warned.
Unless public funds are put aside to provide more affordable housing for those aged between 20 and 35, we could see greater divisions in society, more youth support for extremist groups and damaging levels of alienation.
“I think in Australia you haven’t yet felt the anger that is coming from young people,” says Oona Goldsworthy, the chief executive of UK housing association United Communities, who is in Australia as part of a world tour studying Millennials’ housing.In Australia, Millennial home ownership levels are among the lowest in the world.
“It can be nice and civil and well-behaved, or it can be quite difficult to contain, and you don’t know where it can go. It can lead to things like young people supporting extremist groups on the fringes of society if you’re not careful. If you don’t listen to young people’s voices, that can have a big impact on both the micro and macro levels.”
Ms Goldsworthy, who is also working with Grand Designs presenter Kevin McCloud on a landmark housing project in the UK, says the housing crisis disproportionally affects the young because they have no, or little, capital behind them, and fewer options.
In Australia, she sees that problem as particularly acute with Millennial home ownership levels among the lowest in the world, beaten only by the UAE, according to a recent global survey by the HSBC bank. Here, only 28 per cent of young Australians own their home, compared with the average around the world of 40 per cent.
“On an individual level this is very difficult for young people,” Ms Goldsworthy says. “But on a macro level it impacts on the success of our cities and economy, with Millennials making decisions to leave cities, delay families and fostering inequality and resentment between generations.
“In Britain, that was particularly recognised after the anger that followed the Grenfell disaster [when 23 people in a tower block in London died in a fire] which highlighted the social inequality and injustice of the housing market. A lot of people then realised the depth of the housing crisis – which isn’t solved by leaving it all to the private sector.”
This site has frequently railed against the unfair treatment leveled at Australia’s Millennial generation.
This inequity is most apparent in the housing market, where today’s younger generations are being forced to pay far more than their parents to live in smaller and poorly located accommodation. But it extends beyond housing and includes a whole bunch of things like:
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Importing large numbers of foreign workers in a bid to increase competition for jobs and lower overall pay and labour standards, as well as keep upward pressure on house prices, all under the cloak of “skills shortages”.
Related to the point above, the refusal by Australian businesses to take on new graduates and train local workers, as well as the increasing propensity for businesses to take on unpaid interns.
Biased tax laws (e.g. negative gearing and the CGT discount) that encourages investor speculation and crowd-out first home buyers.
Failing to apply adequate means testing of the Aged Pension, despite it being the biggest and fastest single cost to the Budget and the wealth of those aged over 60 skyrocketing over the past decade at the same time as the wealth of younger Australians has declined.
Failing to adequately unwind overly generous superannuation concessions that overwhelmingly benefit the old and wealthy.
There are other points that I will have missed, but you get the picture.
These inequities are by no means isolated to Australia, however. We have also seen similar issues at play in New Zealand and other Anglosphere nations, whose Millennials are also been shafted.
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Indeed, yesterday Credit Suisse released its 2017 Global Wealth Report, which contained a whole chapter on the mistreatment of the world’s Millennial generation:
The Millennials have had an unlucky start to adult life, hit early on by the repercussions of the global financial crisis, alongside mounting student debt, tighter credit and rising income inequality…
The Millennials’ challenges seem to have been most evident in North America, but the ripples have extended to Europe and elsewhere. They contrast with the good fortune experienced by the baby boomers, born in large numbers between 1945 and 1964, whose wealth was boosted by a range of factors including large windfalls due to property and share price increases.
The millennial cohort is smaller as a percentage of the total adult population than the baby boomers were at the same age. Normally it is good to belong to a smaller cohort: there is less congestion in school and less competition with peers for jobs and homes…
Cohort analysis seems to have been turned on its head: the big cohort is now the lucky one…
Millennials are doing less well than their parents at the same age, with respect to incomes, home ownership and other dimensions of well-being…
Student loans have been an increasingly important component of debt in a number of countries. The trend is particularly striking in the United States… The rise in student debt is partly due to higher fees. But it also reflects the fact that Millennials are more educated than preceding cohorts… But for most university-educated Millennials, the outcome may be job opportunities and wages no better than those of their parents, achieved by a dint of more costly education…
Millennials have been affected by the general rise in income inequality in advanced economies over recent decades… Mobility has also gone down. Similar trends have been seen in other “anglo” countries (with some notable differences, of course). The net result is that past expectations no longer apply…
The Millennials have not been a lucky cohort so far. They faced the rigors of the financial crisis and the high unemployment that followed in many countries, and have also been widely hammered by high and rising house prices, rising student debt and increasing inequality. Their pension outlook is also worse than that of preceding cohorts…
As a result, the Millennials are not only likely to experience greater challenges in building their wealth over time, but also greater wealth inequality than previous generations.
I’ve said it before and I will say it again: Parliaments world-wide desperately need to be occupied by a dedicated youth political party to apply a lightning rod and to educate and mobilise their ravaged young.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
