The myth of the “smashed avocado” generation

By Leith van Onselen

Back in 2016, Bernard Salt attacked the Millennial generation, claiming they’d rather spend their money on $20 smashed avocado breakfasts than making the sacrifice their parents and grandparents made to forgo consumption in order to accumulate a deposit.

The ABC has published an interesting chart series comparing age cohorts in 2016 to the same cohorts in 1981. The charts pertaining to the Millennial 31-40 cohort is particularly interesting and comprehensively debunks Salt’s profligate Millennial claim.

First, real median house prices were more than twice as high in 2016 as they were in 1981:

Second, mortgage repayments as a percentage of disposable income were also 43% higher:

Third, home ownership rates have fallen 26%:

Fourth, real weekly rents have more than doubled, making saving a home deposit more difficult:

And finally, the percentage of income spent on recreation has actually fallen 18%:

In other words, Bernard Salt couldn’t be any more wrong about Millennials.

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Unconventional Economist
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  1. More evidence he should quit commenting on demographic trends then – as he isn’t a demographer. He should have this printed on a shirt and be forced to wear it to press conferences. Tool.

      • Steve Keen was mostly right, just got the timing wrong (haven’t we all). Bernard Salt is completely wrong.

      • Absolutely his writings on debt dynamics was excellent, the problem came when he started to become a ‘go to’ for house price forecasts and ended up making a fool of himself. A real shame because there aren’t enough truely independant analyst voices in Australian media.

    • A large number of Millennials vote for pro immigration parties and shoot themselves int the foot. If all the complaining Millenials in NSW vote for Mark Latham in the NSW election in the net few months they will begin an avalanche to end high immigration levels and will be able to buy homes at a lower price.

  2. Salt isn’t a demographer
    He works for kpmg ie big Australia pumpers
    He is a typical boomer I’ve got mine I’m all right jack

    • Salt is not wrong irrespective if he is or not a demographer or has hidden agenda.

      LvO looks here for a false exclusive relation between two correct statements, one that housung is indeed out of reach but Salt is correct that Millenials are not interested in sacrificing today for anything tomorrow.

      If houses came back to historical level milenials would not buy them either.
      House owning simply does not offer instant gratification for half the interest they put in any work/emplyment (of course, generalisation error applies here, there and everywhere)

  3. Salt is correct, and if you add that the millennial have been exploited by the msm to dream well above thier station, in some instances supported by the bank of MAD,
    as the reality that they will never attain their dreams, for the general millennial,
    huge problems will arise.
    think yellow jackets.
    the issue cant be defused, it has to explode.

    • Jumping jack flash

      If this were any country other than Australia.
      The people are too well fed, too entertained, and possibly just too ignorant, to revolt.
      It’d have to get a lot worse before they could be bothered.
      Not to say that it won’t.

  4. One reason for old people being wrong about the young’s “spendthrift” tendencies, is that the young now get so much MORE consumer goods and services for the same or less money, thanks to free markets and progress – BUT in housing the opposite has happened, thanks to the rigging of once-free markets.

    What young people now spend in cafes and on handheld IT, is a lot less than old people when they were young, spent on the odd visit to a milk bar, the odd movie ticket, and the odd toll call to friends and family. Old people just aren’t getting the point about what free markets DO – and that they SHOULD do the same for housing.

    • $13 at local trendy cafe for hell avo

      Half or full avo
      sprouts and other greens
      big thick slice of artisanl sour dough
      trimmings (toasted pepitas etc)

      medium soy latte

      Hardly ostentatious (though their raw vegan wagon wheel at $7.50 is some sort of high price delectability)

    • Yeah nah ! This cohort is made credit dependent and welfare dependent at a very early age. Its not their fault but the kids that get a job are miles in front of the aspirants most of whom have little to offer the economy in terms of repaying their HECS Auststudy etc.

      I don’t envy them in any way…

    • And my generation ripped through piles of grog. Half our uni years were spent drunk or hungover!
      The millennials l know don’t drink anywhere as much,whereas many of my old uni mates are still knocking it back( and some of them have or are developing a real problem).
      My boys watched in amazement as a couple we know well knocked back two bottles of wine( less one glass) and then got into the car and drove home. None of their mates would drink that much or drive afterwards.

      • The Uni experience today is nothing like it was 30+ yrs ago. It was a “life experience”, now it’s a debt experience.

      • Can’t afford to get sh*t-faced and ahve it show up on your permanent social media record for all future prospective employers to dismiss you.

    • “So in Bernie’s defence, it would seem that there is indeed a significant relationship between smashed avocado breakfasts and Australia’s 20 year long housing bubble, but it’s not the one-dimensional relationship with fiscal responsibility that the “Middle Aged Moraliser” scornfully posits through projectile flecks of hard-earned green breakfast fruit.

      Far worse than the inability of Australian youth to practice avocado-austerity adherence, is the disturbing fact that unaffordable housing is secondary to the irreparable damage caused to our once productive, dynamic, diverse and competitive economy by over-investment in smashed avocado breakfasts, and the terminal build up of severe risks to both personal and public financial stability caused by the highest level of smashed avocado breakfast debt in the world. We spent the last 20 years putting all our avocados in one basket, leading to a hyper-concentrated and unsustainable debt-fuelled economy, having experiencing the fastest de-industrialisation in the developed world”
      There are some wise commentators on this site who have been saying for years, that what is going on is not sustainable, in fact is fraudulent, and who encouraged dismissal of this whole housing fad.

      The beaches up here are closed, which means that if you go swimming and you need rescue, too bad, you drown.

  5. I think we should stop being mean to the boomers.

    They are hurting.

    Their franking credit windfalls are at risk and getting by with a million in savings outside the family home is tough, especially when the banks are not inflating the house prices as fast now.

    Before long they may lose their preening confidence to lecture and condescend.

    Will no one think about the boomers.

    Their tough times were all in their minds after all.

      • Good – best place for them.

        The inner city has been increasingly dullsville since it was fully gentrified in the 1990s. Once they get rid of the houso’s the process will be complete.

        It is amusing watching young hipster families try to raise kids in cramped but over capitalised “workers cottages” trying to convince themselves that the inner city is still so vibrant and cosmopolitan when it is really just white bread with some foreign students delivering menu log between assignments.

        Over the next 10-15 years the inner suburbs will become rich heritage (in multiple senses of the word) low density retirement villages with the oldies clustering around the railways lines waving to their grandkids as they speed past riding the trains from the outskirts to the CBD.

      • @pfh – Can probably see this a bit already in the resurgence of some of the midwest towns in the US. Lots of space, big yards and great rail-trails etc. But the US has an established and still functional productive economy to retreat to. Australia as a rent seeking economy has a long way to go to make this a viable option. I’ve lived regionally for many years and it’s hard to see how we can recover our productive economy in the short-term.

      • morgs,

        Yes – we are going to have to go through a lot of pain before we understand how much we fooled ourselves with the idea that speculation was any substitute for productive investment.

        Even the Saudis finally understand the perils of sitting on top of a sea of oil.

        Just as we seemed to have started to learn the lesson, we got Howard and Costello who shamelessly promised an endless future where we produce nothing but ships full of dirt and use the proceeds to speculate on asset prices.

        Mind boggling stupidity.

        I wonder if Mr Bowen understands how difficult it is going to be wean the junkies off the junk.

        The franking credit moaning is just the start of it.

      • Ditto homie, ditto
        My mum had a near mental breakdown at me about my Facebook anti boomer ravings (ironic as she claimed to NEVER BE ON TEH FACIE) when visiting that went well beyond unhinged (it turned into a semi interrogation asking how much I gave to charity blah blah)
        “Fck this I’m going to bed mum”

      • “”I can’t afford to donate to charity MUM ! I’ll be paying off my university debt for the next 10+ years, since your generation decided that you should be the last ones to free university tuition. Now GAGF, I have 5 hours to get some sleep before I have to get up and start my early morning internship at Muffin Break””

      • Well sort of accurate, fortunately I don’t work at Muffin Break and uni was paid off back when an engineering degree was “only” 4k a year and we had HECs. Of course, she had free uni.

        BUT BUT BUT
        – “interest rates – your father and I had 19%” (sure, on a tiny mortgage)
        – “I had to work hard too” (sure but the boomer driven *system* is the issue)

      • Nah, the retired postal clerks have a defined benefit indexed pension from the government. So all good bro.

  6. Someone also has to pay for the debt sitting on all these recently renovated trendy ‘cafes’. There seems to have been an arms race in this area to have the trendy decor, which I assume doesn’t come cheap.

    Also if these 20 – 35 y/os are still living at home, assuming they have a reasonable job they would otherwise be paying in the $1000 or so a month in rent, this is money either to save or spend in a discretionary manner they otherwise wouldn’t be able to do.

    • And how many years of saving $1000 a month does it take to get a deposit for a house in Sydney or Melbourne?

      • ‘Bout 20. If prices don’t rise.

        If they do rise, like they have – you need to save….. forever.

    • And what do all those young people do, who grew up in the non-capital cities (and whose parents still live there) but who are forced to look for work in the capitals because 20 years of Boomer neo-liberalism has completely hollowed out the rest of the country ?

    • shiiiiiiieeee home boy
      any one can buy some old ply or palettes and put together a trendy fit out for fk all
      It’s all the $50 (cash) labor that is needed to pay for the expensive (thanks boomer system) housing that’s all killah no thrillah

      • Not those ply fit-outs, the ones where the whole place is done up top to bottom. Must cost a bomb. I think we’ve already seen high end restaurants struggling.

  7. Another reality that is not included in the excellent data presented above, is “the proportion of income over a lifetime spent on housing”. If you think that proportion “right now” looks bad, it looks far worse in lifetime terms.

    The size of the principal really, really matters. A large mortgage with a low interest rate is NOT the same as a small mortgage with a high interest rate even if the payments at the start of each are comparable. The ignorance and unwisdom that is prevailing in public discourse on this issue is just depressing.

    Politicians seem to understand “Keynesianism” and the effect of discretionary spending on the economy, when it comes to the “need” for the government to boost this along a bit – but who is thinking about the trend in household discretionary spending AFTER HOUSING COSTS, over the long term? The generation who has been condemned to paying 3 times as much, or more, of their lifetime income, for housing, is a generation that won’t be getting their kids music lessons, or orthodontry, or doing tourism. This is one of the feedback loops that makes a housing-Ponzi economy all the more inevitably self-destructing.

    • And furthermore, the rate of financial attrition of households due to bad luck, is greatly increased. Most people get some bad luck, sometime. A major accident, an illness, unemployment, being the victim of a crime or a natural disaster, disabled kids, disabled parent needing care, unexpected repairs to the home, etc etc – if your mortgage is 3 times the size, and even after 15 years, is still swallowing half your income, good luck coping with any of this stuff. People managed it in the past because the mortgage was small and was far less of a burden as the years passed. Plus, back in the day many households were single-income, and there was always the option of the woman becoming an earner to help the household survive. Two incomes are now priced into the expected debt position in the first place.

      • Very well said. We have come to the same conclusions about the unsustainable debt driven situation, and I have often wondered why it is that the so called “experts” at the RBA and government have failed to recognise and take actions to mitigate the potential risks.

    • It will look even worse when the 20 or 30 year life of the house is factored in
      This modern housing wont last longer that the repayment period

    • I tried to explain this to friends…all educated quite well…they could not see the difference between what you owe and your repayments.

      • it’s why one ought insist on paying 10%+ more than one need to, and banking any extra pay rises into the mortgage
        slam that mofo

      • As per my comment below, start by explaining to them how increasing the loan period reduces the monthly repayments (but they are still higher than the past anyway….which is just scary…)

    • One of my own pet housing affordability topics is that % disposable income figures are not “normalised”, so to speak.

      In that %s from different years are not adjusted for the same amortisation (payment) period, or loan length.

      eg. 5-15 years for the Boomers, and now 25-40 years, etc.

      Adjust the longer amortisation periods for the shorter ones (or vice versa), and the multiples of difference start to blow out even more….

      I can make a loan really cheap per month if you are willing to pay it off over 100 years!

      I have not seen a single affordability analysis that adjusts for the loan period (apologies Leith if you’ve done one!), but I rant to my wife about it every time I read another piece of pseudo-analysis about comparative housing affordability…instead we tend to get cherry-picked ABS data from people who don’t really know better (but should!)…

      I would do it myself, but I just don’t have the time… 🙁

      /end rant

      • good point
        when we refi, we always try and shave a year or so off period (which we can do as often move for lower rates)
        banks ALWAYS will try and service you on 30 years and something like ?7% ?

        Dad was a State Bank Vic manager and tells me he always counselled people to pay off their mortgages asap and shorten their period as much as possible to reduce interest
        Tells me it all changed when it was sold to CBA

      • It’s not just the term length, either. It’s the inflation rate that the interest rate is “compensating for”. Not only did the high interest rate generation get a small mortgage, they got significant nominal wage/income increases every year that steadily “inflated away” the burden of the mortgage. High interest rates are pretty much netted off as a “burden” by this effect.

        Furthermore, when the interest rates were high, there was every chance they would go down, which they did. Is this good luck gonna happen to the current generation with a low interest rate that even then. they can barely service because the principal is so large?

        I despair at the ignorance that prevails on these points. It might as well be fraud, the fact that it is ignorance doesn’t make it any less a vicious set-up of the younger generation.

    • Thank you for mentioning this Phil.
      This is often ignored in the debate, the lifetime costs of now-ism.

  8. blindjusticeMEMBER

    Its the Muffin Break Generation, and not because they are spending money on muffins…………………

    • Only in a “oh, everyone is really mad at me, I’d better back-track” kind of way

      When he was first called out on it, he initially defended the comment and the article.

    • Well don’t quit your day job bernie, if you’re gonna crack one, make sure it can’t easily be taken out of context or that one needs to read a 55 page speech to get the context

      keep em short sharp and self contained

      like reusas parties

      • I think it is the other way – people should take classes in how now to take things out of context. The first four paragraphs of the original article:

        If you are under 40 and starting to read this, I politely suggest that you turn the page. There isn’t anything here that will interest you. Just me rabbiting on about the old days. Bit of a yawn-fest, really … Have they gone? Is it just you and me now? Shhh … act natural and read this column without making a sound. Do not look up; do not make eye contact with anyone. Come close to the page. Closer!

        I belong to a secret society and I am looking for new recruits. It’s a sect known as the Middle-Aged Moralisers. We in the MAM meet monthly in our members’ homes in the suburbs, where we discuss … hush … the youth of today. Why the need for secrecy? Well, if it ever got out that middle-aged people talk about young people, all hell would break loose.

        We on the MAM membership committee have been watching you. We’ve seen the pursed lips, the tut-tutting, the head-shaking. We have seen the sighing, the face-palming, the eye-rolling. We think you are one of us. We know it, you know it. Come to our next meeting. You’ll find it liberating to know there are others just like you.

        This week we’re discussing the evils of hipster cafes. Do you know why hipster cafes have milk crates for seating? To keep baby boomers at bay. They know they can’t officially ban us, so what do they do? They rig the seating so that tight baby-boomer hamstrings recoil at the prospect of positioning the buttocks below the latitude of the knees. Sitting is fine. Getting up is problematic. And doesn’t the sub-40 set know it. They don’t want we over-50s despoiling the authentic grooviness of their cafes. (Is groovy still a word?)

        The housing/ avocado comment was little more than an exclamation mark on the whole column. Yes it wasn’t a very good or funny column but others need to stop taking it seriously.

        The most insulting part about the whole thing for me was that it talked about under 40s not wanting under 50s to spoil the scene. It’s like us 40 somethings don’t even exist!

  9. The Boomer generation seems to prefer spouting lofty ideals and false morals than actually engaging with their communities. Unfortunately they are wilfully blind to the realities of an angry youth (and not just immature students, but people in their 30-40s too). This anger is becoming visceral and potentially quite destructive.

    From a strategic perspective, Boomers need to quickly understand that their influence is rapidly waning and their divisive rhetoric will come soon back to them in spades. They MUST engage in policy debate that involves the broader community, outside their own cohorts. If Boomers fail to engage in these issues intergenerational issues, it will be done for them, whether or not they like it.

    The policy discourse is very close from shifting away from equality arguments (like, it’s unfair to get tax refunds even though no tax was ever paid), to more draconian policies, like confiscating wealth that is deemed unfairly misappropriated. This is a very slippery slope into incivility.

  10. Lots of reasons, but anyone who thinks it’s easier for younger people needs to start looking at the real job marter, lack of opportunity due to a very narrow economy, low IR’s and harder to save, years of FIRE stealing everything not nailied and then some, mass immigration and foreign states stealing IP, agricultural land, laundering money to RE… I could go on. And in control of all of this are the overlords of all political parties that have enrighed themselves and their masters. No one is looking after the deplorables people…

    • Last i heard this joint is a democracy
      if you vote for these idiots, you can only expect a poor result.
      Labour is an alternative, but look at the track record of that commo shortman

      • I totally agree WW, but as I said before the system is broken. Our vote is meaningless as it just some pollie spending or taxes on their agenda or their masters. It’s rarely for our benefit in the big picture pov. They are both the same and commie greens…ship of fools.

      • Well we know that
        but at least Ermo goes to the Labour party meetings and gets his opinion out
        you guys need to get a similar movement going, and dont muck around.
        PH was elected on near nothing.
        Its not hard to get a system going and get elected,
        or become wealthy and buy the politicians as per the current practice.

  11. There was an interesting survey in the US that asked boomers if they could would they like to be young again, but not in the past; today.
    overwhelmingly most said no.
    I cant remember where I read it, it was a 2-3 years ago.

  12. Bah millenials. They’re both lazy and entitled, because they won’t make and/or serve delicious baked goods for free.

  13. Jumping jack flash

    Hey look over there, a smashed avocado!

    Meanwhile, my house is worth whatever I say it is, and the banks simply hand out however much debt is required for someone to hand me the amount I want.
    And why shouldn’t the banks do that? Everyone deserves to be happy. I’m happy when I receive my debt mountain in my bank account. The indebted rube is happy when they receive the house and it magically rises in value. The bank is happy when they receive their interest. Everyone is happy!

    When enough people do this at the same time, our “housing market” dictates that houses must simply be worth that much because someone paid that much, and our awesome property valuation system also means all the houses around those ones are also worth that much. (+/- a bit here and there, of course, but not much less, if any)

    There’s no risk!
    When enough debt is being handed out to keep houses rising in price as the vendors simply think up new, bigger, numbers, the “market” and the constantly rising “valuations” take care of the risk.
    Besides, conveniently all risk except for the risk that depends on the valuations and debt’s growth is ignored.

    Then, quite suddenly as if by some kind of magic we have a system to create infinite debt with absolutely no risk!
    (No risk that anyone cares about, so it mustn’t matter)
    Truly an amazing achievement! Certainly a new age of economics!
    2 decades of growth, 3 decades of growth, 10 decades of growth.
    Infinite growth because of infinite debt.
    Infinite happiness because of the infinite riches that infinite debt brings.

    What could go wrong with that?

    • HnH is always bashing on about the value of the currency, eg the exchange rate vs the reserve say the USD
      PJK introduced us to the notion of the banana republic.
      for the moment the currency is holding, only because of interest rates
      if interest rates go down and the real value of the currency is tested
      under 50c/[USD is probable
      then it is good night nurse.

  14. BANK AD #1 Why would you go out for lousy avocado and toast when you can make it at home for much less?

    BANK AD #2: We support small business!!!

  15. Great article. Just wondering, do you send this analysis to Bernard? I would be interested in his response.

  16. “I Bought a Condo and It Ruined My Life”
    “Nearly a decade after the collapse of the housing bubble, I’m still feeling the consequences.”

    We need to give these folks some credit for avoiding extreme financial risks as the data supports their intuition; a battle the propaganda for ‘buying’ is obviously losing.

    The once proud Aussie dream of property ownership is now a mangled and terrifying nightmare. Avoiding the certain disaster is actually pretty smart but this does not align with the ponzi ‘machine’ that needs a full hopper of input .
    Like plummeting car sales, the ‘value’ is just not there anymore for this age group. The ‘sellers’ of the over-priced properties NEED the young ins to lever up or the game dissolves– for the vendors and the lenders.
    These ‘this happened to me’ stories are more powerful than the spruik and what we are witnessing now in Straya is just the prelim’s of the unwind.

  17. Garbage, for starters there is no chart showing the growth in average weekly earnings since ’81.

    Seriously, running short on stuff worth writing about? this is nothing but BS click bate.