Page 7 - Wealth-Adviser-Issue-119 (FWP)

ISSUE 119
SEPTEMBER 2025

RESETTING THE DREAM

AUSTRALIA’S GENERATIONAL HOUSING

DIVIDE AND WHAT COMES NEXT depositphotos.com

BY WEALTH ADVISER ongoing house price growth, even as incomes stalled.
Housing affordability today ranks among the worst in the
Introduction: From Dream to Divide developed world. Data from the State of the Housing System
For generations, owning a home was central to the “Great 2025 confirms that the price-to-income multiple—once a
Australian Dream”—a symbol of security, belonging, and manageable 3 to 4—now pushes 8 to 10 in major cities. This
prosperity, achievable through steady wages and prudent shift has diverted capital away from productive investments
savings. Yet the landscape of the 2020s is sharply different. into housing, reducing living standards and making home
Housing prices have surged far beyond wage growth, while purchases ever more distant for many young families.
stagnant policy, high immigration, and a preference for asset Historical housing undersupply, tight planning rules, and
inflation have left many young Australians feeling locked tax settings have compounded the divide.
out. The system is now stacked against young people who
increasingly feel home ownership is out of reach. Australia’s The New Reality: Generational Impacts,
growing intergenerational housing wealth divide is one of Division, and the ‘Rent Trap’
the biggest issues facing our society. For Millennials and Gen Z Australians, the “bank of mum
and dad” has become an unofficial institution: parental
How Did We Get Here? Asset Inflation, Policy support is increasingly necessary for home ownership,
Choices, and Missed Opportunities further entrenching inequality. Young people have been the
Much of the housing crisis has been decades in the mak- big losers in all this—belatedly, they’ve realised the system
ing. In the wake of the Global Financial Crisis, both Labor is stacked against them and they may never be able to buy
and Liberal governments were unwilling to address the main a house of their own. The situation is deeply emotional, as
drivers for the economic slowdown—instead, they sought well as economic, fuelling protests, political backlash, and a
to support asset prices to give the appearance of increasing loss of trust in leaders.
wealth. Policies such as negative gearing, capital gains tax This generation of renters faces greater insecurity and
concessions, and frequent first home buyer schemes fuelled fewer pathways to building wealth. According to CEDA,

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