The housing market in Australia is a tale of two generations, with a stark contrast in wealth distribution. Generation X, the nation's wealthiest property owners, are reaping the benefits of the housing boom, while younger generations struggle to keep up.
According to KPMG, the average Gen X family is sitting on a fortune, with an estimated net worth of over $2 million. This is largely due to the skyrocketing property prices and the growth of their superannuation funds. But here's where it gets controversial: this wealth gap has sparked fresh debates about the country's housing affordability crisis, leaving many Gen Y and Z feeling left behind.
KPMG economist Terry Rawnsley highlights the importance of home ownership as the cornerstone of wealth accumulation in Australia. He adds, "Sometimes we overlook just how wealthy Australian households are." However, he acknowledges that the average wealth figure is skewed by those at the top end, with some families owning multiple investment properties.
With inflation still high, Rawnsley emphasizes that not everyone is thriving. "There are families struggling to make ends meet," he says. "The wealth distribution is not equal."
Baby Boomers, born between 1946 and 1964, remain the wealthiest generation overall. However, they are now liquidating their assets, selling properties and shares to build cash buffers for retirement. In contrast, Gen X, aged 45 to 60, has most of its wealth tied up in property. "Gen X owns the most expensive and biggest homes," Rawnsley explains. "They've climbed the property ladder, while Baby Boomers are downsizing."
There's a catch, though. The figures for younger generations may not accurately reflect the full picture, as those still living with their parents are not counted separately. This means the poorest millennials are not factored into Gen Y's average wealth.
The estimates are based on 2022 ABS data, updated by KPMG to account for recent economic trends. Last year, Commonwealth Bank economists urged the Federal Government to shift the tax burden from income to wealth, a suggestion that has gained traction ahead of Treasurer Jim Chalmers' economic reform summit.
Rawnsley agrees that the timing of entry into the residential market plays a significant role and that the government should consider tax system reforms. He adds, "It's becoming increasingly challenging for individuals to accumulate wealth independently. The wealth gap is often linked to parental or even grandparental wealth."
So, is it time for a tax system overhaul to address this wealth inequality? And what does this mean for the future of home ownership in Australia? These are questions worth pondering as we navigate the complex landscape of the housing market.
