We’ve all heard accusations that the younger generations lean towards “too many lattes” and “broken avos” and can’t afford to buy their own homes.

And the younger generations point the finger at the older generations for making it so much easier for them and buying all the good properties.

The truth is that each generation has had its own unique struggles with first home ownership.

But what was the hardest?

baby boomers

There is a common misconception that baby boomers did not have the same struggles that first home buyers now face with high interest rates and the crippling cost of living. But that is not the case.

In the 1980s and 1990s, boomers faced high interest rates, recession and wage stagnation, according to Gareth Bryant, a senior lecturer in the Department of Political Economy at the University of Sydney.

Professor Bryant said interest rates meant mortgage repayments were extremely high, in some cases as high as 17%.

At the time, he said that would have meant mortgage repayments were at least 30% of income.

“It was a different kind of challenge. But today you get (the same challenges) and on top of that you actually get a deposit to buy a house in the first place,” Professor Bryant said.

While they had their problems, statistics show that baby boomers owned more homes than other generations.

The Australian Bureau of Statistics looked at census data from 1991, 2006 and 2021, which showed that home ownership for people aged 25 to 39 has declined in each successive generation.

Baby boomers aged 25 to 39 in 1991 were three times more likely than those aged 25 to 39 in 2021 to own their home.

Generation X

In the 1990s, boomers who were able to enter the housing market would have enjoyed a significant increase in home prices that began in the early 2000s.

Professor Bryant said one of the biggest dividing lines between boomers and Gen Xers was whether or not they could buy a property during the boom in house prices that began in the early 2000s.

At the same time, many Gen Xers would then be in their 30s and looking to own their first home.

He added that in the early 2000s, “we saw prices really explode.”

“Since World War II, all generations and age cohorts within generations have had lower levels of home ownership than older generations and age cohorts. But with Gen X we started to see more pronounced gaps emerge,” he said.

Older Gen Xers, who were able to buy before the housing price boom of the early 2000s, had similar levels of home ownership as boomers.

But those who delayed buying a home until their 40s, and younger members of Generation X, faced more significant challenges as a result of home price inflation, he said.

According to Census data, 25- to 39-year-olds of all generations made higher mortgage payments than rent.

But Gen X paid the highest proportion of their income on mortgage repayments compared to other generations.

In 2006, the median income for Gen X was 44.8% higher than the total median income for all Australians aged 15 and over, the census also found.

The Reserve Bank’s cash rate in recent years has been between 2-4%, lower than in 2006 and 1991.

This would mean that millennials would generally have lower-interest mortgages than previous generations.

Millennials

Millennials were born in the 80s and 90s and therefore experienced early adulthood as smartphones and tablets became household items.

They have also been going through the current cost of living crisis at the same time many are looking to buy their first home.

This meant high interest rates and higher housing costs.

Professor Bryant said getting into the housing market and saving a deposit was much more difficult for younger generations.

“For many people, it doesn’t matter how careful you are with your money. It doesn’t matter how many sacrifices you’re willing to make, without some other kind of support, often from parents, it’s very difficult,” he said. .

Over half, 55% of millennials own their own home, which is lower than Generation X and Baby Boomers who had 62 and 66% at the same age.

It also showed that millennials are the most skilled generation.

2021 Census data, those aged 25 to 39 were the largest proportion to have earned a certificate, diploma or degree than previous generations.

More than three-quarters of millennials have a qualification compared to less than two-thirds of Gen Xers and less than half of baby boomers.

Generation Z

Generation Z is currently entering the housing market with the dual challenge of high prices and higher interest rates.

“They face significant ‘deposit gaps’ – saving a 10 or 20 percent deposit even with a good income is very difficult. It currently takes about 10 years to do this on an average income,” Professor Bryant said.

Many Gen Zers also have insecure jobs, which could make it difficult to secure a mortgage, he said.

And with higher interest rates, they will struggle to borrow enough money and make repayments without facing housing stress.

Home prices have continued to rise, so if things don’t change, home ownership may look like a kind of parental or grandparental support, he said.

“The wealth that is currently in our housing market (doesn’t) just disappear when people die. Instead, this money is transferred between generations,” he said.

“The evidence suggests that it is getting harder to buy a home with each successive generation.”

Some Gen Zs who may be in the early stages of buying their own homes, but Professor Bryant said it was a little too early to tell.

“The long-term trend is definitely towards lower levels of home ownership for this generation. Currently, levels of first home purchases as a proportion of total home purchases are at mid-range levels,” he said.

In the past two decades, there have been two spikes in first-home buying, both around the economic crises of 2009 and 2020, when interest rates were cut, he added.

The alpha generation

Projections for Generation Alpha may mean that home ownership will continue to be difficult.

Professor Bryant said if things continue on this trajectory, it could mean this generation ends up renting for a longer period of time.

Housing affordability plays a role in first home ownership for younger generations.

He added that intergenerational wealth or inheritance could be the likely route into the housing market for this generation.

“Parents finding ways to unlock equity in their home, by giving gifts, coming in as a guarantor, things like that, will probably be the key determinant of whether or not they can get into ownership,” he said.