A deep and troubling economic divide is fracturing Australian society, pitting the financial security of older generations against the desperate struggle of the young. New analysis reveals a tale of two Australias: one where Baby Boomers navigate the cost-of-living crisis from a position of strength, and another where Generation Z is being crushed by its weight.
The Insulated Generation: Boomers' Financial Fortress
Australians aged over 65 have emerged as the nation's most economically resilient demographic. Data paints a picture of remarkable financial health, with this cohort having the lowest inflation rate of any group at just 5.3%. Their secret weapon? Outright home ownership.
With mortgages long since paid off, Boomers have been largely shielded from the Reserve Bank's aggressive interest rate hikes. Their major expenses—food, fuel, and energy—have seen smaller price increases compared to other household costs. Many are not just surviving but thriving, with household savings for over-65s swelling by a staggering 9.6% in the past year.
Generation Squeeze: The Brutal Reality for Young Australians
In stark contrast, Australians under 35 are facing an economic maelstrom. They contend with the highest inflation rate at 6.3%, driven by a perfect storm of soaring rental costs and mortgage pain.
For renters, the situation is particularly dire. advertised rent prices have skyrocketed, pushing many to the brink. Those who managed to enter the property market recently now face punishing mortgage repayments, with many enduring the sharpest end of the RBA's rate tightening cycle.
The financial bleeding is severe: household savings for under-35s have collapsed by 17.4% in the same period Boomers' savings grew.
An Economist's Stark Warning
"The data reveals a story of two Australias," explains independent economist Nicki Hutley. "If you're a young person, you are being hit the hardest. It's a double whammy—you're more likely to be renting or to have a mortgage, and you're in the age group where every dollar counts for building your future."
Hutley highlights the cruel irony facing younger generations: "They're being told to stop eating avocado on toast to save for a deposit, while simultaneously facing the highest housing costs in history relative to income."
The Housing Crisis at the Heart of the Divide
The core of this generational schism is Australia's housing market. Soaring property values have created enormous paper wealth for older homeowners while locking millions of younger Australians out of ownership entirely.
This isn't just about current comfort—it strikes at the heart of intergenerational wealth transfer and long-term financial security, potentially creating economic ramifications that will echo for decades.
The great Australian divide is more than an economic statistic; it's becoming a fundamental feature of the national experience, determining financial security based largely on when one was born.
