This report from Per Capita examines the impact of stagnating wage growth on the ability of young Australians—particularly Millennials and Gen Z—to achieve home ownership between 2012 and 2022, a period the authors term “The Lost Decade.” During this decade, real wages grew by just 2.6% in total, compared to over 15% in each of the two decades prior.
This stagnation, combined with rapidly rising house prices, severely curtailed the capacity of young people to save for home deposits or increase their borrowing capacity. The report estimates that the average worker lost $54,000 in potential income over the decade, equating to a typical 20% home deposit. The authors model the consequences for housing affordability and intergenerational wealth, finding that wage stagnation explains a significant share of the home ownership decline among younger Australians.
The report critiques tax policies like negative gearing and the capital gains tax discount that incentivized property investment, while also tracing the failure of industrial relations policy to support robust wage growth. Concluding with cautious optimism, the authors highlight modest improvements in real wages and affordability since 2022, thanks to policy changes and inflation adjustments, while warning that rebuilding equity lost during the Lost Decade will take many years.
