Helping Younger Australians Thrive in a Changing Economy

Bridging the Wealth Divide from Boomers to Millennials

Rethinking wealth, housing and opportunity in Australia

The Changing Landscape of Australian Wealth

Australia’s story has long been one of progress, prosperity, and the promise that each generation will enjoy a better life than the last. For decades, this narrative held true: baby boomers and their parents benefited from robust economic growth, affordable housing, and expanding opportunities. Today, however, a new reality is emerging—one where young Australians face mounting challenges to achieving the same financial security as their parents.

As the Firstlinks article “Will young Australians be better off than their parents?” observes, “The wealth of older Australians has grown rapidly, while younger Australians have seen little improvement in their financial position.” This generational divergence is not merely a matter of perception; it is rooted in data, policy, and experience. For Australian financial advisers and their clients, understanding the forces behind these shifts is essential to navigating the future.

This article explores the causes and consequences of intergenerational inequality, the role of housing and policy in shaping wealth, and the practical steps advisers and clients can take to secure a brighter future for the next generation.

Intergenerational Inequality: Causes and Consequences

The gap between young and older Australians is widening across several dimensions—income, wealth, and opportunity. While older generations have enjoyed strong asset growth, particularly in property, younger Australians have faced stagnant wages, higher living costs, and limited access to the housing market.

As the Grattan Institute’s “How to ensure a fair go for young Australians” highlights, “Housing has been the main driver of the increase in wealth inequality.” Over the past two decades, property prices have soared, far outpacing wage growth and making home ownership increasingly elusive for many under 35. This trend is compounded by the fact that “Australia’s tax and transfer system has become less progressive, favouring older, wealthier Australians,” as noted in the Firstlinks article “The distortions in our tax system have been ignored for too long…”.

This dual effect—rising asset values and policy settings that benefit those who already own assets—has entrenched intergenerational divides. The consequences are profound: young Australians are less likely to own homes, accumulate wealth, or feel secure in their financial futures. The philosophical ideal of a “fair go” is under threat, replaced by growing anxiety about whether the next generation can ever catch up.

External research supports these findings. The Productivity Commission has reported that wealth inequality in Australia is at its highest level in decades, with the top 20% of households owning 64% of all wealth, while the bottom 20% hold just 1%. This concentration of wealth among older Australians is a significant barrier to upward mobility for younger people.

Housing Affordability and the Property Divide

Nowhere is the generational divide more stark than in the housing market. Home ownership has long been a cornerstone of Australian prosperity, providing both security and a means of wealth accumulation. Yet, for many young Australians, the dream of owning a home is slipping away.

According to the CEDA report “Australia’s growing intergenerational housing wealth divide,” “Home ownership among young Australians has fallen sharply, while older generations have enjoyed significant capital gains.” The report details how the proportion of 25–34 year olds who own their own home has dropped from 60% in the early 1980s to just over 40% today. Meanwhile, those who already own property—primarily older Australians—have seen their wealth multiply.

Family support and intergenerational transfers are now playing an outsized role in determining who can enter the property market. The Grattan Institute notes, “The property market is increasingly shaped by family assistance and inheritance.” This means that a young person’s prospects of home ownership are increasingly tied to their parents’ wealth, rather than their own earnings or savings.

The implications are significant. Not only does this entrench inequality, but it also undermines social mobility and the ethos of merit-based success. As the CEDA report observes, “The growing reliance on family wealth to access housing risks creating a class-based society, where opportunity is inherited rather than earned.”

These trends present both challenges and opportunities. Clients may need guidance on how to support their children or grandchildren, manage intergenerational transfers, and plan for a future where housing is less accessible to the young.

External sources echo these concerns. The Australian Bureau of Statistics has found that the median age of first home buyers has increased, while the proportion of young people renting into their thirties and forties is rising. This shift has long-term implications for wealth accumulation and retirement security.

Policy, Tax and Superannuation: Barriers and Opportunities

Australia’s policy landscape has played a critical role in shaping intergenerational outcomes. Tax concessions for property and superannuation, as well as the structure of the welfare system, have disproportionately benefited older Australians.

The Firstlinks article “The distortions in our tax system…” argues, “Tax concessions for superannuation and housing are skewed towards older Australians.” Negative gearing, capital gains tax discounts, and generous superannuation tax breaks have all contributed to the concentration of wealth among those who already own assets.

The CEDA report reinforces this point: “Structural reform is needed to ensure the system is fair and sustainable for future generations.” Without changes to tax policy and housing incentives, the gap between young and old will continue to widen.

Proposed reforms include capping tax concessions, redesigning housing incentives to support first home buyers, and ensuring superannuation benefits are distributed more equitably. While these changes are politically challenging, they are essential to restoring balance and ensuring the long-term sustainability of Australia’s social contract.

Staying abreast of policy changes is more important than ever. Understanding how shifts in tax, superannuation, and housing policy affect different generations can help clients make informed decisions and adapt their strategies accordingly.

External analysis from the Australian Council of Social Service (ACOSS) supports the need for reform, noting that “Australia’s tax system is increasingly failing to support those who need it most, while delivering windfalls to those who already have significant wealth.”

Charting a Path Forward: Strategies for Advisers and Clients

Despite these challenges, there are practical steps that young Australians—and their advisers—can take to build wealth and secure their financial future.

First, financial literacy is paramount. As Firstlinks notes, “Young Australians need to be proactive and seek advice to make the most of available opportunities.” This includes understanding the benefits of diversified investment, the importance of starting early with superannuation, and the potential of alternative pathways to wealth beyond property.

Second, advisers can help clients navigate intergenerational transfers. With family support playing a growing role in home ownership, it is essential to plan for gifts, loans, or inheritances in a way that is fair, tax-efficient, and aligned with family goals.

Third, resilience and adaptability are key. The Grattan Institute points out that “Advisers play a crucial role in helping clients adapt to changing economic and policy environments.” This means staying informed about policy changes, reassessing strategies regularly, and being open to new opportunities as they arise.

Finally, advocacy matters.

Advisers can use their expertise and influence to push for policy reforms that benefit all Australians, not just those who have already accumulated wealth. By engaging in public debate and supporting evidence-based policy, advisers can help shape a fairer, more sustainable future.

External resources such as ASIC’s MoneySmart and the Australian Taxation Office provide valuable guidance on financial planning, superannuation, and tax strategies for young Australians.

For Australian financial advisers and their clients, understanding these trends is the first step towards overcoming them. By embracing financial literacy, planning for intergenerational transfers, adapting to policy change, and advocating for reform, advisers and clients can work together to ensure that the next generation has the opportunity to thrive.

The challenge is great, but so too is the opportunity. With informed advice and collective action, Australia can once again become a place where every generation has a fair go.

References

1. Will young Australians be better off than their parents? — Graham Hand, Firstlinks, 2 May 2024
2. The distortions in our tax system have been ignored for too long, and we’re now paying the price. — Graham Hand, Firstlinks, 9 February 2023
3. How to ensure a fair go for young Australians — Brendan Coates, Grattan Institute, 25 October 2023
4. Australia’s growing intergenerational housing wealth divide — CEDA, 10 May 2023
5. Household Wealth and Inequality in Australia — Productivity Commission, 2021
6. First Home Buyers, Australia — Australian Bureau of Statistics, 2024
7. Inequality in Australia 2023 — Australian Council of Social Service (ACOSS), 2023
8. MoneySmart – Financial Guidance for Young Australians — ASIC, 2025