David Koch, the former Sunrise host and current economic director for comparison website Compare the Market, has pointed out something older Australiansmay not want to hear.

He has explained that younger Australians bear the brunt of soaring interest rates and inflation while their older counterparts remain largely unaffected.

The Australian housing market has been a hot topic of discussion for years, with prices skyrocketing and making it increasingly difficult for younger generations to enter the property market.

This issue has been exacerbated by the recent rise in interest rates, which according to Koch, has hit young borrowers the hardest.

It has been reported that younger generations have a hard time buying homes. Credit: Freepik

According to data from Compare the Market, homeowners who purchased property at the peak of the market in early 2022 are now finding themselves in a worse financial position each month compared to those who bought it three years earlier.

For instance, a Sydney homebuyer who purchased a property at the average price of $1.12 million in February 2022 and locked in a fixed rate of 2.2 per cent would now face minimum monthly repayments of $2,247 more than their current payment.

In contrast, homeowners who bought at the median price of about $780,000 in April 2019 on the same fixed rate have seen their repayments rise just $1,576 a month.

This means they are better off by $671 every month, or a total of $8,052 a year.

Furthermore, those who bought before the pandemic have benefited from a rise in equity as property prices have significantly increased over the past four years.

Koch has described this situation as a 'tough pill' for young Aussies who have not had time to save up.

'If you bought your home in early 2022 under the pretence that interest rates would stay low for longer, you've now been lumped with the short end of the stick,' Koch said.

'Meanwhile, a lot of mature Australians have missed this pain altogether after selling their properties at the peak and having reaped the benefits over more equity for years.’

'A lot of mature Australians have been shielded from the rate rises, and it's already widely believed that their spending drove inflation.'

A 2023 report from CommBank iQ found that spending among Australians aged over 35 appears to be fuelling Australia's inflation crisis as younger generations are forced to cut back on essentials.

Older generations were said to be going on holidays and dining out more often.

On the other hand, young Aussies were battling higher rents and mortgage repayments, reducing their spending to cope with the worst cost of living crisis in a generation.

Younger Aussies, particularly those aged 25 to 29, reportedly reduced their yearly spending.

Koch describes the current situation as a ‘tough pill’ for young Aussies. Credit: Freepik

Koch said, ‘It's time policy-makers should be asking: how could the pressure be more evenly spread?’

Many older homeowners have stressed that interest rates for home loans back then weren't as tough when looking at history.

In the late 1980s to early 1990s, home loan rates were a high 17 per cent, but today's variable rates are lower at six per cent.

They argued that the sacrifices young adults make now are incomparable to what they and past generations had to do.

However, Koch said new homebuyers are in a tougher spot than before.

For him, house prices had gone way up compared to what people earn, and this was happening faster than wages were growing.

'Back in the 80s, the average cost of an Aussie house was $70,000, now it's $700,000—ten times more expensive,' he said.

He explained that in the 1980s, the average salary was $19,000. In 2023, it was $94,000.

'So in the 80s, the price of a house was four times the average person's income,' he said.

'In 2023, it's eight times the average Aussie salary.'

He has also urged mortgage holders with higher repayments to call their banks and explore whether refinancing to a lower-rate loan is possible.

‘We urge people in mortgage pain to reduce the interest on their repayments as much as possible by shopping around for a better deal,' Koch said.

'When every dollar counts, 2024 should be the year of the new lender.'

The struggles of young Australians in the housing market are real and palpable.

Mira Almasri, a 35-year-old single mother, rents a one-bedroom apartment with her two children, aged nine and 14 in Mosman on Sydney's well-heeled north shore for $600 a week.

She has given up all hope of owning a Sydney home, stating, 'It's impossible to buy in Sydney.'

'Even if you earn loads of money, it's still hard. All my friends who have bought houses in the last two years say they are not happy at all because they are paying high-interest rates.'

Jacob Burrows, 22, an electrician from Perth, Western Australia, hopes to buy a property within the next 12 months despite interest rates being at their highest since 2012.

He has done a lot of research, including reading a book about a man who owned 30 properties by the age of 30.

However, he acknowledged that 'it's fairly hard at the moment because everything is so expensive’.

‘A couple of years ago, I wanted to try and understand the market to appreciate what's involved in buying a house,’ Burrows added.

‘I spent a year or so learning the housing market, and now I'm going to try to look for cheaper houses instead of buying one big one so that I can have a smaller deposit.'

Still, it’s not all rosy for older Australians.

On the other side of the spectrum, a report by Ageing in a Housing Crisis showed that having safe, secure, and affordable housing for older people has become increasingly difficult.

More older people also lived in marginal housing, as analysed by the Australian Bureau of Statistics census data and homelessness estimates.

The increase in housing costs, declining rates of home ownership, carrying mortgage debt into retirement, uncertainty in private rental arrangements, and the worsening shortage of social housing all indicate a widespread problem of housing insecurity.

This issue of insecure or unstable housing impacts people of all age groups. However, for older individuals, the challenges are exacerbated by factors such as limited income-earning potential, growing frailty, illness, caring responsibilities, an increasing need for at-home support, and age-related discrimination.

Key Takeaways

• David Koch delivered a stark message to older generations, pointing out how young Australians face struggles due to high interest rates and inflation.
• Research by Compare the Market indicates that recent homebuyers who purchased at market peak are financially worse off than those who bought homes several years prior.
• Older Australian homeowners have generally been cushioned from recent rate rises, having benefitted from increased property equity.
• Koch suggested that policymakers should consider ways to distribute economic pressures more equitably across generations.

Members, what are your thoughts on this issue? Share them with us in the comments below.

 

[Les Brett]

All are correct. The younger generation want the best of everything NOW. Not all, but the majority are not prepared to go without or miss out on anything to improve their financial situation for now and for the future. Sure things aren't exactly rosy at the moment, but the younger generations still expect to go out every week, drink, smoke, mobile phones, designer clothes , overseas holiday, the best of everything. Then complain they cant buy a house. GO WITHOUT, like most of us seniors did. Work hard, save hard, get second hand furniture to start with, and party less, then you may have a chance of breaking in to the housing market.
Its not our (seniors) fault.

It is our fault that we have created generations of children that feel self intitled and expect to get everything NOW!

 

[Barbara V]

Go away Koche don't need advice from you

David Koch, the former Sunrise host and current economic director for comparison website Compare the Market, has pointed out something older Australiansmay not want to hear.

He has explained that younger Australians bear the brunt of soaring interest rates and inflation while their older counterparts remain largely unaffected.

The Australian housing market has been a hot topic of discussion for years, with prices skyrocketing and making it increasingly difficult for younger generations to enter the property market.

This issue has been exacerbated by the recent rise in interest rates, which according to Koch, has hit young borrowers the hardest.

View attachment 38953

It has been reported that younger generations have a hard time buying homes. Credit: Freepik

According to data from Compare the Market, homeowners who purchased property at the peak of the market in early 2022 are now finding themselves in a worse financial position each month compared to those who bought it three years earlier.

For instance, a Sydney homebuyer who purchased a property at the average price of $1.12 million in February 2022 and locked in a fixed rate of 2.2 per cent would now face minimum monthly repayments of $2,247 more than their current payment.

In contrast, homeowners who bought at the median price of about $780,000 in April 2019 on the same fixed rate have seen their repayments rise just $1,576 a month.

This means they are better off by $671 every month, or a total of $8,052 a year.

Furthermore, those who bought before the pandemic have benefited from a rise in equity as property prices have significantly increased over the past four years.

Koch has described this situation as a 'tough pill' for young Aussies who have not had time to save up.

'If you bought your home in early 2022 under the pretence that interest rates would stay low for longer, you've now been lumped with the short end of the stick,' Koch said.

'Meanwhile, a lot of mature Australians have missed this pain altogether after selling their properties at the peak and having reaped the benefits over more equity for years.’

'A lot of mature Australians have been shielded from the rate rises, and it's already widely believed that their spending drove inflation.'

A 2023 report from CommBank iQ found that spending among Australians aged over 35 appears to be fuelling Australia's inflation crisis as younger generations are forced to cut back on essentials.

Older generations were said to be going on holidays and dining out more often.

On the other hand, young Aussies were battling higher rents and mortgage repayments, reducing their spending to cope with the worst cost of living crisis in a generation.

Younger Aussies, particularly those aged 25 to 29, reportedly reduced their yearly spending.

View attachment 38954

Koch describes the current situation as a ‘tough pill’ for young Aussies. Credit: Freepik

Koch said, ‘It's time policy-makers should be asking: how could the pressure be more evenly spread?’

Many older homeowners have stressed that interest rates for home loans back then weren't as tough when looking at history.

In the late 1980s to early 1990s, home loan rates were a high 17 per cent, but today's variable rates are lower at six per cent.

They argued that the sacrifices young adults make now are incomparable to what they and past generations had to do.

However, Koch said new homebuyers are in a tougher spot than before.

For him, house prices had gone way up compared to what people earn, and this was happening faster than wages were growing.

'Back in the 80s, the average cost of an Aussie house was $70,000, now it's $700,000—ten times more expensive,' he said.

He explained that in the 1980s, the average salary was $19,000. In 2023, it was $94,000.

'So in the 80s, the price of a house was four times the average person's income,' he said.

'In 2023, it's eight times the average Aussie salary.'

He has also urged mortgage holders with higher repayments to call their banks and explore whether refinancing to a lower-rate loan is possible.

‘We urge people in mortgage pain to reduce the interest on their repayments as much as possible by shopping around for a better deal,' Koch said.

'When every dollar counts, 2024 should be the year of the new lender.'

The struggles of young Australians in the housing market are real and palpable.

Mira Almasri, a 35-year-old single mother, rents a one-bedroom apartment with her two children, aged nine and 14 in Mosman on Sydney's well-heeled north shore for $600 a week.

She has given up all hope of owning a Sydney home, stating, 'It's impossible to buy in Sydney.'

'Even if you earn loads of money, it's still hard. All my friends who have bought houses in the last two years say they are not happy at all because they are paying high-interest rates.'

Jacob Burrows, 22, an electrician from Perth, Western Australia, hopes to buy a property within the next 12 months despite interest rates being at their highest since 2012.

He has done a lot of research, including reading a book about a man who owned 30 properties by the age of 30.

However, he acknowledged that 'it's fairly hard at the moment because everything is so expensive’.

‘A couple of years ago, I wanted to try and understand the market to appreciate what's involved in buying a house,’ Burrows added.

‘I spent a year or so learning the housing market, and now I'm going to try to look for cheaper houses instead of buying one big one so that I can have a smaller deposit.'

Still, it’s not all rosy for older Australians.

On the other side of the spectrum, a report by Ageing in a Housing Crisis showed that having safe, secure, and affordable housing for older people has become increasingly difficult.

More older people also lived in marginal housing, as analysed by the Australian Bureau of Statistics census data and homelessness estimates.

The increase in housing costs, declining rates of home ownership, carrying mortgage debt into retirement, uncertainty in private rental arrangements, and the worsening shortage of social housing all indicate a widespread problem of housing insecurity.

This issue of insecure or unstable housing impacts people of all age groups. However, for older individuals, the challenges are exacerbated by factors such as limited income-earning potential, growing frailty, illness, caring responsibilities, an increasing need for at-home support, and age-related discrimination.

Key Takeaways

• David Koch delivered a stark message to older generations, pointing out how young Australians face struggles due to high interest rates and inflation.
• Research by Compare the Market indicates that recent homebuyers who purchased at market peak are financially worse off than those who bought homes several years prior.
• Older Australian homeowners have generally been cushioned from recent rate rises, having benefitted from increased property equity.
• Koch suggested that policymakers should consider ways to distribute economic pressures more equitably across generations.

Members, what are your thoughts on this issue? Share them with us in the comments below.

 

[janham]

I'm so over this rubbish from people like Koch. It's seems funny to me that no-one has mentioned the cost of technology as also a major part of the problem. We all need to pay huge cost just to live in this era. When my husband and I bought a house in the late 70s, we had to move way out to Narangba. 3 bedroom, one bathroom. We did it very tough, with two daughters and a mortgage. We had second hand furniture, given to us from family and friends. We had to sell privately seven years later before the bank could as we couldn't afford the payments. We sold it with concrete floors as we couldn't afford flooring. I could keep going but the bottom line is I've had to privately rented since. People like Koch are causing elder discrimination, which in turn will only lead to elder abuse. Every generations have there struggles. Please stop with the blame game, it achieves nothing except hatred.

 

[michaelblucher]

Koch is moron.
We bought our house in the early 1990s. We couldn't get house loan from the banks at all, they didn't want to lend us money and had to borrow through a VIC state government scheme at an interest rate 18.6%
Our household income back then was nowhere near $19,000, way, way lower and we had to struggle to put food on the table each week.
We struggled through and now at 61, I get laid off from work, only to find that no body, absolutely no body wants to hire people over 60. And as CentreLink is broken, we can't even get help from the Government.
We've struggled all our lives only find ourselves with zero income 6 years shy of retirement.
Try living on zero income Koch.
He thinks young people are doing it tough! What a moron.

 

[LeahI]

We have 4 children. I did not work while they were young. We were on a very well controlled budget and they still got things and went to places. Paid rent, though not a high rate as it was subsidised, managed to build 2 investment properties. Didn't do overseas until our 40's.
Anyway the point is our generation struggled and made it through. These guys are also struggling and some will make it through.
This is squarely at the feet of Government. The current economic crisis is certainly not my bloody fault!

 

[Catherines]

Firstly, the man has no credibility, but there are lots of rubbery figures in your commentary. Wages in the 60s & 70s were less than $10k [1978] average (male). Highest interest rate in the 70's 13.5%, University was free to all through studentship or scholarship (less than 5% eligible ever went to Uni). The 80's was when interest rates hit the high teens. By which stage I would think you should have paid off your house if you don't continuously draw back on it. (average mortgage is paid off within 15years).

Hi AlanQ - appreciate your commenting on my post, however, I must also ask you about the origins of your wages and interest rate quotes. I do not know how old you are but I’m pushing 79 this year and lived through the late 60s, 70s and 80s so I’m commenting from that era.

If your comments were related to my post, I don’t take objection to them at all, except to say there are parts that I do agree with, BUT ‘rubbery figures in my commentary’? No, I don’t think so - university being free to all DID NOT include the parents (or some students with part-time jobs) purchasing ALL of their books, paying for transport to & from and also making sure they had a reasonably substantial meal during the day. Interest rate on our home was still @ 17% when we finally paid off our home in 1982, my husband’s wage was a bit more than the $10k you quote as he was a marine engineer on a slightly higher wage; but we saved as much as possible, I didn’t work until about 1988 on part time wages in a snack bar as they were called in those days. I was always there to take our children to school or the bus stop/train station AND pick them up every day as we didn’t live close enough for them to walk to that convenience. We got about $2 per child, PER MONTH, as endowment, no bonus of thousands of dollars on the birth of each child, no free childcare/kindy allowance - NONE OF THAT - we paid our own way, somehow. Many, if not most, of the uni students of the 80s and possibly also now have a HECS fee on their heads which some can pay off gradually, or have paid off, or still owe a lot on.

We had a TV on rent, no large home as mentioned in my post, no media room and everything that opened and closed and all on credit from day one. We saved for that, we didn’t BUY our first coffee of the day, & more throughout the day - we drank instant coffee at home, made our lunch for work, we didn’t use our hard-earned money on things we WANTED, we saved for it and bought things as and when we had saved for it. That was the purpose of my previous, and this, post. The economists of today are not living in our past to comment on how we managed then. Yes, prices are very high, so are wages, but it is the ability and strength to prioritise.

I’m going through the emotional and financial issues with our daughter’s marriage break-up and her UNFAITHFUL HUSBAND’s demands on her to sell their home now, suggesting that SHE pay off their $500k+ mortgage if she doesn’t sell their house BY END MARCH. They have one last child doing his final year in school & she doesn’t want the interruption of moving (emotional & disturbance by moving) to have a detrimental effect on the youngest. She, by the way, has all 3 children living with her while he lives with the girl friend!

They wouldn’t listen to our advice about not adding $13,000 to pull down their old home (5 lived with us for 2 years during this process) and we only asked them to pay the EXTRA gas, electricity & water bills they used. We were prepared to GIVE them $5000 and them then pay back the balance $8000 in regular monthly instalments - but (NO, said he, we’ll add it to our home loan!!). Stupidity, ignorance or just wanting to get everything at once?

Young, including some economists today DID NOT LIVE IN or EXPERIENCE OUR PAST. . No matter their education on the topic, I don’t believe they are in a situation to know or comment that we are the problem of today.

I’ve said my bit on this topic & hope I’m not tempted to comment on this again! Thank you everyone that takes the time to read this; I hope a good number of you will agree with me as this is a Seniors Club and many of you are in my boat, I believe.

 

[Greatgwr]

Another pea brained economist using his 'theory' to attempt to explain reality, yes its tough we know this we worry about our kids BUT its no tougher than when we bought our houses. My first place cost $69,000 to build I was earning $12,000 pa single income, family of 5 we scrimped and saved and survived at19% interest rates, so I am sorry if the current generation is upset, I see no reason to apologize for being frugal and managing my money we now are debt free and modestly comfortable, but we still scrimp and save where we can.
It might be worth adding that the house was 3 bedroom, 1Bath, Lounge and kitchen 154 square meters this was no palace but it was home, no garden no drive and it you wanted it you built it with a shovel a pick and your back!!

 

[Catherines]

In the UK we had a National Insurance Scheme into which we paid a certain amount from wages each week and our employer also ppaid some on our behalf. It kept the Old Age Pension, the NHS Health Fund and the dole money out of the general revenue system for the benefit of those who need to use those systems. That was before Thatcher began the privatisation rot.

And yes, the UK’s NHS is in a mess, from what I see on TV and read. People who have paid into it all their working lives are having to wait months for doctors appointments or medical/surgical attention through the NHS. I believe most don’t have private insurance (seems to high there) as some of us have the benefit of because we opt for it so we can get the necessary attention when we need it.

 

[Knell]

Funny how people interpret information. I cannot see how or why anyone thinks this is about blame - in fact you are not really included in this particular data - It is an explanation of cause and effect - cause not being blame and is indicative of only one aspect of many different causes relating to the here and now, still not blame. This is about stats for analysis - nothing to do with blame and nothing to do with 43 years ago or our demographic at all. Stats are taken by the numbers in fact and not subjective.

 

[koalabcp]

Always amazes me how the "better off" people generalise that every one is in the same boat. You stay in your ocean liner Kochie and try not to run over any canoes.

So, just because we're of the older generation or two that means we have it easier?! What is Kochie on??? We don't have it any easier than anyone else! We were lucky to find a one room cabin at a 55+ place for well under $400; our previous landlady wanted to bump our rent from $500 to $650 per week. We're on a pension and my hubby has a home business repairing gas detectors. Has Kochie checked on the RBA lately; % increases every month last year! There are hardworking 30something couples with kids who live in tents. Yeah, stay in your ocean liner, Kochie

 

[wiskers50]

David Koch aka Mudguard.Shiny on top,shit underneath

 

[Rob44]

$43 000 000 debt owed by some golfing outfit in Victoria has just been written off by the State government. The Tasmanian State government has promised the AFL $750 000 000 of our taxpayers money to build a footie stadium on Hobart's waterfront (Hobart already has a suitable stadium at Bellerive and one in the Northern Suburbs that could be HIRED at a profit to the AFL). That amounts to $1 180 000 000 billion given to profit-taking private enterprise sporting outfits! How much more don't we know about, apart from subsidies given to energy companies mining coal and gas and oil?

And our politicians whinge that there is not enough money for decent public health care?

And yet perish the thought that we spend $2 900 000 000 billion per year looking after our elderly in profiteering private old-age "care" homes. Bastards!

And yes, the UK’s NHS is in a mess, from what I see on TV and read. People who have paid into it all their working lives are having to wait months for doctors appointments or medical/surgical attention through the NHS. I believe most don’t have private insurance (seems to high there) as some of us have the benefit of because we opt for it so we can get the necessary attention when we need it.

Yes; the NHS is in a mess after 44 years of Tory crap and privatisation etbloodycetera, just like Australia, just like New Zealand. Gutless Labour Parties and socially very dangerous, greedy Tories, all dishing out our money to little mates who don't need it and shouldn't ask for it.

 

[Rob44]

Funny how people interpret information. I cannot see how or why anyone thinks this is about blame - in fact you are not really included in this particular data - It is an explanation of cause and effect - cause not being blame and is indicative of only one aspect of many different causes relating to the here and now, still not blame. This is about stats for analysis - nothing to do with blame and nothing to do with 43 years ago or our demographic at all. Stats are taken by the numbers in fact and not subjective.

It's got a great deal deal to do with 42 years ago. That's when privatisation of public assets that delivered became the fashion-rage of our politicians. As proved in the UK it has produced a total shambles and is doing the same in Australia and New Zealand. It has inflated costs and deflated services. Thatcher, "Greed is good". Remember?

 

[Knell]

$43 000 000 debt owed by some golfing outfit in Victoria has just been written off by the State government. The Tasmanian State government has promised the AFL $750 000 000 of our taxpayers money to build a footie stadium on Hobart's waterfront (Hobart already has a suitable stadium at Bellerive and one in the Northern Suburbs that could be HIRED at a profit to the AFL). That amounts to $1 180 000 000 billion given to profit-taking private enterprise sporting outfits! How much more don't we know about, apart from subsidies given to energy companies mining coal and gas and oil?

And our politicians whinge that there is not enough money for decent public health care?

And yet perish the thought that we spend $2 900 000 000 billion per year looking after our elderly in profiteering private old-age "care" homes. Bastards!

Yes; the NHS is in a mess after 44 years of Tory crap and privatisation etbloodycetera, just like Australia, just like New Zealand. Gutless Labour Parties and socially very dangerous, greedy Tories, all dishing out our money to little mates who don't need it and shouldn't ask for it.

Wow! You are Intense!

 

[Rob44]

My first home was in the country.
I travelled 4 hours of round trip every day to work. That move set us up, it was only a 2x1, our friends thought we were mad. Most of them were still renting and saving, when we had left Victoria, moved to WA where we were able to pay cash to build a new home because our home had increased in value and houses were so much cheaper in WA.
How many young people are prepared to move to the country, settle for an older house and work up from there these days.
We have recently put our country rental, 4x1 on the market. 100% improvement on the one we started with, only $229,500, but I'll bet no young couple will buy it, wouldn't be good enough for them.

Where is your country rental? I have a son and a daughter-in-law looking for a place.

 

[mylittletibbies]

Where is your country rental? I have a son and a daughter-in-law looking for a place.

Quairading WA. 69kms from York.

 

[Rob44]

Wow! You are Intense!

No; just telling it as it is. That's the world we live in now.

I was born into a post-WW2 world that valued care for the sick, the halt and the lame. And promoting "blue-sky" scientific research. And paid to educate those who wanted good Tertiary qualifications be they from university, from Polytechnic College or TAFE. And didn't begrudge helping those out of work or who could not work because of some disability. AND DIDN'T HAVE FOOD BANKS in what are not poor countries. In which kids got subsidised good school dinners, meat, 2 vegies and pudding and custard 5 days a week, and free school milk to prevent rickets; and one million kids, as they do in Australia now, did NOT go to school without breakfast.

We may have lived three families each to one floor in one of those upstairs-downstairs type of Victorian Pomgolian houses, or in a Council House or got born in a caravan 22feet long with an outside long-drop dunny, but we (and our parents) had a far more secure promise of a useful future than a great many of our elderly and our children and grandchildren have now, and that future got savaged (privatised) almost overnight in 1979.

Intense? That's why.

 

[Rob44]

Quairading WA. 69kms from York.

Sad. That's the wrong side of Australia for my son and his wife. They work in eastern Victoria. Thanks for the quick reply and the information. I hope you get a good price for your place.

 

[Codger]

David Koch, the former Sunrise host and current economic director for comparison website Compare the Market, has pointed out something older Australiansmay not want to hear.

He has explained that younger Australians bear the brunt of soaring interest rates and inflation while their older counterparts remain largely unaffected.

The Australian housing market has been a hot topic of discussion for years, with prices skyrocketing and making it increasingly difficult for younger generations to enter the property market.

This issue has been exacerbated by the recent rise in interest rates, which according to Koch, has hit young borrowers the hardest.

View attachment 38953

It has been reported that younger generations have a hard time buying homes. Credit: Freepik

According to data from Compare the Market, homeowners who purchased property at the peak of the market in early 2022 are now finding themselves in a worse financial position each month compared to those who bought it three years earlier.

For instance, a Sydney homebuyer who purchased a property at the average price of $1.12 million in February 2022 and locked in a fixed rate of 2.2 per cent would now face minimum monthly repayments of $2,247 more than their current payment.

In contrast, homeowners who bought at the median price of about $780,000 in April 2019 on the same fixed rate have seen their repayments rise just $1,576 a month.

This means they are better off by $671 every month, or a total of $8,052 a year.

Furthermore, those who bought before the pandemic have benefited from a rise in equity as property prices have significantly increased over the past four years.

Koch has described this situation as a 'tough pill' for young Aussies who have not had time to save up.

'If you bought your home in early 2022 under the pretence that interest rates would stay low for longer, you've now been lumped with the short end of the stick,' Koch said.

'Meanwhile, a lot of mature Australians have missed this pain altogether after selling their properties at the peak and having reaped the benefits over more equity for years.’

'A lot of mature Australians have been shielded from the rate rises, and it's already widely believed that their spending drove inflation.'

A 2023 report from CommBank iQ found that spending among Australians aged over 35 appears to be fuelling Australia's inflation crisis as younger generations are forced to cut back on essentials.

Older generations were said to be going on holidays and dining out more often.

On the other hand, young Aussies were battling higher rents and mortgage repayments, reducing their spending to cope with the worst cost of living crisis in a generation.

Younger Aussies, particularly those aged 25 to 29, reportedly reduced their yearly spending.

View attachment 38954

Koch describes the current situation as a ‘tough pill’ for young Aussies. Credit: Freepik

Koch said, ‘It's time policy-makers should be asking: how could the pressure be more evenly spread?’

Many older homeowners have stressed that interest rates for home loans back then weren't as tough when looking at history.

In the late 1980s to early 1990s, home loan rates were a high 17 per cent, but today's variable rates are lower at six per cent.

They argued that the sacrifices young adults make now are incomparable to what they and past generations had to do.

However, Koch said new homebuyers are in a tougher spot than before.

For him, house prices had gone way up compared to what people earn, and this was happening faster than wages were growing.

'Back in the 80s, the average cost of an Aussie house was $70,000, now it's $700,000—ten times more expensive,' he said.

He explained that in the 1980s, the average salary was $19,000. In 2023, it was $94,000.

'So in the 80s, the price of a house was four times the average person's income,' he said.

'In 2023, it's eight times the average Aussie salary.'

He has also urged mortgage holders with higher repayments to call their banks and explore whether refinancing to a lower-rate loan is possible.

‘We urge people in mortgage pain to reduce the interest on their repayments as much as possible by shopping around for a better deal,' Koch said.

'When every dollar counts, 2024 should be the year of the new lender.'

The struggles of young Australians in the housing market are real and palpable.

Mira Almasri, a 35-year-old single mother, rents a one-bedroom apartment with her two children, aged nine and 14 in Mosman on Sydney's well-heeled north shore for $600 a week.

She has given up all hope of owning a Sydney home, stating, 'It's impossible to buy in Sydney.'

'Even if you earn loads of money, it's still hard. All my friends who have bought houses in the last two years say they are not happy at all because they are paying high-interest rates.'

Jacob Burrows, 22, an electrician from Perth, Western Australia, hopes to buy a property within the next 12 months despite interest rates being at their highest since 2012.

He has done a lot of research, including reading a book about a man who owned 30 properties by the age of 30.

However, he acknowledged that 'it's fairly hard at the moment because everything is so expensive’.

‘A couple of years ago, I wanted to try and understand the market to appreciate what's involved in buying a house,’ Burrows added.

‘I spent a year or so learning the housing market, and now I'm going to try to look for cheaper houses instead of buying one big one so that I can have a smaller deposit.'

Still, it’s not all rosy for older Australians.

On the other side of the spectrum, a report by Ageing in a Housing Crisis showed that having safe, secure, and affordable housing for older people has become increasingly difficult.

More older people also lived in marginal housing, as analysed by the Australian Bureau of Statistics census data and homelessness estimates.

The increase in housing costs, declining rates of home ownership, carrying mortgage debt into retirement, uncertainty in private rental arrangements, and the worsening shortage of social housing all indicate a widespread problem of housing insecurity.

This issue of insecure or unstable housing impacts people of all age groups. However, for older individuals, the challenges are exacerbated by factors such as limited income-earning potential, growing frailty, illness, caring responsibilities, an increasing need for at-home support, and age-related discrimination.

Key Takeaways

• David Koch delivered a stark message to older generations, pointing out how young Australians face struggles due to high interest rates and inflation.
• Research by Compare the Market indicates that recent homebuyers who purchased at market peak are financially worse off than those who bought homes several years prior.
• Older Australian homeowners have generally been cushioned from recent rate rises, having benefitted from increased property equity.
• Koch suggested that policymakers should consider ways to distribute economic pressures more equitably across generations.

Members, what are your thoughts on this issue? Share them with us in the comments below.

I believe that Mr Koch has probably never been subjected to the real world of recognised average wages having young family of 3 or 4 children and wife homekeeper as well as working part-time whilst paying mortgage intereste rates of 17% plus on his $70,000.00 mortgage: If I am wrong with such a belief then I sincerely apologise and congratulate David on making good progress in his life.
As small busines owners, whilst I was full time University student with two children in Secondary School and wife and I running our small retail business as well I had part-time work we were paying 22% interest in the Recession That We Had To Have (Paul Keating) .
We do own our house now in a rural town with great community and most facilities ever needed by us (65% physically disabled husband and ageing sick wife) and all demographics; single live alone, or live at home, small and larger families through to our older aged group single or married.
I do invite David Koch and his economics "influencers" to actually move around our regional Australia and be sure of their grounds for a statement, before accusing older people of Australia of causing the near insurmontable financial distress.
imposed on the younger people in current era.

 

[Knell]

No; just telling it as it is. That's the world we live in now.

I was born into a post-WW2 world that valued care for the sick, the halt and the lame. And promoting "blue-sky" scientific research. And paid to educate those who wanted good Tertiary qualifications be they from university, from Polytechnic College or TAFE. And didn't begrudge helping those out of work or who could not work because of some disability. AND DIDN'T HAVE FOOD BANKS in what are not poor countries. In which kids got subsidised good school dinners, meat, 2 vegies and pudding and custard 5 days a week, and free school milk to prevent rickets; and one million kids, as they do in Australia now, did NOT go to school without breakfast.

We may have lived three families each to one floor in one of those upstairs-downstairs type of Victorian Pomgolian houses, or in a Council House or got born in a caravan 22feet long with an outside long-drop dunny, but we (and our parents) had a far more secure promise of a useful future than a great many of our elderly and our children and grandchildren have now, and that future got savaged (privatised) almost overnight in 1979.

Intense? That's why.

Sounds like you have been very angry for a very long time. Not sure where you will find the political ideology you will be happy with.