between roughly 1925 and 1945, known as the Silent Generation, would require 11.2 per cent of their gross income as average repayment cost over the course of the mortgage when buying a house in 1970. On the other hand, a Baby Boomer family, who were borne between mid-1940 and mid-1960, this figure had risen to 19.5 per cent, when buying a home in 1985.
However, it is turning out to be much more difficult for younger Australians to buy a home, as the study found that a Generation X family who bought a house in 2000 and therefore has about nine years left on their mortgage would have to set aside 25.5 per cent of their gross income in order to merely service mortgage debt. According to Per Capita, the reason for this is that for younger generations, low inflation and wage growth means their debt would decline at a much slower pace in comparison to previous generations.
“We estimate the Gen X family is paying $1425 per month on their mortgage in 2021,” report author Matt Lloyd-Cape said. “If they were on the same repayment trajectory as the Boomer family, their monthly bill would be $910, while if they were on the Silent Generation trajectory it would be just $440 a month.” Accordingly, he noted that this immensely higher cost of securing a home would have a noteworthy impact on Australia’s economy, since it puts a significant constraint on household consumption which accounts for more than half of the country’s economic activity.
