The Lost Decade: new Per Capita research shows that historically low wage growth between 2012 and 2022 robbed young Australians of their home deposit, costing them a collective $600 billion in lost wages. It shows that why wages have started growing the impact of that decade has cost many young Australians their deposit.
A new report released by Per Capita today shows that the average incomer earner lost around $54,000 due to very low wage growth between 2012 and 2022, meaning a typical young couple was robbed of the deposit on the average first home.
Per Capita's analysis reveals that real wages increased by just 0.2% each year in the decade to 2022, so that the average wage today is almost $12,000 lower than it would have been if wage growth had kept pace with its historical average.
The lack of real wage growth experienced by Millennial and Gen Z Australians during the first decade of their working lives combined with rapidly increasing house prices to lock them out of the housing market unless they can draw on help from the bank of mum and dad.
The report also shows that, since September 2022, real wages have begun to grow again, while house prices are moderating. As a result, housing affordability is slowing improving for the first time in decades.
In total, the income lost to workers due to very low wage growth between 2012 and 2022 amounts to more than $600 billion in lost wages across the Australian economy.
These lost wages went into the profit margins of large corporations, but this trend has since been reversed, with the wage share of national income lifting by 3.8 percentage points and the profit share falling by 4.6 percentage points between September 2022 and December 2024.
The report's lead author, Emma Dawson, said:
"Data from Australia's major banks shows that the typical first home buyer is a couple in their mid-30s borrowing just under $500,000. If they had enjoyed the same wage growth as their parents did early in their careers, they would have earned an additional $54,000 each over the Lost Decade. Combined, that would have been enough for a 20% deposit on their first home today.
"In late 2022, almost two-thirds of young people told Per Capita's Australian Housing Monitor that the only way they would ever be able to buy a home was if they got a large inheritance.
"In other words," Dawson said, "young Australians today believe that someone they love will have to die before they can achieve the great Australian dream of home ownership. This is a damning indictment of the loss of social mobility in a country long considered the land of the fair go"
"This report shows the power of wages in achieving housing affordability. Supply side measures to build more homes are critical but allowing people to get a head with wage increases is a critical factor in affordability."
The full report can be accessed here: https://percapita.org.au/our_work/the-lost-decade
