Housing crisis breaking Australia's intergenerational compact, economist warns

Australia's housing affordability crisis is leaving many younger Australians feeling locked out of home ownership, prompting warnings from economists that a key pillar of the nation's social contract is beginning to fracture.

Speaking on the Savings Tip Jar podcast, Richard Holden, chief societal economist at UNSW, described the widening divide between older homeowners and younger aspiring buyers as a "violation of the intergenerational compact" between generations.

"We've had a housing affordability crisis for a long time now, probably 15 years or longer," he said.

For younger Australians, the consequences are increasingly personal.

"The sort of Australian dream of owning your own home is getting harder and harder for a lot of folks and for a large proportion of the younger population, it's just out of reach," Prof Holden said.

A new Growing Up in Australia study, released in August 2026, showed the strain is already reshaping how young Australians live.

More than half of respondents aged 19-20 and 23-24 were still living with their parents, either rent-free or at subsidised rates, shielding them from the full force of Australia's rental crisis. Meanwhile, those who moved out faced a different reality.

Young renters in the private market were spending a larger share of their income on rent than their peers living at home, leaving less money for essentials, savings, and future home deposits.

Home ownership also remains rare with just 8% of 23-24 year olds owning or partly owning a home, while among 19-20 year olds the figure was only 1%.

The anxiety that accompanies those numbers is widespread. Around 85% of young people surveyed said they were concerned about whether they would ever be able to afford to buy a home.

Those findings lend weight to Prof Holden's warning that housing affordability is becoming more than a question of property prices.

"That's dispiriting. It's a violation of the intergenerational compact between older Australians and younger Australians."

Why home ownership matters beyond wealth

While housing affordability is often framed as a question of prices, deposits, and mortgage rates, Prof Holden argues the effects extend much further.

"I think it also drives some negative behaviours, which is if you don't believe that you're going to own a home, you're going to feel less likely to invest in your connection to that place," he said.

"You know, less likely to invest in your education, in financial aspects, in your connection to the community."

In Prof Holden's view, prolonged housing insecurity risks weakening the social and economic ties that traditionally came with owning a home.

"I think that has very negative effects on both people psychologically, but also economically."

Housing experts have increasingly warned that the fallout from unaffordability extends well beyond the property market, affecting financial security, social mobility, and people's connection to their communities.

More than a housing crisis

For Prof Holden, the housing affordability crunch is as much an economic story as a property story.

"We've had literally zero productivity growth since 2019 and basically none over the last decade," he said.

Prof Holden argued weak productivity growth had left living standards flat for many Australians, making it harder for younger households to break into the property market.

"When living standards don't go up, it makes people much more focused on how to get a bigger share of the pie rather than thinking about growing the pie."

The bigger concern, he said, is what prolonged unaffordability does to confidence.

As home ownership drifts further out of reach, younger Australians risk losing faith that the opportunities enjoyed by previous generations are still attainable.

"Consumer confidence is at rock bottom levels and people feel like they're not getting ahead because they're not," Prof Holden said.