Sumary of Generation X is the most ‘stressed’ when it comes to being able to pay their mortgage. Here’s why:
- It compares home prices, mortgage rates, and wage changes to see what proportion of a median income would go to covering the cost of the median mortgage, and finds a Generation X family’s debt has been declining much more slowly in real terms than that of previous generations.
- The report also points out how, over the past decade, wages have been largely stagnant, while in previous decades they have increased faster relative to inflation.
- Australians have experienced “anaemic median nominal wage growth of roughly 3 per cent, with many people effectively seeing no increase to their pay packet”.
- Read more”By comparison, in the 1970s — although inflation was extremely high at 9.8 per cent — nominal wage growth outstripped inflation significantly with an average annual increase of around 13 per cent,” it says.
- “The ‘debt overhang effect’Rising housing debt burdens have significant macroeconomic and microeconomic implications.
- “This huge increase in real household debt produces a large ‘debt overhang effect’, reducing consumer spending by 0.3 per cent with every 10 per cent increase in debt,” the report says.