Life satisfaction among Australians is lower now than at the height of the pandemic as financial pressures and housing costs squeeze people in their 20s, 30s and 40s, with Anthony Albanese admitting the cost of living is contributing to the nation’s political divide.
A survey released on Tuesday by consultancy KPMG shows life satisfaction – a measure that tracks whether a person is satisfied with their situation – is now significantly lower than it was in the mid-2010s across all age groups, while it has risen among people facing the biggest financial impact.
Most people would struggle to come up with $2,000 in an emergency, a key point of the financial crisis, when household wealth levels have stagnated since the start of the decade.
KPMG urban economist Terry Rawnsley said that unlike during the pandemic, when many Australians had their income levels boosted by government schemes such as JobKeeper and low interest rates, people today were under sustained financial pressure.
“These things have left many average Australians in dire financial straits for the better part of five years and it’s certainly affecting how they feel about their lives,” he said.
Life satisfaction surveys typically find that people in their 30s and 40s show lower levels of satisfaction than other age groups. People in their retirement years typically record a high level of satisfaction.
KPMG found the lowest level of satisfaction among 25 to 34-year-olds at 6.8 out of 10. This group also recorded the biggest decline of any age group, at 7.5 years before the pandemic in 2019.
Rawnsley said the fall among 20- and 30-year-olds was linked to the property market.
“The decline in life satisfaction among 25- to 34-year-olds reflects the reality of Australia’s housing market. This is a group facing high rents or high mortgages while real incomes have fallen,” he said.
The survey also showed satisfaction among younger Gen Xers has also dropped significantly since COVID.
“The ‘sandwich’ generation is starting to feel the financial pressure to care for both aging parents and trying to support their children whose ability to generate their own wealth has declined,” Rawnsley said.
During the crisis, satisfaction fell sharply among young Australians, those under the age of 24. But this has recovered somewhat, while there has also been a lift among people approaching retirement.
In both cases, however, satisfaction is still lower than it was in 2014.
Household financial stress appears to be the main issue affecting satisfaction levels. More than 21 percent of people reported that they would struggle to come up with $2000 a week in an emergency, while a quarter said they had experienced a cash flow problem in the past year.
Financial pressures are most visible in real wage growth, which turned negative in mid-2021. Inflation-adjusted wages fell for two years before rising between late 2023 and the end of last year. But they have regressed over the past six months.
Figures from the Australian Bureau of Statistics show that since mid-2021, wages have increased by 17.5 per cent while inflation has risen by 23.3 per cent.
During the same period, measures of consumer confidence have also fallen. Consumer sentiment, which was consistently strong through the 2010s, fell sharply at the start of the pandemic and has remained below its long-term average since then.
Pressed on the strong support for One Nation by extreme left-wing political groups, the prime minister on Monday said financial pressure was the driving factor.
“Of course it is. Explaining … it’s a stupid economy, it’s always an economy that sets the parameters of the debate,” he told reporters.
Albanese said last month’s budget, with its proposed changes to property tax such as negative gearing, recognized how young Australians were being priced out of owning their own home.
“We have made decisions to improve the lives of Australians, and that is why we want to change the opportunity that exists for first home buyers,” he said.
“Australians are confused, and one of the interesting things about the debate about our budget in recent days or weeks, I haven’t seen anyone go out there and argue in the comments section, in an editorial that Australia’s current housing systems are working for Australians. I haven’t seen anyone argue that.”
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Shane Wright is the senior economics writer for The Sydney Morning Herald and The Age.Connect through X or email address.
