Productivity Commission chair Danielle Wood will tell a parliamentary inquiry into the property market this week that Australia's long-standing "intergenerational bargain" is breaking down, with three decades of house prices outpacing wages leaving younger Australians facing a genuine decline in living standards, The Sydney Morning Herald reported.
Wood argued the effects go well beyond affordability, shaping decisions about where people work and whether they start a family.
Commission research shows two-thirds of Australians born between 1976 and 1982 out-earned their parents at the same age, but that pattern of rising intergenerational income has since stalled — people born in the 1990s are the first cohort to see almost no income growth compared with those born a decade earlier.
Incomes have flatlined for younger cohorts at the same time as property values have risen roughly three times faster than wages between 1997 and 2025, according to Commission data — a mismatch that has pushed buyers into ever-larger mortgages even where ownership remains within reach.
Wood said the result is "much lower rates of homeownership among people in their 20s and 30s" than in previous generations, fuelling frustration among younger Australians about unequal access to opportunities their parents took for granted.
That squeeze shows up in the latest lending figures too: first-home buyer loan numbers fell 4.3% in the March quarter, even as the average loan size climbed to $614,048 — a reminder of how much further young buyers now have to stretch just to get a foothold.
Wood noted the government's contested changes to capital gains tax and negative gearing, aimed at improving affordability for younger buyers, hadn't actually been modelled by the commission itself.
She said the changes were broadly in line with earlier Treasury and Grattan Institute analysis, which suggested they would shave around 2% off house price growth — a modest impact compared with the scale of the underlying problem.
The more consequential lever remains housing supply, with the commission due to release an interim report on planning and housing regulation shortly. The government is already tens of thousands of homes behind its target of 1.2 million new dwellings by mid-2029, despite building approvals climbing more than 9% to 202,000 over the past year.
That supply-side debate is playing out against a market that's already cooling. Auction clearance rates have held below 50% for a third straight week nationally, Cotality data show, though Sydney and Melbourne rose last week to sit above that mark.
HSBC Australia chief economist Paul Bloxham expects national prices to fall through the rest of 2026 and by 2% to 6% in 2027, even as Perth — up 24% over the past year — continues to defy the broader trend.
Bloxham said a softer market would be "helpful for the RBA if it slows down consumer spending," adding to the case for rates to stay on hold rather than rise further.
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