Australians' life satisfaction has dropped to a decade-low, with many people struggling to make ends meet due to high living costs and stagnant wages. Research by consultancy KPMG found that life satisfaction among Australians has been steadily declining since the mid-2010s, with those in their 20s and 30s being the hardest hit, facing high rents or large mortgages at the same time as real incomes have gone backwards.

A record-low life satisfaction score of 6.8 out of 10 is seen among those aged 25-34, who have also experienced the biggest drop in life satisfaction since 2019, when it was at 7.5. This decline reflects the reality of Australia's housing market, where high rents and mortgages are combining with stagnant wages to make it difficult for people to afford basic necessities, according to KPMG urban economist Terry Rawnsley.

Rawnsley attributed the decline in life satisfaction to the property market, citing high rents and mortgages, combined with stagnant wages, as the key factors contributing to the difficulties faced by people in their 20s and 30s. 'This group is facing high rents or large mortgages at the same time as real incomes have gone backwards,' he said.

The research also found that satisfaction among younger Gen Xers has slipped sharply since COVID. 'The 'sandwich' generation are starting to feel significant financial pressures caring for both ageing parents and trying to support their children whose ability to generate their own wealth has flatlined,' Rawnsley said.

Pressed on the strong support for One Nation and far-left political groups, Prime Minister Anthony Albanese admitted that financial pressures were a driving factor. 'Of course it is - it's the economy, stupid - it's always the economy that sets the parameters for debate,' he said.

Albanese said the government's recent budget, which proposed changes to property taxes such as negative gearing, recognized the way younger 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 which is there for first-home buyers,' he said.

The financial pressure on households is evident in the number of people who would struggle to raise $2000 in a week for an emergency. Over 21% of people reported they would struggle to raise this amount, while a quarter said they had experienced a cashflow problem in the past year. Data from the Australian Bureau of Statistics shows that since mid-2021, wages have grown by 17.5% while inflation has climbed by 23.3%.

This means that in real terms, wages have actually fallen over the past two years. The strain on household finances appears to be the key issue affecting satisfaction levels. The financial pressure is most evident in real wage growth, which turned negative in mid-2021. Inflation-adjusted wages fell for two years before they picked up between late 2022 and the end of last year, but have since gone backwards through the past six months.

Over the same period, measures of consumer confidence have also crashed. Consumer sentiment, which had been consistently strong through the 2010s, slipped sharply at the start of the pandemic and has remained below its long-term average ever since.

Key Facts:

  • 6.8/10 is the current life satisfaction score for 25-34 year olds
  • 7.5 was the life satisfaction score for 25-34 year olds before the pandemic in 2019
  • 21% of people would struggle to raise $2000 in a week for an emergency
  • 23.3% is the inflation rate since mid-2021
  • 17.5% is the wage growth since mid-2021
  • Consumer sentiment has been below its long-term average since the pandemic

The research has far-reaching implications for the federal government, which is facing criticism for its handling of the economy. The government's proposed changes to property taxes such as negative gearing are seen as a response to the housing affordability crisis, but critics argue that these changes do not go far enough in addressing the underlying issues of housing affordability and wage stagnation.

The KPMG report is a sobering reminder of the struggles faced by many Australians, highlighting the need for urgent action to address the housing affordability crisis and ensure that all Australians have access to secure and affordable housing. Australians are frustrated, and it's clear that the government must take concrete steps to address the underlying issues driving this decline in life satisfaction, including stagnant wages and soaring housing costs.