How baby boomers are benefiting from Australia's "worst financial mistake"
A financial expert has explained how baby boomers have remained largely unscathed by the ongoing housing crisis in Australia.
ABC finance guru Alan Kohler described the crisis as Australia's "worst financial mistake", as Adelaide has now become the country's second least affordable city.
The South Australian capital, which has long been known as one of the more affordable places in the country to live, has skyrocketed in price, as the median price for houses and units in Adelaide was $721,376 in January, which is 7.9 times higher than the state's average full-time salary of $91,026.
"There are a couple of things that might surprise you: Adelaide became the second, least affordable Australian city last year," Mr Kohler explained.
"Adelaide has just taken over from Hobart in second place."
"What's going on: put simply, incomes in Adelaide, Hobart and Brisbane are not keeping up with house prices, which are being pushed up by fast-rising population and by first-home buyers."
Mr Kohler, a baby boomer, noted that when he and his wife bought their first home in Melbourne for $40,000 in 1980, he was earning $11,500 as a journalist, meaning his home cost just 3.5 times his income before a mortgage deposit.
"When my wife and I bought our first house in 1980, the average house price was 3.5 times average income," he said. "Now, it's 7.5 times and rising."
"That didn't have to happen: it's Australia's worst, economic mistake."
Mr Kohler said parents were increasingly propping up the mortgage deposits of first-home buyers, as first-home buyer subsidies from the federal government only pushed up property prices.
"Despite rising prices and crushing interest rates, first-home buyers were the fastest-growing type of borrower," he said.
"The Bank of Mum and Dad coughing up early inheritances and politicians showering them with grants and concessions, desperate to appear to be doing something about affordability while actually making it worse."
Image credits: Shutterstock / ABC