Australia is becoming increasingly unequal, with a stark generational divide emerging. Young Australians today confront a harsher reality than their parents and grandparents. Despite unprecedented access to education and information, they are more precarious, indebted, insecure, and anxious than ever before. This paradox has profound implications for the social fabric of the nation.
Financial, educational, and employment insecurities are converging to affect mental health and psychological wellbeing, shaping how young people form relationships, start families, and engage with society and politics. Intergenerational inequality is a pressing concern for policymakers in Canberra and beyond. In this comprehensive analysis, we explore the challenges facing younger generations and potential policy solutions.
Understanding the Generational Divide
Generational definitions are not an exact science. Researchers often use varying birth cohorts, shaped by key social and political events during formative years. However, youth is not solely defined by age. It is a period before acquiring key markers of adulthood, such as educational credentials, financial independence, home ownership, partnership, and parenthood. Many young people today find these milestones increasingly elusive.
Education: A Costly Gateway to Adulthood
Education, once seen as a pathway to a stable job, is now taking longer and costing more. In less than two decades, average student loan debt for people in their 20s has more than doubled, increasing by 145%.
If debts had only tracked up with inflation, they’d be 62% higher.
While graduate salaries have increased by about 2.5 times since 1996, student contributions have surged by up to 6.2 times, meaning HECS-HELP debts now consume a larger share of starting incomes. The Labor government’s recent reform, which raised the repayment threshold from $56,156 to $67,000 from 2025–26, aims to ease early repayment burdens. However, financial stress starts well before graduation, with most rental listings unaffordable for those on Youth Allowance. In 2023, one in seven full-time students also worked full-time, double the rate in the 1990s.
Home Ownership: A Disappearing Dream
Home ownership, long a symbol of financial stability, is increasingly out of reach for young Australians. The latest Household, Income and Labour Dynamics in Australia (HILDA) data report shows a significant decline in home ownership among young adults.
In 2023, dwelling prices rose nearly 5%, far ahead of wage growth.
Over the past 25 years, the average dwelling has gone from costing nine times annual household income per capita to 16.4 times in 2024. Housing affordability is now so strained that many young Australians no longer see home ownership as essential. A 2024 Australian National University (ANU) survey found a growing sentiment among youth that owning a home is no longer important to Australia’s way of life. In 2024–25, an estimated 1.26 million low-income households were in housing stress, spending more than 30% of their disposable income on shelter. These households are more likely to be headed by younger people, first-home buyers, single parents, and those in the lowest income bracket.
The Psychological Toll on Young Australians
Psychological Distress: The Silent Crisis
Across all age groups, psychological distress is rising, with younger Australians bearing the brunt. Between 2011 and 2021, distress among 15 to 24-year-olds more than doubled, from 18.4% to 42.3%. For those aged 25 to 34, prevalence reached 32.7% in 2021.
Young people today are twice as distressed as their 2007 counterparts.
Distress is significantly higher among income support recipients and those in insecure housing, particularly renters and social housing tenants. These vulnerabilities converge in youth. The 2025 Australian Unity Wellbeing Index survey found young Australians are some of the least satisfied with life, with adults aged 18 to 34 reporting the highest levels of mental distress and loneliness.
Loneliness: Not Just an Old Person’s Problem
Loneliness has shifted from being an issue exclusively of old age to a defining feature of youth. According to the 2024 HILDA statistical report, the share of lonely people aged 15 to 24 rose from 14.4% in 2008 to 20.2% in 2019. The pandemic accelerated this trend, with loneliness jumping to 26.6% in 2020 and remaining high in the two years following.
No other age group saw a similar increase.
The 2025 ANU Election Monitoring Survey found loneliness and financial stress are strongly linked to political disengagement, with affected individuals reporting lower satisfaction with democracy and reduced trust in institutions.
Delayed Adulthood and Its Implications
Changing Familial Milestones
Young Australians are entering adulthood later and under more pressure. More are living with parents into their late 20s and early 30s, often while studying or working in low-paid jobs. Census data show the proportion of young adults living at home has increased across every age group since 2006, with the sharpest rise between 2016 and 2021.
Relationship formation is also changing. Young people are entering first marriages later, and women are having children later or not at all. The proportion of first-time mothers aged 30 and over has more than doubled since the 1980s, but the fertility rates of every age group under 35 have declined since the mid-2010s. Overall, fertility rates have dropped to a record low of 1.5 babies per woman, starkly below the current level needed for population replacement.
These demographic trends have long-term implications for care and dependency, as fewer children will be available to support ageing parents. Relationship pressures are intensifying, with nearly half of young people aged 18 to 24 reporting that work or study commitments strain their most important relationships.
These shifts in household dynamics, fertility, and relationship stability reflect a broader delay in achieving traditional markers of adulthood. For many young people, the path to independence is not only slower but more fragile, shaped by economic constraints and social change. Financial, educational, and employment insecurities are converging to shape mental health and psychological wellbeing, influencing how young people form relationships, start families, and engage with society and politics.
Intergenerational inequality is not just an economic issue, but a social and democratic one. As Australia grapples with these challenges, the need for effective policy interventions becomes ever more pressing.
