In this opinion piece, Prophet’s chief statistician John Strumila, otherwise known as “Macro Man” shares his thoughts on the Federal Government’s newly released Intergenerational Report and what its implications will look like for companies and marketers.
The Federal Government’s Intergenerational Report paints an optimistic picture of a larger, wealthier country. Look beyond the average, however, and a different future emerges.
Australia is projected to be substantially richer in 40 years. According to the 2026 Intergenerational Report, the economy will be more than twice its current size by 2065–66, while real national income per person will be 55 per cent higher.
This headline is encouraging, but averages have a habit of smoothing over the differences that matter most.
The average Australian in 2066 may be wealthier but that does not mean every Australian, or even every generation, will feel better off. Increasingly, the country is dividing along a line more consequential than age or income alone whether or not you own a home.
For much of Australia’s recent history, the economic divide was relatively predictable. Older people generally held more wealth because they had spent longer accumulating it. Younger people earned less, owned less and gradually caught up.
However, the current housing situation is disrupting that progression.
Home ownership among young households has fallen sharply since 1981. Treasury estimates that around 250,000 more households aged 25 to 34 would own their homes today if ownership rates for that age group had remained at their 1981 level.
Over roughly the same period, the relationship between earnings and house prices has fundamentally changed. In 1999–2000, the median dwelling cost approximately four times average full-time earnings. By 2025–26, it cost approximately eight times earnings… and the cost of just about everything else has gone up significantly.
This is more than an affordability statistic – it represents a change in the way Australians accumulate wealth, form families, consume and eventually retire.
Home ownership has traditionally been the gateway into what we might call the “normal” Australian economic lifecycle. You purchase a home, gradually pay down the debt, build equity and gain greater financial flexibility as your income rises. You can spend, invest and plan for retirement with the security of knowing your largest future expense is being brought under control.
For people locked out of that lifecycle, the trajectory looks very different.
They might rent for longer, save for longer and delay decisions requiring financial certainty. Starting a family, changing careers or building a business all become harder when housing costs remain high and future tenure feels insecure.
This may be one reason falling fertility rates cannot be treated as an isolated demographic phenomenon.
The report projects Australia’s fertility rate will fall to 1.34 children per woman by 2065–66. Social attitudes and personal preferences are changing, but economic security matters too. It is reasonable to ask how many people are delaying children because they have not achieved the housing and financial stability earlier generations reached at the same age.
The consequences continue into retirement.
Housing costs already consume 40 per cent of household expenditure for retired private renters. According to figures cited in the report, 11 per cent of retired homeowners live in poverty, compared with 67 per cent of retirees in the private rental market
That is an extraordinary divide. And unless housing patterns change, it is one that could become more pronounced as today’s younger renters age.
Australia’s superannuation system will undoubtedly help. The report projects the median superannuation balance of Australians aged 65 to 69 will approach $450,000 by 2037. As the system matures, reliance on the Age Pension is expected to decline even as the retirement-age population doubles.
But superannuation was designed within an economic model in which most retirees owned their homes. A healthy super balance has a very different meaning when one household has no mortgage and another must continue paying market rent indefinitely.
There is also the growing importance of inherited wealth.
For Australians who own property or whose parents do, the rise in housing values has created substantial wealth. That wealth can increasingly pass from one generation to the next, helping children enter the market, reduce their mortgages or build investments of their own.
Those without access to family property wealth face a different equation. They are not simply starting later; they may be competing against buyers supported by decades of accumulated housing gains.
The traditional divide between younger and older Australians is therefore becoming something more permanent – a divide between people inside the property system and those outside it.
This is why the report’s projection of a 55 per cent increase in real income per person needs context. It tells us the size of the future economic pie, but not how securely different households will live or how evenly the gains will be experienced.
It is entirely possible for average income and wealth to rise while a significant proportion of Australians feel less secure.
One household can own a valuable, appreciating asset while another spends a growing share of its income renting it. Both households contribute to the same national average, but they are not participating in the same economy.
For marketers, this means a national forecast is a starting point, not a picture of future demand. Two households with similar incomes may make very different decisions if one owns its home outright and the other faces decades of rent. Their capacity to spend, appetite for risk and response to a price increase may diverge further over time.
Businesses planning for 2066 need to ask where growth will actually come from: which households will have more discretionary income, which will be managing persistent housing costs, and how those groups will differ by age and location. A strategy built around the “average Australian” could miss both the customers gaining financial freedom and those under growing pressure.
This is not an argument against long-range economic modelling. The Intergenerational Report is valuable precisely because it forces Australia to look beyond the next Budget or election cycle.
But our measures must evolve with the country they describe.
Income per person, GDP growth and average household wealth remain important.
They should increasingly be accompanied by outcomes divided by generation, housing tenure and access to family wealth. Businesses should bring the same distinctions into their forecasts of customers and demand. Otherwise, an improving national average may conceal deteriorating prospects for a significant group of Australians, and lead companies to plan for a customer who exists only on paper.
By 2066, Australia is likely to be bigger, older and richer. But the question for governments and businesses is who will share in that prosperity, and who will still be paying for the security others already own.
The future will not be experienced as a national average. The sooner we plan for the different households within it, the better our decisions will be.
