Top economist busts 'avocado' stereotype and reveals why young Aussies actually have it tougher than other countries: 'An affordability problem'
A top economist has busted the 'avocado' stereotype, arguing young Australians really do have it tough when trying to get onto the property ladder.
AMP deputy chief economist Diana Mousina, 36, claimed the 'divide between the have and the have nots has probably never been wider in Australia that it is right now'.
Australian millionaire property tycoon Tim Gurner famously claimed in 2017 young Australians could not afford a property because they kept wasting their money on superfluous spending such as $19 smashed avocado.
The 'avocado on toast' image quickly became a stereotype that has been stuck to Millennials and Gen Z in the ongoing debate about whether or not boomers had it financially easier than the successive generations.
Ms Mousina told The Fred Schebesta Show in April that while some Aussies from the 'avocado-eating generation' needed to pull in their spending, a lot were struggling to get into the real estate market because of reasons beyond their control.
The median dwelling price in Australia is about $814,000 and in Sydney it's around $1.3million.
Ms Mousina explained it would take an Aussie 11 years on an average income of $100,000 to save for a 20 per cent deposit.
'Do people want to wait 11 years of saving to be able to purchase their home when it took five years a few decades ago?' Ms Mousina said.
'This is why people feel like they can't get into the market they can't succeed because they have this drag of having to save for a long time.'
The AMP economist noted the 'spending behaviours of young people are different to what they were a few decades ago' but that it's 'normal' to spend more on services.
'The idea of this avocado-eating generation I think it does have some merit to it,' she said.
'There is partly an excuse of young people perhaps not wanting to save as much or not being able to save as tightly perhaps as their parents or their grandparents.
'But at the same time Australia does have an affordability problem.'
Ms Mousina noted that although Australia wasn't the only country which was suffering from this problem, it did have a secondary issue that was exacerbating matters.
Half of Australia lives in three cities Sydney, Melbourne and Brisbane.
The economic expert explained in other countries like the United States, people are far more spread out and are able to buy property regionally.
'But even our regional home prices are unaffordable on the typical metrics that you would look at,' she added.
In Sydney alone, the median house price is approaching $1.5million - or 15 times the average full-time salary of $100,000, while the banks won't lend borrowers more than 5.2 times their pay before tax.
The situation is now so ridiculous that a borrower buying a Sydney house on one income would need to earn $226,281 to qualify for a home loan - and be among the top 2.3 per cent of income earners.
Even with a hefty 20 per cent mortgage deposit of $294,125 - built up from more than a decade of saving - this high-income borrower would still be in mortgage stress, contributing more than a third of pay on monthly mortgage repayments.
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