Like every parent watching their adult kids edge toward the real estate market, I look at the numbers with growing alarm. In 25 years, Perth house prices have jumped from roughly $200,000 to close to $900,000 — a three-to-fivefold increase — while wages have barely doubled from $50,000 to $100,000. That’s not a generational squeeze; it’s a structural impossibility. Unless the next generation marries a doctor, a diesel mechanic, a FIFO worker, wins Lotto, or inherits early because Mum and Dad kindly check out before 70, they’re staring down permanent exclusion from home ownership — unless the Bank of Mum and Dad is open, which now seems to be a prerequisite.
And when young people look at the suburbs they’ll realistically end up in — miles from the CBD, the beach or any meaningful job opportunities — they realise they can’t afford to take risks. They’re not starting businesses, not working in Europe for two years, not building the next Canva. They’re clinging to the safest bureaucratic chair they can find, because that’s what a broken housing market does: it kills aspiration. When your first mortgage is $700,000 with $50,000 a year in repayments, you’re not taking chances; you’re praying the Hyundai doesn’t need a gearbox.
This is why the work of Michael Green — former Wall Street economist and author of the Substack Yes, I Give a Fig… — Thoughts on Markets — is worth reading. In two brutal essays, My Life Is a Lie and The Door Has Opened, he turns his analytical firepower onto a simple question: what does it actually cost to live a normal middle-class life today? When he ran the numbers, the façade collapsed. His conclusion was stark: governments measure poverty and middle-class living standards using a formula from a world that no longer exists.
The original 1963 US poverty line was devised by Mollie Orshansky, who observed that food took up about a third of household income. She priced a basic food basket and multiplied by three. Crude but workable in an age when housing was cheap, childcare didn’t exist commercially, Mum stayed home, healthcare barely dented the budget and one income bought a house near the CBD with a backyard for cricket. The real crime came later: instead of updating the formula as society changed, governments simply inflated Orshansky’s basket by CPI for 60 years and pretended everything else remained affordable. The result is a measure that gauges hunger — not the real cost of functioning in a modern economy.
Green re-ran Orshansky’s logic using today’s spending patterns. Instead of assuming food takes a third of income, he plugged in reality: food today is 5–7 per cent, while the killers are housing, healthcare and childcare. Apply Orshansky’s method honestly and the modern poverty threshold for a US family of four isn’t US$31,200 — it’s around US$140,000, roughly $200,000 Australian. Not for luxury. Not for ski holidays or Disneyland. Just the income required to avoid sliding backwards each month.
Australia makes the same mistake, we use the OECD’s “relative poverty line”: 50 per cent of median disposable income after tax. For a couple with two kids, that’s around $63,800. It sounds reasonable until you try to live on it. It has zero relationship to the real cost of housing, commuting or childcare. It measures how far the battlers sit from the middle — not whether they can survive.
You don’t need an economics degree to see the absurdity. How do you live on $60,000 while paying Perth’s average rent of $700 a week — $36,000 gone before you’ve bought bread? Or buy in Byford or Ellenbrook, where median prices are $700,000 and a mortgage at 6 per cent costs $50,000 a year? Add childcare: one child at three days a week — $24,000 before subsidies. Two kids full-time — $40,000 to $50,000. Even after subsidies you’re still out $15,000 to $25,000. Then add two cars — because the State blew billions on Metronet instead of a functioning bus network — plus fuel, insurance, connectivity, gap fees, school costs, sport and streaming. The cost of merely existing has outpaced wages for the past 20 years.
Now compare this with the supposedly comfortable household income of two adults on the average full-time wage — around $200,000 a year combined. Treasury and the think tanks call that “solidly middle class”. Stack it against real numbers: an $800,000 mortgage on a $900,000 house, $20,000 in car and fuel bills, $20,000–$30,000 in out-of-pocket childcare, $3,000 for energy, $5,000 for phones, and $30,000 for food, living and medical. That “comfortable” household burns through $150,000 just to stand still — before tax. One illness, one job loss, and the whole structure collapses.
The problem isn’t big screens or Netflix — despite the usual boomer lectures. It’s the maths. Modern households don’t have disposable income; they have participation costs — the unavoidable expenses required just to stay employed, connected and raising children. And these essentials are precisely the things that have exploded in price because they can’t be outsourced to a factory in Shenzhen. A cheap TV is irrelevant when your housing bill alone is bigger than a part-time wage.
Older Australians love to say: “We bought our first house for $10,000, raised three kids, didn’t need two cars, never had childcare and lived on one income.” True — and no one denies they worked hard. But the economic structure they lived in has vanished. That brick-veneer in Mount Claremont that cost 7,000 pounds in 1963 was roughly the average wage. That same block today is $2 million in land value alone. Cut it into three 330m² blocks and each still sells for $700,000. Move to Ellenbrook and land alone is $350,000 — three times a full-time wage before you’ve laid a slab. This isn’t a generational shift; it’s a complete decoupling of housing from incomes.
And unlike the 1970s, you can’t simply “buy further out” in the sticks of Karrinyup. Perth has sprawled under mass immigration. Outer suburbia now means Yanchep — where planners expect you to commute 120 kilometres a day because they designed a city that assumes everyone works in a CBD tower. The problem isn’t just where the city has grown, but how the underlying economics of family life have shifted.
One-income households worked back in the 60s and 70s because participation costs were low. You didn’t spend a third of your income on rent or half the mother’s income on childcare. You didn’t pay for broadband — try functioning without it today. Healthcare was cheap because you either got better or you died. Schooling was affordable because it was local. Petrol was cheap. Insurance was cheap. Houses were cheap to build. Jobs were local. Commuting didn’t swallow two hours. And — crucially — your parents lived next door and did the childcare, and they didn’t live to 90 in private aged care, consuming the family home in the process. The once-sacred dream of passing down the house is now being devoured by the aged-care sector long before the kids see a cent.
Today’s young families face cost blowouts at every line item (except food — farmers can’t win). And this is where Green’s second insight — the “Valley of Death” — exposes how the generational deal has broken. In the past, effort translated into stability. Work hard, save more, move from renter in South Perth to owner in Mount Claremont, then up to City Beach. The classic property ladder. Boomers were property heroes — but would any of them start that climb again today? The ladder has become a trap. The moment a second parent returns to work, the household triggers full-whack childcare. A small pay rise wipes out subsidies faster than income rises. A couple earning $120,000 to $150,000 can end up with less disposable income than a single-income household from 40 years ago — not because they’re lazy, but because the system punishes effort.
Which leads to the biggest myth of all: the idea that rising house prices have made Australians “wealthy.” On paper, a Gen X home bought 25 years ago might now be worth a million dollars. But unless you plan to live in a caravan park or retire in Bali, you can’t spend that money. Selling just buys another million-dollar house. Downsizing only works if you leave the city entirely — and stamp duty takes a bite on the way out. Meanwhile, aged care hoovers up estates like a hungry tax collector. Rising asset prices don’t make you rich; they simply raise the minimum entry price for the next generation and turn the once-ordinary dream of home ownership into a fortified estate.
What makes this absurd is that Australia is not short of land. We’re not the Netherlands or Singapore. We sit on thousands of kilometres of sand north and south of Perth, yet a block 30 kilometres from the beach is 300 square metres and $300,000 before you’ve poured a slab. And instead of decentralising government departments to Bunbury and turbocharging regional economies, every job and agency stays welded to Perth. A land-rich country has managed to make land the most unaffordable commodity of all.
Then comes the build: $400,000 for a basic house. We’ve regulated ourselves into a corner. Try getting a council to approve a 1960s fibro house with no garage or insulation. The outer suburbs are now an economic hamster wheel: global-city prices, modest wages and infrastructure that still pretends everyone works in the CBD.
The only real pressure valve is the regions — but even that chance is being wasted. Country towns have 4G or 5G, and where they don’t, Starlink has solved it. Agriculture, mining and regional SMEs are desperate for young families. What’s missing is housing — real housing. Not $700,000 urban shoeboxes on postage stamps, but spacious, affordable land.
Instead of pouring billions into rent subsidies and “affordable housing” pods, governments should help shires buy land, rezone it into one-acre blocks and let owner-builders get on with it. Give people the freedom to build a shed-house with insulated panels and ten years of weekend labour — $1,000 per square metre instead of $3,000. Concrete floors, tin roof, no marble nonsense. A home that works.
For half the cost of a suburban mini-McMansion, a family could have an acre, a shed, a veggie patch and breathing room. Allow that and Perth’s insane housing market becomes a recruitment engine for the bush. A couple staring down 30 years of mortgage servitude might consider Bunbury, Katanning, Northam, Narrogin or Lake Grace if they could build a new home outright for less than half the Perth price on land that costs them a quarter.
But that requires scrapping planning laws that treat adults like toddlers. And yes — the bureaucrat Greens and Teals will scream about sustainability guidelines and climate-compliance codes. Who cares? Throw them in the bin with the net-zero paperwork. It’s a home — and it’s theirs.
Which brings us to the last great fantasy: that Gen Z will be rescued by the same house-price boom that enriched the Boomers. Canberra clings to this like a religion: rising house prices equal rising family wealth, and Gen Z will inherit their way onto the ladder. But it’s fantasy built on demographic sand. Australia is one policy wobble away from joining the 60 countries already in population decline. Once the curve turns negative, the whole trick stops working.
Japan and Italy are the warnings. When populations shrink, house prices stagnate or fall, and suburbs hollow out. Young people are left servicing yesterday’s inflated mortgages while tomorrow’s buyers vanish. Japan already has towns where homes are free. Italy sells them for a euro. That’s what happens when your economic model depends on perpetual population growth — and then growth ends.
The idea that Gen Z will ride the next boom is delusion. They’re more likely to be the ones caught holding the bag: overpaying at the peak, loading themselves with 30 years of debt and watching equity melt as demographics turn. That’s assuming they ever get on the ladder — and right now, the ladder looks like a cliff.
Unless you’re a double-income household earning well above the so-called poverty line, Perth is becoming unliveable. The political class refuses to admit it because doing so would mean acknowledging the underclass they’ve engineered — an entire generation locked out of home ownership and punished for trying to work, save or even hope to raise a family. Instead of fixing fundamentals, they inflate the housing market and congratulate themselves on “growing wealth”, when the only thing growing is the divide.
It’s an intergenerational disgrace, made worse by political fools who still treat booming house prices as a sign of national success rather than a warning siren. Sure, politicians and senior bureaucrats can leverage their salaries — and their kids — into the first-home market. But for everyone else, the ladder is being kicked away. Far too many Australians in their 20s and 30s are now staring at a future no previous generation has faced: the very real possibility that the great Australian dream may never be theirs.
