Why happiness levels have fallen below pandemic-era lows, according to new KPMG research
Life satisfaction among Australians is lower than at the height of the pandemic, as financial pressures and housing costs squeeze people in their 20s, 30s and 40s. Anthony Albanese admits the cost of living has contributed to the fragmentation of the country’s politics.
Research published Tuesday by consultancy KPMG shows that life satisfaction, a measure that tracks whether a person is happy with their situation, is now significantly lower than it was in the mid-2010s across all age groups, but nosedived among people facing the biggest financial hit.
While the majority of people struggle to come up with $2,000 in an emergency, this is a key indicator of financial stress. Household wealth levels have stagnated since the beginning of the decade.
KPMG urban economist Terry Rawnsley said unlike during the pandemic, when many Australians’ income levels were boosted by government programs such as JobKeeper and ultra-low interest rates, people today were under constant financial pressure.
“These factors have left many average Australians in a precarious financial situation for much of the last five years and are undoubtedly affecting how they feel about their lives,” he said.
Measures of life satisfaction traditionally reveal that people in their 30s and 40s express lower satisfaction ratings than other age groups. People in their retirement years often record the highest levels of satisfaction.
KPMG found that satisfaction was lowest among those aged 25-34, at 6.8 out of 10. This group also recorded the largest decline of all age groups, with 7.5 year olds before the pandemic in 2019.
Rawnsley said the decline among people in their 20s and 30s was down to the property market.
“The decline in life satisfaction among 25 to 34-year-olds reflects the reality of Australia’s housing market. This is a group facing high rents or large mortgages, and at the same time real incomes are declining,” he said.
The research also showed that the satisfaction of young Gen Xers has fallen sharply since Covid-19.
“The ‘sandwich’ generation is beginning to feel significant financial pressures as they both care for aging parents and try to support their children, whose ability to create their own wealth remains stable,” Rawnsley said.
During the pandemic, satisfaction has fallen sharply among young Australians aged under 24. However, this situation has partially improved and there has also been an increase in people about to retire.
However, in both cases, satisfaction is still lower than in 2014.
Pressure on household finances appears to be the main issue affecting satisfaction levels. More than 21 percent of people said they would struggle to raise $2,000 a week for an emergency, while a quarter said they had cash flow problems in the past year.
Financial pressure is most evident in real wage growth, which turned negative in mid-2021. Inflation-adjusted wages fell for two years before rebounding between the end of 2023 and the end of last year. However, they have gone backwards in the last six months.
Data from the Australian Bureau of Statistics shows wages have increased by 17.5 per cent since mid-2021, while inflation has increased by 23.3 per cent.
Measures of consumer confidence also collapsed during the same period. Consistently strong throughout the 2010s, consumer confidence fell sharply at the beginning of the pandemic and has remained below the long-term average since then.
Highlighting strong support for One Nation and far-left political groups, the prime minister said on Monday financial pressures were clearly a driving factor.
“Of course it is. In other words… economics is stupid, it is always economics that sets the parameters of the debate,” he told reporters.
Albanese said last month’s budget and proposed changes to property taxes, such as negative gearing, showed how young Australians were being priced into owning their own home.
“We’ve made decisions to improve the lives of Australians and so we want to change the opportunity available for first home buyers,” he said.
“Australians are frustrated and one of the interesting things about the debate over the last few days or weeks about our budget is that I haven’t seen anyone get out there and argue in an editorial that Australia’s current housing systems are working for Australians. I haven’t seen anyone arguing that.”
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Shane Wright is senior economic correspondent for The Sydney Morning Herald and The Age.Connect with: X or email.
