A young influencer challenges baby boomers who suggest that “lazy young people who drink coffee” could buy a house like they did 40 years ago.
Jack Toohey made a video explaining the differences between buying a house in 1983 and 2023.
Baby boomers often like to remind young people how they paid 18 percent interest in the 1980s, but fail to mention that the typical house price was significantly cheaper compared to median incomes when they bought four decades ago.
Toohey, the founder of Sure Studios, a creative content and production company, has blasted their misleading claims and misinformation with facts and figures comparing real estate values and earnings.
Let’s go back in time to buy a house. In 1983 I am an average person who wants to buy an average house,” he said.
Toohey came in 1983 comically dressed in 1980s clothing to emphasize incomes, cost of living and real estate prices.
TikTok user Jack Toohey (pictured) argued that in 1983 it took a person two years to save for a 20 percent down payment after calculating a person’s average annual salary against rent, taxes and house prices in 1983
In 1983, a house in Sydney cost less than four times the average full-time salary for someone with a 20 percent mortgage.
In Australia’s most expensive city, someone buying a typical house worth $81,425 only had to save $16,285 for a down payment – a level lower than the annual salary at the time.
Now an ordinary house costs 11 times an average salary of $94,000, with Sydney’s average house price now at $1.293 million, meaning someone needs a $1 million loan and a $259,000 down payment.
Saving for a mortgage now typically takes 14 years for a couple earning a six-figure salary, but it still takes a decade in Melbourne, Brisbane, Canberra and Hobart, according to a report from ANZ-CoreLogic.
Toohey compared national property values in 1983 and 2023, with figures from the Australian Bureau of Statistics and Australian Taxation Office in text boxes above the video.
He noted that a typical Australian home cost $64,039 in 1983, when higher education was free, and the median annual income was $19,188.
‘In 1983 I am an average person who wants to buy an average house. I have a mediocre degree that I got for free, and I have a mediocre job.”
“After paying taxes and rent, I have $12,315 of disposable income. If I save 50 percent of the rest ($6,157), it will take me two years to save a 20 percent down payment. Remember that!’
“If I saved 50 percent of the rest, it would take me two years to save for the 20 percent down payment,” of $12,807, says Toohey.
The video then shows Toohey ‘going back’ to 2023 where he explains the financial plight of young Australians.
The cost of an average home is now $920,100, while the median annual income is $90,896.
Toohey explains that in 2023 the average annual rent is $28,600, the annual tax is about $20,008 and young Australians with a degree have an average HECS debt of $23,658 with an average annual repayment of $5,543.
That leaves young Aussies with a disposable income of $36,835.
Back to 2023 and I’m still an average person looking to buy an average home. Have this average degree and have an average job,” says Toohey.
“After paying taxes, rent and stuff, I have $36,835 of disposable income. If I save 50 percent of the rest ($18,417), it will take me 10 and a half years to save the 20 percent down payment.”
Clearly, the problem isn’t just caused by lazy slackers sipping lattes.
Toohey applied the same formula to an average person looking to buy a house in 2023 and found that it would take them 10 and a half years to save a 20 percent down payment. He claims that the housing market is broken and that “lazy young people drinking coffee” are not the problem
Toohey adds that it will take him 84 years to save enough money for a down payment if he doesn’t buy a latte every day before whispering to the camera, “I’m out of 84 years.”
In 40 years, the average house price has increased 14 times, while full-time salaries have only increased 4.7 times. Houses used to cost three times your salary, now they cost ten times.”’
He adds that 40 years ago house prices cost three times the average person’s salary, while it now costs ten times as much.
“All things being equal, you would need to make $300,000 a year to benefit from that same triple ratio,” says Toohey.
“You might think $90,000 ‘wow that’s high’. It is! That’s because CEOs and Vice Chancellors take home millions and inflate the total revenue source and pull the average upwards.
If we look at the median, that’s the number in the middle of all the numbers, which is about $48.00. So if you earn more, you earn more than 50 percent of all working people in Australia.
‘And yet housing is so far out of reach. Something bigger is going on here.”
Toohey explained that over four decades, house prices have risen 14 times compared to full-time wages, which have risen only 4.7 times. House prices in 1983 cost three times a person’s salary compared to 10 times as much in 2023 (stock image)
Social media users agreed with Toohey’s claims, with many highlighting the unwanted advice baby boomers are giving them about how to save money and buy a home.
“You can’t put it more plainly, but I still hear the over-50s in my head still trying to argue that there was one recently who told me to get three jobs,” one person wrote.
“If you stopped buying that coffee/junk food and saved your money you could buy a house ‘yeah…..right,’ another person commented.
A third person chimed in, “I heard this boomer get asked on the radio why our generation can’t buy a house and she says it’s because of all the ‘tap and go’.”
The Reserve Bank has raised interest rates by another 25 basis points – its 12th hike in just over a year, and blames a hefty increase in pay wages for fueling inflation.
It comes after the Reserve Bank of Australia raised cash rates by a further 25 basis points on Tuesday to an 11-year high of 4.1 percent.
It is the 12th rate hike since May 2022, the fastest consecutive hike since 1989.
Borrowers can expect even more pain in the coming months, with loan amortizations rising 62 percent in just 13 months.
Reserve Bank Governor Philip Lowe said the increases must continue because inflation was still too high, noting that the big wage increases coming into effect next month will only make that worse.
“Inflation in Australia has peaked but is still too high at 7 percent and will take some time to get back into target range,” he said in a statement Tuesday.