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Sydney renting needs A$130,000
The average young worker in New South Wales earns around A$54,000. The best jobs in any field cluster in specific cities, like finance in London and New York and tech in San Francisco, and those are the cities where rent bites hardest. In 1960, the typical renter spent less than a fifth of their income on housing. Today it's closer to a third, and in the cities where the jobs are, it's considerably worse.
In the US, three in five Gen Z renters are rent-burdened, spending more than 30% of their income on housing before anything else. In Los Angeles and San Diego, it's closer to three in four.
Many young people decide the move isn't worth it. Some stay in the town they grew up in, where opportunities are thinner and the risk of ending up out of work is higher. Others move back in with their parents, which is now the living situation of roughly one in four young adults in the US, up from one in nine 50 years ago. That arrangement can make financial sense, and it often comes with a growing feeling that adulthood has been indefinitely delayed.
Why do the best jobs cluster in a few cities?
In 1890, economist Alfred Marshall described three forces behind clustering: a shared pool of workers, shared suppliers, and knowledge spreading between nearby firms. Those forces make firms in the same industry more productive when they sit close together, which is why finance gathered in London and New York and tech in the San Francisco Bay Area. Economist Enrico Moretti estimated in his 2012 book The New Geography of Jobs that each job in the innovation sector supports about five additional local jobs in other fields.
Why do rents rise fastest where jobs are?
When a city adds jobs, more people compete for the same homes, and prices climb unless new housing is built quickly. Economists Edward Glaeser and Joseph Gyourko have found that in heavily regulated coastal US markets, home prices sit well above the cost of construction, which they link to zoning and land-use rules that limit new supply. In cities with fewer such limits, such as Houston, new building has kept prices closer to construction costs.
Why is living with parents so common now?
Pew Research Center reported in 2016 that, in 2014, living in a parent's home became the most common arrangement for Americans aged 18 to 34, the first time that had been true in more than 130 years of records. The shift tracks later marriage, since a partner's household had long been the usual destination for young adults. The Census Bureau reports that the median age at first marriage has risen by several years since the 1970s.
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