‘We’re getting left behind’: Young people suffer under coronavirus two-track recovery
For high school graduates, the summer days before university starts are typically a time to celebrate graduations and new beginnings.
But for Aanjoli Rayat and her friends, there are much bigger things to worry about.
Having navigated her senior year during COVID-19 Ms Rayat, 18, is more concerned about whether she’ll land a part-time job against the most difficult labour market in a generation.
“It’s freaky,” Ms Rayat told The New Daily.
“A lot of people are confused about what all these long-term changes are going to be … trying to get a job over the last year has been really hard.
“We couldn’t really celebrate our milestones last year because of COVID, but many of us couldn’t afford to even if we could.”
More than 3.5 million people aged between 15 and 34 are stepping into 2021 mired in historic uncertainty as a two-track recovery emerges in Australia’s labour and housing markets.
Economists celebrated in January as ABS data revealed total employment rebounded to within 0.7 per cent of pre-COVID levels last December, but not all age brackets are returning to work so fast.
Employment was 4.7 per cent lower for 15 to 24-year-olds in December than in March, and 2.3 per cent lower for those aged 25 to 34.
Altogether, that’s 165,200 fewer young people with a job.
Callam Pickering, APAC economist at Indeed, said the data showed outcomes for young people have been much worse than for older Australians in the early recovery months.
“Most of the jobs being created, most of the people coming back into the workforce, are older than those [15-34] age groups,” he told The New Daily.
Mr Pickering said last year’s recession had an outsized impact on young people too, with the 15-to-34 jobless rate increasing from 11.6 per cent to 16.4 per cent between March and July.
JobKeeper helped, but because many casual roles were excluded, many young people were hard pressed to get work as employers scaled down and prioritised eligible staff.
Now, labour market newcomers like Ms Rayat, who hopes to land a job in hospitality, will contend with cost-conscious employers paying workers all by themselves for the first time in almost a year when JobKeeper expires in March.
“We know from history the impact of a recession tends to linger for young people,” Mr Pickering said.
“So far it appears as though the recovery from COVID-19 is much the same.”
‘FOMO’: Pandemic spurs young home buyers
Others like university lecturer Thuong Hoang have been lucky enough to find job stability during the pandemic, and are now making longer-term investments.
After securing ongoing employment, Dr Hoang, 34, decided to pull together a deposit for an apartment in Melbourne’s inner north.
“There was a semi FOMO [fear of missing out] kind of thing as there were a few properties I liked last year that had been sold,” he told The New Daily.
“With low interest rates in the short term, I can see the amount of payments for a mortgage is equivalent to what I’m putting down in rent, and I thought, ‘Why not actually have a long-term investment?’”
Dr Hoang is one of many younger buyers who took the property plunge during the pandemic.
First-home buyers entered the market in record numbers last year, as low interest rates and fiscal stimulus helped tens of thousands find a spot on the property ladder.
But although these policy settings have helped the likes of Dr Hoang, those just starting to save for a deposit will have a much tougher time.
Mr Pickering agreed this generated a two-track recovery in the housing market, raising the prospect that savers will start taking more risks.
“The real challenge younger people have right now is simply raising a deposit,” he said.
“Once you get into the property market those low mortgage rates make it easier to pay down your debts … [but] right now, in order to save enough to get in you have to take more risks, like investing in equities.”
Young people left behind as market prepares for boom
Last year’s 3 per cent uptick in property prices may end up being meagre compared to economists’ expectations of a nationwide housing boom in 2021, as policy settings continue to drive activity.
The official interest rate is expected to remain at its record-low 0.1 per cent until at least 2024, while the Morrison government’s fiscal policies are pouring billions of dollars into house values.
So, how far could prices rise?
An internal report published earlier this month revealed the Reserve Bank cited research finding house prices could soar as much as 30 per cent over three years if borrowers believed a 1 percentage point reduction in the cash rate was “permanent”.
Meanwhile, an influx of applications for the government’s HomeBuilder grant program has expanded its expected cost to almost $2 billion, in what UBS chief economist George Tharenou said raised the risk of double-digit property price increases in 2021.
It’s a discouraging forecast for recent nursing graduate Joshua Hermans, who wants to save for a deposit but won’t be in the market anytime soon.
Mr Hermans, 22, faces fronting up with a much larger deposit in five years’ time after current policy settings push up prices.
“It’s frustrating,” he told The New Daily.
“I feel like we’re getting left behind.
“For those who moved out of home younger due to whatever circumstances … it’s just really difficult.”