Samuel Thawley’s essay in these pages this week did something Australian economic writing almost never does. It located the pain. Not in a national average, where pain goes to die, but in cohorts and in postcodes: Blaxland, Watson, Fowler, and McMahon in Sydney’s south-west, Bradfield and Menzies on the leafy side, the late 20s and early 30s where the renter share keeps climbing. His formulation is the one worth keeping. A tide changes governments. A channel breeds insurgencies.

I want to add one thing to it, and it is not an economic argument. It is an arithmetic one, and it belongs to the demographers.

The channel has a source, and the source does not run dry.

Bernard Salt recently asked a question nobody thinks to ask. Not which generation is largest, but which single year of age contains the most Australians. The answer for the 2025 financial year is 34. There are 412,775 of them. More usefully, every single year of age between 29 and 37 contains more than 400,000 people. The crest of the Australian population is a nine-year band born between 1988 and 1996, and it is currently sitting on the exact spot where Thawley’s floor is giving way.

Hold that against the ownership data. The average first home buyer in this country is now about 34 years old, one in five is over 40, and the standard deposit takes roughly six years to assemble, close to double what it took a generation ago. Home ownership among 30 to 34-year-olds has fallen from 64 per cent in 1971 to 50 per cent in 2021, and among 25 to 29-year-olds from 50 per cent to 36 per cent. The largest single-year cohort in the nation’s history is standing at a threshold that is closing, and it has been told for a decade that the closing is a triumph.

That alone would make for a difficult decade. What turns it from a political moment into a political condition is what happens next, and here the demography is unforgiving. The comfortable assumption, and Salt makes it cautiously, if at all, is that this cohort ages out. It wafts off into the family stage, finds its forever home in a lifestyle locale, and takes its grievance with it.

Something like that might happen to the individuals. It will not happen to the position. The demographic peak does not follow them up the age curve. In 2030 the commonest Australian will not be 34, he will be 26. By 2035 the peak sits at 27, with 468,805 people in it. By 2071, on the projections, it is still 27. The summit falls back, again and again, into the heartland of youth, restocked each time by the student and skilled migration program.

So the bulge does not pass through the housing system the way a pig passes through a python. It sits at the entrance, and it is continuously refilled.

And the exit that would drain it is itself blocked. Salt’s progression assumes the progression is available. On the evidence, it is not. Australia’s total fertility rate fell to 1.481 in 2024, the lowest ever recorded. HILDA’s survey work shows Australians still want about two children. That is a gap of roughly half a child per woman, wanted and not had, and the constraints behind it are identifiably economic: the deposit, the second earner facing effective marginal tax rates the Productivity Commission concedes sometimes exceed 70 per cent, and childcare subsidies the ACCC found are recurrently absorbed by fee increases. The forever home is the mechanism by which the grievance was supposed to resolve itself. It has been priced out of the childbearing years.

This is the insurgency’s raw material. Not envy, not social media, not a failure of gratitude. A cohort of record size, at a gate that will not open, being congratulated on the height of the wall.

Salt makes one further observation that ought to worry the established parties considerably more than it does. He expects the cultural agenda to reset around 2030, away from mid-30s concerns such as housing affordability and towards mid-20s concerns such as renters’ rights. Read that carefully. It is not the grievance dissolving. It is the grievance changing register, from a request to be let into the system to a demand for protection inside it. The first is a policy conversation with people who still hope to become owners. The second is a fight about property conducted by people who have concluded they never will, and who therefore have nothing at risk in a downturn. That is precisely Thawley’s closing point: the insurgency is short the one asset the rest of the political system is structurally long.

There is a slower clock running underneath his weighted-voter arithmetic, and it runs in the same direction. Renters are 31 per cent of households, 29 per cent of adults, 25 per cent of citizens and, once enrolment and turnout are applied, about 17 per cent of the effective federal electorate. That is the best single explanation of Australian housing politics I have read. It is also a photograph rather than a film. The temporary cohort naturalises. Students become residents, residents become citizens, citizens enrol. The exposed share of the population is held roughly constant by the intake, while the exposed share of the franchise rises every year. The political insulation that a migration-led growth model enjoys behind a citizens-only franchise is a depreciating asset, and nobody is amortising it.

So much for why the disgruntled are here to stay. The question underneath it is why they were manufactured at all, and that is not really a housing question.

Thawley’s audit of the five levers, interest rates, credit, deposit guarantees, tax privilege, and migration, is right, and the emptiness of the armoury is not news to anyone who has been paying attention. Read the list one step further, though, and the common property is the thing worth naming. Every one of the five is a demand lever. Everyone works by raising what a buyer can bid. In a market where supply responds to price, that produces houses. In a market where supply is rationed by statute, it produces only price, and then it produces the political consequences of price. Australia has spent 30 years running the second experiment and calling the results prosperity.

We ran it, moreover, inside an economy that had quietly stopped generating the wage growth that would have made any of it survivable. The Productivity Commission found labour productivity growth in the decade to 2020 was the slowest in sixty years. Whole-economy productivity now sits fractionally below where it stood in March 2023. The Reserve Bank’s August statement cut its trend productivity assumption to 0.7 per cent a year, which is not a forecast so much as a lowering of the ceiling on real wages. GDP per person fell for seven consecutive quarters between March 2023 and September 2024, the longest such run since the series began in 1973, and real household disposable income per person fell about 8 per cent from its 2022 peak, among the worst outcomes in the developed world over that window.

The causes are not mysterious. Around 80 per cent of the jobs created in calendar 2024 were in the public or government-funded non-market sector, whose measured productivity is negative. Compliance with federal regulation is costed at roughly $160 billion a year, about 6 per cent of GDP, and Australia has slid from 2nd to 15th of 28 OECD countries on product market regulation. The capital-to-labour ratio fell 5.3 per cent in 2022-23, the largest fall on record, which is the statistical way of saying our workers are being handed worse tools. Business research and development sits at 0.90 per cent of GDP against an OECD business average of 1.99.

Put plainly, we asked house prices to do the work that wages were supposed to do. The insurgency is the invoice.

And the damage does not stop at the front door of the house. Asset price inflation is not a residential phenomenon, it is the operating condition of the whole economy, and you can watch it work on any suburban shopping strip. The butcher has gone. So has the cake shop, the shoe shop, the milk bar, and the bloke who repaired lawn mowers. What replaced them, with a consistency that ought to be studied, is coffee. Not because Australians developed a sudden craving, but because a flat white carries a gross margin high enough to service the rent and almost nothing else does. Rent is a function of land value, land value is a function of 30 years of cheap credit meeting rationed supply, and the result is a retail monoculture that employs fewer people, trains fewer apprentices, and makes less of anything. The high street is the housing market with a shopfront.

That is what asset price inflation actually does. It does not merely move wealth from the young to the old, although it does that too. It changes what kind of business is possible. Capital learns, correctly, that the reliable return lies in owning the site rather than operating the business on it, and it allocates accordingly. Then we affect surprise when the capital-to-labour ratio falls 5.3 per cent in a single year, and when business research and development sits stuck at 0.90 per cent of GDP. We have spent a generation making land the most rewarding asset in the country.

Land does not innovate.

Which means the way out is not a better demand lever. There isn’t one, and the armoury is close to empty. The way out is supply, and supply is largely a state and local matter that federal politics has spent two decades pretending it cannot reach.

Start with energy, because it is the input price under everything else. The 2022 promise of a $275 bill reduction is officially assessed as broken. Bills rose about 6 per cent nationally in the year to August 2025 excluding rebates, and roughly $6.8 billion of Commonwealth money has been spent disguising the increase. Meanwhile the capital program meant to lower costs has become the country’s most reliable source of cost blowouts: Snowy 2.0 from a $2 billion announcement to beyond $12 billion, HumeLink from about $1 billion to $5 billion, Project EnergyConnect roughly doubled. A rebate is not an energy policy, it is a receipt. Publish an independent cost-benefit gate before every transmission and storage commitment, report the consumer price consequence of every reliability and abatement decision, and retire the bill-masking in favour of settings that lower the underlying price. Cheap, reliable energy is the precondition for every other item on this list.

Then zoning, which is the real subject of the housing debate and is almost never named as such. Australian planning law has converted the right to use land into a discretionary permission granted by an administrator. Every downzoning, every heritage overlay applied to a 1970s brick veneer, every minimum lot size and mandatory car park is a transfer of value from the person who owns the land to the person who owns the view. The owner is compensated for none of it. Restoring as-of-right development within clear envelopes is not a subsidy to developers, it is the return of a property right that was taken without payment. This is the hardest item on the list to do politically, and the difficulty is precisely why the price is where it is.

Then stamp duty, which is the tax on moving house. The IMF’s Article IV work names state transfer duties among the most distortionary taxes in the country, and the mechanism is obvious once stated. A tax levied on the transaction rather than the asset punishes the empty nester for downsizing, punishes the growing family for upsizing, and punishes the worker for taking the better job in the other city. It freezes the housing stock in the hands of whoever last transacted, then we survey the resulting misallocation and call it a shortage. Every serious review for 20 years has recommended the swap to a broad-based land tax. The states cannot manage the transition alone because the revenue timing kills them, which is exactly what Commonwealth reform payments exist for. Add payroll tax to the same negotiation, since a tax on the act of employing people sits oddly in a country worried about productivity.

Then the pipes, because this is where the housing target meets the physical world. In September 2025 the New South Wales price regulator approved Sydney Water capital expenditure of $13.2 billion, some $3.4 billion or 20 per cent below what the utility proposed in order to service growth. On industry arithmetic the approved envelope services roughly 161,700 new dwellings over five years against a state Housing Accord commitment of 263,000. That is a shortfall of more than 100,000 homes, created by a pricing decision, in a country conducting a national argument about housing supply. At the same time councils face an infrastructure renewal task of up to $280 billion, a quarter of the local road network is in poor condition, and Grattan finds routine road maintenance underfunded by about $1 billion a year. Against that backdrop, transport megaprojects have run 21 per cent over announced cost, and Victoria’s Suburban Rail Loop is costed by that state’s own parliamentary budget office at $96.4 billion to build with a further $120.2 billion to operate to 2084. Maintenance before megaprojects, and trunk water, sewer and stormwater capacity funded as a precondition of every housing target rather than as an afterthought to it.

Then decentralisation, and here the demography and the policy finally point the same way. Salt’s cohort says it wants the lifestyle locale. The pandemic proved that a large slice of knowledge work does not need to be done in a capital city CBD. What the regions lack is not desire or land, it is the three services that make a location viable for a family: medical, energy, and transport. Fund regional hospital and specialist capacity as infrastructure rather than as an annual grant fight. Put firm, dispatchable generation and the transmission that serves it where the industrial load can follow. Fix the road and bridge network that a quarter of the country is currently driving over under load limits. Then let genuine technology and services hubs form around universities and regional centres, on the American model where the cluster followed the institution rather than the announcement. Decentralisation has failed in Australia every time it has been attempted as a relocation of Commonwealth departments. It might work if it is attempted as the building of the things people actually move for.

None of this is a rescue package for house prices, and that is the point. It is the only combination that lets prices fall in real terms without the country falling with them, because it raises the denominator. Wages, output, mobility, and the number of dwellings that can physically be connected to a sewer.

The alternative is the path we are on, which Thawley describes accurately and which I would summarise more bluntly. Defend the nominal price with whatever lever is left, pay for the defence through inflation and the exchange rate, and tell a cohort of 412,775 34-year-olds, and the 427,912 25-year-olds who will be standing behind them in 2030, and the 468,805 27-year-olds behind them in 2035, that the arrangement is working.

They will not believe it, because it is not true, and they are not going anywhere. The demography guarantees the queue. The only question left for the established parties is whether they intend to open the gate or keep explaining the wall.

Scott Heathwood is President of the Institute of Financial Professionals Australia and Director of Strategic Planning at Lifestyle Asset Management. His source paper on Australian productivity, The Slow Decay, will be published shortly.