Inflation, property prices, wage stagnation all concerns
The Financial Services Council of New Zealand’s (FSC) latest research report, ‘Money and You – The Lost Generation’ has shone a light on the impact inflation, property prices, and wage stagnation is having on younger generations, those aged 18-39.
On Tuesday afternoon, FSC launched an online event to discuss its findings and invited Trustees Executors chair Laurence Kubiak, ANZ NZ chief economist Sharon Zollner, and AUT professor of human resource management Jarrod Haar to headline the discussion.
FSC head of content, communications and marketing Clarissa Hirst (pictured) said having a diverse panel of experts providing their experience and expertise was beneficial to young people and their financial knowledge.
“It was great to get these panellists together to talk about what is happening in both the macro and micro environments on the current economic climate,” Hirst said.
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The panellists and FSC members discussed younger generations’ financial concerns with 79% ‘very’ or ‘somewhat’ concerned of the effect of rising house prices and 68% ‘very’ or ‘somewhat’ concerned about the effects of wage stagnation.
“This data is a concern given the current economic environment,” said FSC CEO Richard Klipin.
“What this research reveals is our younger people are not as prepared to weather financial shocks as they could be and are worrying more about money than older New Zealanders. This demographic is also significantly more worried than older generations about house prices and wage stagnation, which is concerning.”
Hirst said inflation is the largest cause of concern among all age groups.
“Everyone across the board is worried with 81% ‘very’ or ‘somewhat’ concerned,” she said.
“The median house price for Auckland is now $1.3 million, so for younger people saving for their first home, this price point is almost unachievable. We are finding the younger generation is leaning on the bank of mum and dad if possible, because the goal of homeownership is becoming so unaffordable.”
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Kubiak said history tells us the cure for extended periods of inflation, such as a rapid increase in interest rates, can be ultimately harmful to increasing mortgage stress.
“I am particularly concerned for Kiwis under the age of 50 who have yet to experience high inflationary environments,” Kubiak said.
Hirst said providing financial information to the younger generation can be done well if it is presented in an accessible way.
“It makes the information more engaging which is the key. Providing information helps but it needs to be delivered in the right way through the right mediums,” she said.
Hirst encourages younger people to speak with a trusted adviser for tailored financial advice best suited to them.
