This is why Australia is Experiencing a Generational Spending Divide.

Have you noticed how some Australians seem to be tightening their belts while others continue spending with little restraint?

The latest CommBank iQ Cost of Living Insights Report highlights an emerging disparity between younger and older Australians in their financial habits, painting a vivid picture of the economic challenges and opportunities shaping the nation.

According to the report, Australians aged 18–29 have reduced their spending by 2% over the past year.

This includes a notable 2.3% drop in essential expenses and a 1.9% decline in discretionary spending.

Meanwhile, older Australians are heading in the opposite direction.

Individuals aged 60–69 increased their spending by 3.9%, while those over 70 saw a staggering 7.7% rise in their outlays.

The squeeze on young Australians

According to the report, younger Australians are feeling the brunt of rising costs.

With rental prices soaring and everyday essentials such as groceries and transport taking bigger bites out of their budgets, many in this age group have little choice but to cut back.

Their reduced discretionary spending on dining out, entertainment, and travel further highlights their financial strain.

For millennials and Gen Z, who are often still building their careers or tackling HECS debt, the economic environment has necessitated caution.

These groups are also more likely to delay major life decisions, such as purchasing a home, which has significant ripple effects on the property market.

Older Australians are spending big

In contrast, the report shows that Australians in their 60s and beyond are showing no signs of slowing down when it comes to spending.

With many older Australians owning their homes outright and benefiting from accumulated wealth, this cohort has a greater capacity to indulge in discretionary purchases.

Their spending reflects a lifestyle focused on experiences and convenience, including travel, dining, and leisure activities.

For retirees with access to superannuation and stable financial portfolios, the cost-of-living pressures haven’t dampened their confidence.

This trend reinforces their role as a critical driver of discretionary spending in the economy.

Shifts in consumer habits

The report also unveils interesting changes in spending habits across all demographics.

Australians are increasingly prioritising convenience and value in their purchases.

Spending on online marketplaces, food delivery, and streaming services has surged, signalling a shift toward digital-first consumption.

This focus on convenience has implications for businesses and investors alike.

Companies that cater to these preferences are better positioned to capture market share, while savvy property investors can explore opportunities in areas where these services are in demand.

The regional boom

Interestingly, the data shows that regional Australia is outperforming metropolitan areas in spending growth.

Regional spending increased by 2.2%, compared to 1.3% in metro areas.

This trend likely reflects the continued migration of Australians to regional hubs, driven by affordability, remote work options, and lifestyle preferences.

For property investors, this resilience in regional spending growth suggests potential opportunities in areas outside the traditional metropolitan hotspots.

With many Australians embracing the benefits of regional living, these markets could provide strong returns for those willing to look beyond capital cities.

What about property?

The CommBank iQ Cost of Living Insights Report provides a valuable lens through which to view the changing financial behaviours of Australians.

It highlights the economic pressures shaping spending decisions and the opportunities that arise for those who stay ahead of the curve.

For property investors, the lesson is clear: the current economic environment is not affecting all Australians equally and generational wealth dynamics are shaping the property market.

At a time when many are wondering how property values can keep increasing, there will be several factors driving prices higher in 20 2025, including:

1. Wealthy buyers, including downsizers with significant equity, entering the market.
2. The Bank of Mum and Dad helping their children and grandchildren into property.
3. Some buyers moving to cheaper locations or buying an apartment or townhouse rather than a home.
4. More young people rentvesting.

About Adam Hubbard Adam Hubbard is a senior Wealth Strategist at Metropole and his many years of real estate and wealth creation experience gives him a holistic perspective with which he helps his clients safely grow their wealth through property.