KPMG analysis of average household spending reveals that younger Australians are pulling back on recreational spending to cover costs like mortgage repayments, rent and other essential expenses, while older Australians are enjoying more travel and dining out.
The top five categories as a percentage of household spending for each age group in 2023-24 are:
25-34 yr
35-44 yr
45-54 yr
Note: The data captures the average spend of a household, it does not reflect the average spending of an individual.
For all Australian households, the top expenses continue to be home loan repayments and food, however, 25-34 year olds are spending more on rent than any other age group, highlighting the declining homeownership rates of this generation.
KPMG Urban Economist Terry Rawnsley said, “We are witnessing the rise of 'Generation Rent’, with saving for a deposit and servicing a home loan increasingly challenging, especially in our capital cities.”
For households headed by a 35-44 year old, home loan repayments have risen to 22.3%, food (9.7%) and dining out & takeaway (5.7%). In the 45-54 households, home loan repayments (18.6%) and food (9.8%) were the top categories followed by dining out & takeaway (6.1%). For the 55-64 households, home loan repayments were the largest expenditure group at 13.4%, followed by food (10.0%) and insurance (7.5%).
“The data really shows some clear lifecycle trends, as priorities changes, but unsurprisingly housing and food related costs are the common theme across the age groups, with Australians increasingly being forced to reign in non-essential spending as cost-of-living pressures continue to hit hard”, Rawnsley said.
Comparing inflation-adjusted spending patterns from 2013-14 to 2023-24 highlights shifts in real household spending across age groups over the past decade.
“While household spending is up, many Aussie households are experiencing reduced purchasing power compared to a decade ago. We are getting less bang for our buck, forcing us to reign in non-essential spending and prioritise the essentials.”
More young people living alone and prioritising health and furniture
The 25-34 age group experienced the most significant changes in household structure compared to any other age group over the past decade, with the number of people living alone increasing from 15% to 21%. This has meant that we have gone from larger shared homes to small apartments.
Terry Rawnsley explains, “Ten years ago young people were more likely to be living in a share house and so would be sharing a fridge between three or four people. Now those three to four young people each have their own place which requires them to each have their own appliances.”
Spending on health has also increased as a portion of the household budget going up from 4.6% of household spending in 2013-14 to 5.1% in 2023-24, as younger Australians focus spending on mental health and other health options like physios and nutritionists.
Transportation services, which cover air travel, bus, and train expenditure, are down 0.9 percentage points, suggesting that this age group is spending less on travel and focusing more on core expenses.
Young Australians are also spending more on cars with the share of spending on motor vehicles seeing the highest increase of all age cohorts, up by 0.2 percentage points between 2013-14 and 2023-24, however, the costs associated with getting behind the wheel are going down.
“The shift towards more expensive SUVs and electric vehicles combined with young people opting to use public transport more frequently means whilst they prioritise having a car, they’re actually spending less than a decade ago,” Rawnsley said.
“The focus on health, household goods, and vehicles has meant categories like food, alcohol, cigarettes, and recreation are taking a backseat.”
Housing costs dominate millennial household budgets
The 35-44 age group, which encompasses the Millennial generation, are in a pivotal stage of life, with their household budgets dominated by spending on mortgages.
In 2023-24, the average millennial spent $33,680 on mortgage repayments, compared to $37,270 in 2013-14.
“The fall in the average value of mortgage payments is not actually because mortgages are getting cheaper, but the result of the lower home ownership rates because younger people simply cannot afford to buy their own home anymore,” Rawnsley said.
Property related expenses including real estate agent, legal and conveyancing services and taxes on property transfers increased by 3.6 percentage points from $5,030 in 2013-14 to $9,970 in 2023-24.
To accommodate increased spending on housing, spending across a range of other categories has declined, including, recreational goods (down by $1,730) and clothing & footwear (down $930), alcohol (down $630), and cigarettes & tobacco (down $560).
“It is well known that housing affordability is impacting millennials particularly hard, but the pairing back of household spending in just about every discretionary category highlights just how hard this cohort is working to get into the property market.”
Kids’ education an increasing priority for Gen X
The share of household spending by the 45-54 age group, which encompasses the Gen X generation, has been focussed more on essentials or costly areas such as housing, financial services and education. Education services increased consumed slightly more from of household budget in 2023-24, compared with 2013-14 up 0.1 percentage points, indicating a rise in education expenses possibly linked to costs associated with children still in the household.
“The increased shift towards private school education combined with the increasing number of Gen Xer’s helping pay off their children’s HECS debt is likely what is driving the increase in education spend,” Rawnsley said.
While mortgage costs remain significant; they are spending less compared to other age groups, with the share of spending on home loan repayments falling from $33,260 in 2013-14 to $29,520 in 2023-24.
Meanwhile spending on other financial services, which includes financial transactions and property transfers (such as real estate agent services, legal and conveyancing services), increased by 1.6 percentage points, indicating Gen Xers are still active in the property market, but drawing more on equity from their first home on the property ladder.
“Gen X households are more likely to be established on the property ladder and in a position to upsize or downsize depending on their family needs and lifestyle. This would explain the increased portion of their budget dedicated to financial services.”
Spending on accommodation services (hotels, motels, short stay) saw a small relative increase between 2013-14 and 2023-24, while dining out & takeaway expenses fell from $11,400 to $9,620.
Older Australians aged 55-64, balancing the mortgage with recreation and travel
Older Australians are increasingly carrying mortgage repayments later into life, with a 0.5 percentage point rise in spending on home loans ($18,070 in 2023-24) compared to a decade ago where more individuals in this age group would have fully paid off the mortgage.
Despite still carrying a mortgage, this age group is still making the most of their pre-retirement years with spending on accommodation services (hotels, motels, short stay) increasing by 0.1 percentage point, while spending on dining out and takeaway represented the highest relative growth across (0.3 percentage points) any age group to almost $9,000 in 2023-24.
Average household spending on recreation & culture goods including boats, caravans, TVs and personal computers totalled $9,360, an increase of 0.6 percentage points of the household budget over the past decade.
“Older Australians are understandably enjoying the fruits of their labour before they retiree. They are in a unique position where they are most likely still generating an income from work but are not burdened by large mortgages and are able to carve out a larger proportion of the household budget to recreational activities and discretionary spending,” Rawnsley said.
For further Information
Summary methodology
The analysis conducted by KPMG utilised data from the following sources:
It is important to note that the average household spending represents the average for households headed by someone in that age group (the ABS refers to this person as the 'Reference Person'). It does not reflect the average spending of an individual in that age group. For example, the spending of someone aged 26 living at home with their 58-year-old parents would be categorised under the 55-64 age group household, not the 25-34 age group household.
Households headed by people below the age of 25 have been excluded from the analysis removed as there is not enough data to make accurate representations. Households aged 65+ have also been excluded as it is not possible to provide a ten-year comparison for this larger age group.
The data present is consistent with the National Account Household Final Consumption Expenditure groupings with one exception Imputed Rents. Imputed rents represent the estimated value of housing services that homeowners "provide to themselves" by living in their own homes, as if they were renting the property at market rates. This ensures the National Accounts fully capture the economic contributions of housing, treating homeowners and renters equivalently and enabling consistent measurement of household consumption and GDP.
Rather than imputed rents, estimates of home loan repayments, based on the average household mortgage debt is made. This estimate is based on average minimum loan repayments and does not account for additional payments flowing into offset accounts.
This economic analysis is portrayed in "real terms" which refers to values that have been adjusted for inflation to reflect constant purchasing power over time. This adjustment removes the effects of changes in price levels, allowing for a more accurate comparison of monetary values across different periods.
The National Accounts Implicit Price Deflators (IDP) have been used to create the estimates of real spending, the IDP do not account for quality changes in the goods and services been sold, only price changes. Consistent with the National Accounts, the Reference year for the prices is 2022-23. Reference Year is the base year used where prices are held constant to reflect "real" changes over time.
It should be noted that periods of rapid price inflation can, therefore, squeeze household budgets and lead to a fall in real living standards, as higher prices outpace the growth in what people can afford to consume. This can lead to them consumer less goods for the same price. For example,
In these cases, while spending on electricity or fuel might still go up due to the higher prices, the real consumption of these goods—measured in terms of kilowatt hours or litres—can decline.
| Spending Group | Description |
Food | Purchases of groceries, takeaway meals, dining out, non-alcoholic beverages, and snacks. |
Cigarettes and Tobacco | Cigarettes, cigars, loose tobacco, and related accessories. |
Alcoholic Beverages | Beer, wine, spirits, and other alcoholic beverages, including those purchased from liquor stores and consumed at establishments like bars and restaurants. |
Clothing and Footwear | Expenditure on clothing, footwear, fashion accessories (e.g., belts, scarves), and minor repairs to clothing and footwear. |
Rent for Housing | Rent payments for private, community, and public housing, including payments for furnished and unfurnished rentals. |
Home Loan Repayments | Mortgage principal and interest repayments, excludes any additional payments into offset accounts. |
Water and Sewerage Services | Payments related to water supply, wastewater treatment, and sewerage systems. |
Electricity, Gas, and Other Fuel | Expenditure on electricity, natural gas, heating oil, firewood, and other energy sources |
Household Goods | Includes purchases of furniture, carpets, kitchenware, utensils, cleaning equipment and products, and major appliances like refrigerators, washing machines, and air conditioners. |
Health | Expenditures on doctor’s visits, prescription medicines, over-the-counter medications, dental care, eyeglasses / contact lenses, and hospital services |
Purchase of Vehicles | Purchases of new and used motor vehicles, motorbikes, caravans, and trailers. |
Operation of Vehicles | Expenditures on fuel, maintenance / repairs, registration, licencing, and parking fees. |
Transport Services | Passenger transport by road, rail, air, and water, including ride-sharing apps, taxi fares, public transit tickets, train passes, and airline tickets. |
Communication | Mobile phone bills, landline service, internet subscriptions, postal services, and telecommunications devices. |
Goods for Recreation and Culture | Includes purchases of TVs, computers, gaming consoles, cameras, garden supplies, musical instruments, toys, games, boats, caravans, pet food, and pet-related products. |
Recreational and Cultural Services | Expenditure on streaming services, Pay TV, net losses from gambling, tickets to sporting events, movie theatres, concerts, and recreational classes (e.g., dance or art lessons). |
Books, Papers, and Stationery | Purchases of books, newspapers, magazines, office supplies, stationery, and art supplies. |
Education Services | Tuition fees for pre-schools, primary and secondary schools, universities, technical colleges, tutoring, and textbooks, |
Dining out & Takeaway | Expenditure on meals and beverages, both alcoholic and non-alcoholic, consumed at restaurants, cafes, pubs, hotels, and fast-food outlets. |
Accommodation Services | Temporary stays such as hotels, motels, guest houses, boarding schools, university halls of residence, and short-term vacation rentals like holiday homes. |
Insurance | Comprehensive insurance for homes, vehicles, health, and compulsory third-party insurance (CTP for motor vehicles). |
Other Financial Services | Services related to financial transactions, including real estate fees, legal and conveyancing, stockbroking, accounting fees, and taxes associated with property transfers. |
Other Goods and Services | Includes hairdressing, beauty salon services, perfumes, cosmetics, toiletries, jewellery, watches, and miscellaneous services not elsewhere classified. |
