The latest report of the Household, Income and Labour Dynamics in Australia (Hilda) survey, by the Melbourne Institute of Applied Economic and Social Research, shows that the median incomes of Australian households have stopped growing since the global financial crisis. The Hilda survey also highlights the continuing issue of housing affordability and that those under 35 have largely missed out on the increase in wealth households have experienced over the past 15 years.

You only need to look to the state of affairs in America right now to know the importance of household incomes.

In real terms, the median household disposable income in the US is now just 0.6% above what it was in 1989, and is about 6% below what it was just prior to the GFC hitting in 2007.

House prices have fallen but don't expect a housing affordability bonanza | Greg Jericho Read more

Here in Australia we have not suffered such a collapse, but that is not to say the brakes have not been applied.

According to the latest Hilda report, in 2009 the median household disposable income (in $2014) was $76,262 – a stunning 25% higher than it had been just five years earlier in 2004.

But in 2014, five years after that peak year was reached, the median income is now $75,731 – a fall of 0.6%:

Now before we get too panicked and start thinking we need our own version of Donald Trump (and not just in the Senate), a comparison with the US since 2001 shows that we are still doing relatively well:

But when median household incomes flatline, it’s never a good thing, and very much brings the issues of inequality into focus.

The findings of the Hilda survey suggest inequality in 2014 did not increase greatly from the previous year. The income of households in the 90th percentile (that is those who have an income higher than 89% of all households) was 1.91 times that of median household income – a rise from 1.89 in 2013.

That remains below the peak levels but it also means 2014 was the fourth year out of the past five where the incomes of the top 10% rose faster than those of median households.

The Hilda report also suggests there may be a growing issue of entrenched income inequality.

It uses a measure to calculate the stability in income from one year to the next. It found that since the start of this century that measure has been increasing – meaning that there is very little income mobility in Australia – and less than there was 15 years ago.

As the report notes, “the increase in income stability from year to year is a positive development for people with good incomes, this is not a good development for people with low incomes, since they are more likely to have persistently low incomes”:

The Hilda data also allows us to discover what actually is the income of middle Australia. The $75,731 is for all households and does not reflect the various sizes each household may be. To compare a single person household with a family of four, the Hilda report, like the ABS and others, uses an “equivalised” figure.

In 2014, the Hilda report estimates the median equivalised disposable incomes was $45,505. Thus a single person with this income was bang on middle income Australia. Given this is an after tax income, that would equate to someone earning around $54,700 .

As extra people in the household means a greater amount of income is required to sustain the same standard of living, the equation used is to add 50% for each adult and 30% for each child.

That means for a family of four of middle income in 2014 would have had a disposable income of $95,561. Given a standard 70/30 split of incomes this would mean the household would have earned around $117,700 a year before tax.

So if you are a family of four with that income, your standard of living is essentially better than 50% of Australian and worse than 50%.

The report also notes that home ownership is becoming less and less common. The rates of adults owning a home dropped from 64.4% in 2002 to 59.7% in 2014. When the survey used a more specific indicator of whether your were the legal owner of the home you were living in, the rate dropped from 57.0% in 2002 to just 51.7% in 2014.

Part of this is due to the deadly combination of flattening income and increasing housing prices. And surprisingly it is not due to a massive increase in the headline grabbing million dollar plus houses – they have always been out of the reach of most first-home buyers.

What the survey shows is the 10th percentile house prices (that is those which cost more than just 9% of houses sold) increased by 108% from 2001 to 2014 – well above the 76% increase in median house prices and the 47% increase in the price of houses in the top 10%:

Most of the damage was done prior to the GFC. Since then housing affordability across the nation (if not in Sydney) has generally steadied. But that’s ok if you were already in the housing market, not if you wanted to enter it.

The ratio of the 10th percentile house prices to the 10th percentile equivalised disposable income went from 8.2 times in 2001 to 14.0 times in 2008. It has now fallen to 12.4 times.

For those on median incomes looking to purchase a first-home (or at least a cheap one), the ratio has gone from 3.8 times median income to 6.2:

While in the past five years affordability for those on low incomes – or those seeking a first-home – has improved, it remains much worse than it was at the start of the century.

Given the link between home ownership and wealth, it is not surprising then that all the benefits of increased wealth have flowed to older Australians – those more likely to have been home owners before the boom in prices took off after 2001.

The wealth of 25 to 34 year old householders in 2014 was just 3.2% more than their equivalents in 2002, whereas today’s seniors on average have 61% more wealth than did over 65s back in 2002:

It’s a stark indicator of where the wealth of the country has flowed in the past 15 years. And why millennials will continue to feel aggrieved at the state of the housing market. It’s not just about having a place to live – it also about building wealth.

It’s all very well to say they’ll get their chance, but given wealth builds up over time, having to wait longer now, can mean less wealth later on in retirement.