The housing crisis is pushing Gen Z into crypto and economic nihilism – Financial Times

Report on the Socio-Economic Behaviors of Generation Z in the Context of the Housing Affordability Crisis and Sustainable Development Goals

1.0 Introduction and Executive Summary

This report analyzes emerging economic behaviors among young adults, commonly referred to as Generation Z. It posits that behaviors often characterized as irresponsible—such as reduced work effort, increased discretionary spending, and high-risk investments—are rational responses to systemic economic barriers, primarily the increasing unaffordability of home ownership. These trends have significant implications for the achievement of several United Nations Sustainable Development Goals (SDGs), including those related to decent work, reduced inequalities, and sustainable communities.

Recent economic research provides evidence of a causal link between deteriorating housing affordability and these behavioral shifts. The findings suggest that as the prospect of home ownership diminishes, the traditional incentives for saving and career advancement are eroded, leading to a phenomenon described as “financial nihilism.”

2.0 The Housing Crisis as a Barrier to SDG 11 and SDG 1

The core issue identified is the failure to ensure access to affordable housing, a direct challenge to SDG 11: Sustainable Cities and Communities, particularly Target 11.1 which aims to ensure access for all to adequate, safe, and affordable housing.

• The primary obstacle for first-time buyers in the US, UK, and Australia is the down payment, not salary levels.
• The requirement for substantial deposits, which can take decades to accumulate, effectively locks a significant portion of young adults out of the property market.
• This barrier to a primary means of wealth accumulation undermines progress towards SDG 1: No Poverty, as it prevents a generation from building financial security and assets.

3.0 Impact on SDG 8: Decent Work and Economic Growth

The unattainability of key life goals like home ownership has a direct, negative impact on attitudes towards employment, undermining SDG 8: Decent Work and Economic Growth. When the perceived rewards for diligent work are removed, motivation wanes.

1. Reduced Work Effort: The study demonstrates that young adults with little prospect of home ownership are disproportionately likely to reduce their work effort, a behavior colloquially termed “quiet quitting.”
2. Erosion of Incentive Structures: Historically, applying oneself at work was a means to the end of home ownership. With this goal out of reach, the rationale for striving for promotions or modest pay rises diminishes.
3. Threat to Economic Stability: This widespread disengagement poses a risk to productivity and sustainable economic growth, destabilizing the wider economy.

4.0 Exacerbation of Inequalities in Contravention of SDG 10

The housing affordability crisis deepens societal divides, directly conflicting with the aims of SDG 10: Reduced Inequalities. A two-tiered system is emerging based on pre-existing family wealth.

• A clear distinction exists between young adults who can rely on parental help for a deposit and those who cannot.
• This dynamic entrenches inter-generational wealth disparities and creates significant inequality within Generation Z itself.
• The result is a society where economic mobility is increasingly dependent on inheritance rather than individual effort, contrary to the principles of equal opportunity.

5.0 Policy Imperatives and the Role of SDG 4

The research underscores the urgent need for policy interventions that align with SDG principles. A key area for development is education, as outlined in SDG 4: Quality Education.

1. Address the Housing Affordability Crisis: This is the foundational step required to realign economic incentives with productive and sustainable behaviors. Addressing this is critical for progress on SDGs 1, 8, 10, and 11.
2. Enhance Financial Literacy: As young adults are increasingly likely to be lifelong renters and are pushed towards high-risk financial strategies, providing robust financial education is essential. This aligns with SDG 4’s goal of equipping learners with the skills needed for sustainable livelihoods. Young people require guidance on alternative means of wealth accumulation and risk management to navigate their economic reality.

Analysis of SDGs, Targets, and Indicators

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 8: Decent Work and Economic Growth

  The article directly addresses the theme of work by discussing Gen Z’s changing attitudes, such as “quiet quitting” and “reduced work effort.” It links this behavior to a lack of economic incentives, suggesting that when the prospect of home ownership is unattainable, the motivation for striving at work diminishes. This connects to the SDG’s goal of promoting productive employment and decent work for all.

• SDG 10: Reduced Inequalities

  The article highlights a significant intergenerational inequality. It contrasts the economic prospects of Gen Z with previous generations, noting that applying oneself at work “used to be a means to an end” (home ownership) that is now “yanked out of reach” for many young people. It also points to intra-generational inequality, where those with parental help can access the housing market while others are locked out, thus widening the wealth gap.

• SDG 11: Sustainable Cities and Communities

  This is the central SDG related to the article. The core argument is that the “increasing unattainability of home ownership” and the “home ownership affordability crisis” are the primary drivers of the economic and social behaviors observed in Gen Z. The entire analysis revolves around the lack of access to adequate and affordable housing for young adults.

• SDG 4: Quality Education

  The article concludes by emphasizing the need for solutions, one of which is “providing young people with the financial literacy they need to navigate a new world.” This directly links to the goal of ensuring inclusive and equitable quality education and promoting lifelong learning opportunities, specifically in the area of financial skills for wealth accumulation and risk management.

• SDG 1: No Poverty

  While not explicitly about poverty, the article discusses how the housing crisis is “setting many young adults on a slippery financial path where mis-steps may prove unrecoverable.” This relates to economic vulnerability and the lack of access to key economic resources, such as property, which is a cornerstone of building long-term financial security and avoiding poverty.

2. What specific targets under those SDGs can be identified based on the article’s content?

1. Target 11.1: Ensure access for all to adequate, safe and affordable housing.

   This is the most directly relevant target. The article’s main premise is the failure to meet this target for the younger generation, referring to the “unaffordability of home ownership” and the “housing affordability crisis” as the root cause of the issues discussed.

2. Target 8.5: Achieve full and productive employment and decent work for all.

   The article’s discussion of “reduced work effort,” “quiet quitting,” and young employees bemoaning “the pointlessness of the nine to five” directly relates to the quality and perceived value of work. The research cited shows that these behaviors are a rational response to the lack of economic rewards, challenging the goal of productive and decent employment.

3. Target 10.2: Empower and promote the social and economic inclusion of all, irrespective of age.

   The article describes a system where young adults (“Gen Z”) are economically excluded from a key wealth-building asset (housing) that was accessible to previous generations. It also notes the growing importance of parental wealth, which creates a further divide and hinders the economic inclusion of those without family support.

4. Target 4.4: Substantially increase the number of youth and adults who have relevant skills, including technical and vocational skills, for employment, decent jobs and entrepreneurship.

   The call to provide young people with “financial literacy” to navigate a world of high-risk investments and lifelong renting directly aligns with this target. Financial literacy is presented as a crucial, relevant skill needed for economic survival and success in the current environment.

5. Target 1.4: Ensure that all men and women, in particular the poor and the vulnerable, have equal rights to economic resources, as well as access to basic services, ownership and control over land and other forms of property, financial services…

   The article’s focus on the “unattainability of home ownership” is a clear connection to this target. It demonstrates how a significant portion of the young adult population is being denied practical access and control over a primary form of property, which impacts their ability to build wealth and achieve financial stability.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• Housing Affordability and Access (Target 11.1)

  The article implies the use of indicators such as local house prices and housing affordability ratios (e.g., house price-to-income). The phrase “As housing affordability deteriorates” shows this is a key metric. Another implied indicator is the size of the required down payment or deposit, which is mentioned as a “six-figure deposit” that can take “decades to build up.”

• Youth Employment Engagement (Target 8.5)

  The article describes “reduced work effort” and “quiet quitting.” Progress could be measured through indicators like youth labor productivity or surveys on employee engagement and job satisfaction among young adults. The article suggests a causal link between housing prospects and these work-related behaviors.

• Financial Risk-Taking and Wealth Inequality (Targets 10.2 & 1.4)

  The article identifies “investment in risky financial assets (including crypto)” and “online betting” as common behaviors. An indicator could be the proportion of young adults’ investment portfolios allocated to high-risk assets. Furthermore, the mention of the “importance of parental help” suggests an indicator like the percentage of first-time homebuyers receiving financial assistance from family, which measures intergenerational wealth transfer and inequality.

• Financial Literacy Levels (Target 4.4)

  The explicit call for “financial literacy” points to the need for an indicator to measure it. Progress could be tracked by the proportion of young adults demonstrating proficiency in financial literacy concepts, which could be assessed through national surveys or educational assessments.

4. Summary Table of SDGs, Targets, and Indicators

Source: ft.com