Australians are reporting lower levels of life satisfaction than they did during the height of the Covid-19 pandemic, as years of financial pressure continue to take a toll on households.
New analysis by KPMG, based on Australian Bureau of Statistics data, found overall life satisfaction fell to 7.1 out of 10 in 2025.
That is below the 7.2 recorded in 2020 when lockdowns, border closures and widespread restrictions disrupted daily life across the country.
The result also marks a significant decline from 2019, when Australians reported an average life satisfaction score of 7.5.
KPMG Urban Economist Terry Rawnsley said the figures point to a prolonged decline in living standards rather than a temporary setback.
“Unlike the pandemic lockdowns, this isn’t a temporary disruption, it’s sustained pressure on living standards,” he said.
“Real wages have gone backwards, declining 4.1 per cent between 2019 and 2025, while median household wealth has stalled at $700,000.
“These factors have left many average Australians in a precarious financial position for the better part of five years and is undoubtedly affecting how they feel about their lives.”
The findings come as more households report experiencing financial hardship.
One in five households now say they would be unable to raise $2,000 within a week if needed.
More than one quarter have faced at least one cash flow problem or have been forced to draw down savings, take on additional debt or use other measures to stay afloat.
While there has been some improvement in the number of households struggling to pay bills, Mr Rawnsley said government energy rebates had likely played a role.
“There has been a slight improvement in the share of households reporting difficulty paying bills compared to 2019, likely due to state and federal energy bill subsidies,” Rawnsley said.
The Albanese government reduced its $300 energy bill rebates in 2024-25 down to a final $150 from July to December, before ending rebates on December 31, 2025.
The pressure has been felt most acutely among younger Australians trying to enter the housing market.
People aged between 25 and 34 recorded the lowest life satisfaction score of any age group at 6.8, down sharply from 7.5 before the pandemic.
Mr Rawnsley said that the decline in life satisfaction among 25-34-year-olds reflects the reality of Australia’s housing market, with this group facing high rents or mortgages at the same time when real incomes have gone backwards.
Australians aged between 45 and 54 also reported below-average satisfaction levels.
According to KPMG, many in that demographic were balancing the competing financial demands of supporting children while also caring for ageing parents.
Single-parent households continue to face some of the toughest financial conditions.
Almost half reported experiencing cash flow problems, while many reported multiple forms of financial stress at the same time.
“Financial stress is even more concerning for single parent households,” Mr Rawnsley said.
“Almost half of single parent households report cash flow problems and 45 per cent of those reporting four or more cash flow problems.”
Not every age group has seen a decline.
Australians aged between 15 and 24 reported higher life satisfaction than during the pandemic years, with scores rising from 6.9 to 7.2.
Mr Rawnsley said younger people may be benefiting from the return of normal social and educational experiences after missing key milestones during lockdowns.
Australians aged 65 and over remained the most satisfied group, recording a score of 7.7, unchanged from 2019.
KPMG said higher rates of home ownership, retirement savings and pension support may have shielded many older Australians from some of the financial pressures affecting younger generations.
“This relative stability may reflect lower exposure to labour market pressures, higher rates of home ownership, and the cushioning effects of superannuation and government pensions,” Rawnsley said.
A recent Sky News Pulse / YouGov poll shows that half of the nation says cost of living is the most important issue they face.
About 45 per cent of respondents said cost of living was the most important issue on the 12-option list of problems facing Australia.
This is four per cent higher than when Australians were asked the same question on February 26 and greatly exceeds the second-place priority of immigration – at just 10 per cent.
The poll, which surveyed 1,471 voters between May 26 and June 2, also revealed that 70 per cent of Australians expect energy prices to surge over the coming year.
Millennials were the most likely to pick cost of living as the leading issue facing Australians, with 54 per cent of the generation selecting the option.
At least 50 per cent of Australians with a mortgage picked cost of living alongside 51 per cent of renters.
Labor’s fall follows its unpopular May budget where it went back on pre-election promises not to change capital gains tax or negative gearing.
The CGT proposal, which scraps the discount and replaces it with a tax on real gains, sparked outcry from business leaders and entrepreneurs who warned founders will move overseas.