"My partner and I have just given up on buying," Ms Holme said. "It's completely unaffordable anywhere we look, even further out of the city.

"I think everyone's given up. Everyone I know is renting in their late 20s and mid 30s. I'd like to think I'll buy a house eventually. But my parents bought when they were younger than I am, and their mortgage was less of a proportion of their income.

"It basically means that we're not going to have the same financial security as our parents' generation, because renting each year, you're not building to pay off your own house and have that investment for the future."

Her parents, who bought their first property in their early 30s, now own a house in the Blue Mountains and another near Nowra.

The difference between Ms Holme and her parents is not uncommon, according to a new Grattan Institute report that shows the housing boom, and taxation and welfare systems have led to older Australians getting richer while younger generations go backwards.

The report, The Wealth of Generations, shows how older Australians are capturing a growing share of the nation's wealth, while the wealth of younger Australians has stagnated.

It shows most age groups were richer in 2011-12 than people of the same age were eight years earlier. For example, an average 55-64 year-old household was $173,000 wealthier in real terms in 2011-12 than in 2003-04, while an average 65-74-year-old household was $215,000 better off.

But the average 35-44-year-old household was only $80,000 richer than a household of that age in 2003-04, while the average 25-34-year-old household had less wealth in 2011-12 than one of similar age eight years before.

This was largely due to growth in property prices between 1995 and 2012, which had increased the value of homes, but had made it harder for younger people to get into the market. It also reflected growth in superannuation balances over a period of strong sharemarket performance.

Meanwhile, boosts to pensions and greater use of health services increased government spending on older households. In 2010, government spent $9400 more per household over 65 than they did six years before.

Madeleine's father Lyndsay Holme says: "It's always been hard for young people. Housing prices have been going up forever, from my grandparents' days.

"We didn't have any savings apart from superannuation until we were lucky enough to come into an inheritance when my parents died.

"I'm not particularly worried about either of our children because they'll ultimately have [our] houses. That'll be their inheritance."

He has yet to see the benefit of rising housing prices for much of his generation, said Mr Holme. "If you're in the investment game, it probably affects you. But if you're in the game of having a roof over your head, it doesn't make a difference."

The promise of each generation enjoying higher living standards than its parents' generation is at risk in Australia, partly due to ballooning spending on older people funded by deficit budgets, according to the Grattan Institute report.

"The generational bargain, under which each generation of working Australians supports retirees while still improving its own standard of living, is at risk," Grattan Institute CEO John Daley said.

The report finds that the housing boom plus rapid increases in government payments on pensions and services for older people risks creating a generation of young Australians with a lower standard of living than that of their parents at a similar age.

Mr Daley said much of this spending had been funded by budget deficits, and the burden of repaying this debt would fall disproportionately on younger people.

"For every year that we run a $40 billion deficit, which is roughly where we've been for the last few years, that imposes an extra $10,000 of tax liability on a younger household over their lifetime," Mr Daley said.

Mr Daley said the report reinforced the need for the Abbott government to address the structural deficit in the budget.

"They will have to do a lot more than what they have announced so far," he said.

While some people might benefit from their parents' fortune through inheritance, Mr Daley said the benefits of inheritances tended to flow to people who were already well off, and late in their life.

"Inheritances tend very much to concentrate wealth … If we're moving to a world in which inheritance is going to be ever more important, what that says is we will probably be moving to an Australia in which wealth and resources are much more unequally distributed."

Mr Daley said to restore the balance, governments should tighten eligibility for the age pension, reduce superannuation tax concessions and increase taxes on assets, for example by eliminating negative gearing.

"These reforms would fall most on those who have benefited most from windfalls and government largesse, and have paid lower taxes while deficits accumulated," Mr Daley said.

"We shouldn't delay, or a younger generation may be even worse off, as they miss out on benefits their parents enjoyed."

A separate OECD report released on Tuesday finds that Australian low-income earners have done much better than high earners since the global financial crisis.

While the income of the top 10 per cent grew more strongly than the bottom 10 per cent before the crisis (at an annual rate of 4.5 per cent compared with 3.6 per cent), since the crisis high incomes have fallen while low incomes have continued to climb (minus 0.5 per cent compared with 0.8 per cent).

Before the crisis a typical high earner took home 9.3 times as much as a low earner. After the crisis the figure fell to 8.5 times.

In most OECD countries income disparities continued to worsen, in part because of rising unemployment.

with Peter Martin