Data Decode: Australian housing occupancy stats explained

The ABS has released its Housing Occupancy data to great interest.

Home ownership stats aren’t always what they seem, so here’s five graphs to help break down the data.

1 – Housing costs decline…for owners 

house moneyFirst up, from its survey the Bureau of Statistics found that costs for owners with a mortgage remained steady in real terms between 2011-12 and 2013-14, at an average of $453 per week.

However, those renting from private landlords saw costs rise by 4 per cent over the same period to $376 per week, while renters from housing authorities saw their costs remaining flat

On average households spent 14 per cent of their gross weekly income on housing costs which was unchanged since 2011-12, with the proportion for those with a mortgage falling from 18 per cent to 16 per cent.

Thanks to the heady combination of rising real incomes, the eminence of dual income households, and record low interest rates, this represents the lowest proportion of housing costs to gross household incomes on record for mortgagees.

For renters housing costs as a proportion of gross household income remained flat at 20 per cent.

Disaggregating the data we can see that while more than 82 per cent of households had expenses of 30 per cent or less of gross household income, this share has steadily ticked down from an 86 per cent share two decades ago.

A small percentage share of households (5.7 per cent) continued to spend more than 50 per cent of gross household income on housing costs.

Presumably a fair number of these households are accounted for by self-employed persons for whom costs will remain at this severely elevated level temporarily, although since the ABS figures reveal few further details here this is pure conjecture.

2 – Home ownership rates steady since 2011-12

Home ownership rates have remained steady since 2011-12 at 67 per cent.

Sampling error can see the data at the state level bouncing around a little, but it is clear that the trend has been steadily down since 1995 in the four most populous states, which are also home to the four largest capital cities.

The below graphic suggests that home ownership rates appear to have remained reasonably steady in the southern states of Tasmania and South Australia, as well as in the Australian Capital Territory and in the “Top End” since 1994-95.

With current policy and forecasts projecting that population growth will become even more focused on the largest capital cities over the decade ahead (which almost inevitably hurts affordability and stretches the deposit gap), unless there is a directional change of policy it seems to be a shoe-in that nationally home ownership rates will eventually decline further towards 60 per cent.

With Australians today doing most things later in life than they once did – combined with the ongoing casualisation of the workforce which sees folk flitting between jobs, careers and even countries in a more fluid manner than ever before – lower home ownership rates over time appear likely.

It is worth noting briefly that the interaction between home ownership rates and house prices can be curiously reflexive through the cycles – Sydney has a higher home ownership rate than Brisbane, for example.

3 – Tenure: More mortgaged homes

The ABS found that around 36 per cent of homes are mortgaged, while 31 per cent of homes are owned outright. The proportion of all households renting remained stable at 31 per cent, with 4 per cent of households renting from state and territory government housing authorities.

The data also confirmed what has been obvious for years, that some 300,000 landlords don’t own their own homes, instead choosing to rent where they live and own an investment property instead of a place of residence.

This is a pertinent point for it means that more than 70 per cent of households own at least one property, despite the home ownership rate being just 67 per cent.

While allowing for possible sampling error it seems that low interest rates have allowed more homeowners to kill their mortgage in the last few years, but the trend over the last two decades has been for fewer homes to be owned outright.

Interestingly the mean number of persons per household ticked up slightly from 2.57 to 2.59 since 2001-12.

4 – Properties owned by landlords

Although it is popular to promote the notion that Australia has become a nation of wealthy and greedy landlords, the data doesn’t necessarily support the argument.

Since only a tiny fraction of the market is comprised of portfolio investors, the answer to that question essentially boils down to whether you classify a person with a rental property or a holiday home as a “land speculator” or as someone simply trying to provide for their retirement.

The overwhelming majority of property owning households have no additional properties (82.8 per cent), but a fair proportion of owners do retain one additional property either for lifestyle or investment purposes (12.2 per cent).

Given that folk are partnering later and so many new couples own at least one pre-existing dwelling between them, we might expect to see this share growing over time.

The Australian Taxation Office (ATO) has also found that the use of leverage to invest in properties by self-managed superannuation funds (SMSFs) has escalated quickly, with estimated borrowing having recently been revised sharply higher.

Although borrowing by SMSFs still amounts to only 3 per cent of total fund assets, the Reserve Bank has become sufficiently narked by this expansion in leverage to make another pointed reference to the sector in its latest Financial Stability Review, once again hinting in a none-too-subtle manner that borrowing within the sector should be restricted.

On balance it is hard to disagree with the RBA on this point. While people should within reason be free to do what they want with their own pension fund money, the increasing use of SMSF leverage in the residential sector introduces potentially speculative demand which did not previously exist, thus in turn increasing systemic risk.

Despite all of the above, only 1.8 per cent of property owning households own three or more additional properties.

Granted, it is the case that the majority of second dwellings are owned by higher income households, but then nor would one expect to see low income households owning multiple properties.

Indeed, it would be serious risk to financial stability if that were ever to be the case.

Want more of this type of information?

Pete Wargent


Pete Wargent is a Chartered Accountant, Chartered Secretary and has a Financial Planning Diploma. He’s achieved financial freedom at the age of 33 - as detailed in his book ‘Get a Financial Grip – A Simple Plan for Financial Freedom’. Pete now manages his investment portfolio, travels and works as a consultant in the finance industry from time to time. Visit his blog

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