A Quick Guide To Trends in Home Ownership in Australia

For years the great Australian dream has been to own one’s one home — but how are things going? Are we achieving this?

Home LoanInterestingly this is a very Australian aspiration – it’s not the same in other parts of the world where many expect to be tenants all their lives.

Even in the USA the Great American Dream is different – it’s not about home ownership – it’s about freedom and the opportunity for prosperity and success.

Anyway… what’s happening with the levels of home ownership in Australia?

It’s something that has been carefully studied by the government using data from the Census,  from ABS’ Survey of Income and Housing and the Household Income and Labour Dynamics in Australia (HILDA) survey.

Here is a summary of some of their findings

Trends in overall home ownership rates by household and person

Census data indicates that overall household home ownership rates (including those dwellings where there is a mortgage over the property, as well as those dwellings owned outright) have not changed substantially since the 1960s, hovering around 70 per cent over the past 50 years.

The following table shows the five yearly rates (based on when Census data is released) from 1947 to 2016.

Proportion of owner occupied private dwellings, based on Census data

  1947 1954 1961 1966 1971 1976 1981
% 53.4 63.3 70.2 71.4 68.8 68.4 70.1
  1986 1991 1996 2001 2006 2011 2016
% 70.4 68.9 69.0 69.5 69.8 68.5 67.1

However, if we look at the Census data in combination with other more recent and regular sources, it is possible to discern a slow but marked decline in levels of home ownership since the early 2000s.

The ABS’ Survey of Income and Housing indicates that owners represented 70.6 per cent of all households in 1999–00, falling to 67.2 per cent of all households in 2013–14.

Estimated proportion of households that are owner occupiers, based on ABS Survey of Income and Housing

1994–95 1995–96 1996–97 1997–98 1999–00 2000–01 2002–03
% 71.4 70.9 69.7 70.3 70.6 70.4 69.5
2003–04 2005–06 2007–08 2009–10 2011–12 2013–14
% 70.0 69.3 68.3 68.8 67.4 67.2

Source: ABS, Housing Occupancy and Costs, 2013–14, cat. no. 4130.0.

The HILDA survey data also suggests a decline in home ownership rates, falling from 68.8 per cent of households to 64.9 per cent in the period between 2001 and 2014 (a fall of 3.9 percentage points).

Estimated proportion of households living in owner occupied dwellings, based on HILDA survey

  2001 2002 2003 2004 2005 2006 2007
% 68.8 68.4 68.2 68.1 67.7 67.7 67.9
  2008 2009 2010 2011 2012 2013 2014
% 67.6 66.6 66.7 64.9 65.3 64.8 64.9

Source: Melbourne Institute of Applied Economic and Social Research, The Household, Income and Labour Dynamics in Australia Survey: Selected Findings from Waves 1 to 14, 2016.

Trends in home ownership rates by age

Although overall home ownership rates in Australia have not declined greatly over the last fifty years, rates of home ownership have changed markedly for certain age groups.

Home ownership rates by age of household reference person, based on Census Data

% 1961 66 71 76 81 86 91 96 01 06 11
AGE
15–24 34 30 26 25 25 26 24 22 24 24 25
25–34 60 58 56 60 61 58 56 52 51 51 47
35–44 72 71 71 73 75 74 74 70 69 69 64
45–54 75 76 76 76 79 79 81 79 78 78 73
55–64 78 78 79 78 81 82 84 83 82 82 79
65+ years 81 80 80 75 78 80 84 82 82 82 79
All households 72 70 69 68 70 70 72 69 70 70 67

This data indicates that home ownership rates for younger households have declined. 

For example, in the 25–34 years age range, home ownership rates declined from 60 per cent of households in 1961 to 47 per cent in 2011.

Similarly, in the 35–44 years age range, home ownership rates fell from 72 to 64 per cent of households.

This has not resulted in an overall decline in home ownership levels, due to high levels of home ownership for older households combined with the ageing of the population.

Trends in home ownership rates in Australia by income

Between 1988–89 and 2013–14, rates of home ownership fell for all equivalised disposable income quintiles, except for the highest quintile.

The largest falls in absolute terms was experienced in the second and third income quintiles.

Home ownership rates by equivalised disposable income quintiles for all age groups

Equivalised disposable income quintile
% 1 2 3 4 5 All
1988–89 65.4 74.3 76.6 75.6 71.5 72.7
1995–96 62.7 67.9 72.9 75.2 75.8 70.9
2000–01 61.4 66.3 72.3 74.8 77.1 70.4
2005–06 60.4 67.5 69.7 72.0 76.8 69.3
2009–10 61.5 64.2 70.3 72.1 75.6 68.8
2011–12 60.2 65.3 66.7 69.5 75.4 67.4
2013–14 58.1 64.9 67.8 70.7 74.4 67.2
Difference –7.3 –9.4 –8.8 –5.0 +2.9 –5.5

Source: The Conversation (Yates, Judith). ‘Explainer: What’s really keeping young and first home buyers out of the housing market? updated to 2013–14 by Judith Yates. (Sourced by Yates from ABS Surveys of Income and Housing, derived from Confidentialised Unit Record Files.)

Home ownership rates in Australia by state/territory

The ABS’ Survey of Income and Housing shows the largest declines in Victoria and Queensland from 1994–95 to 2013–14 (see the following graph).

Home ownership rates (per cent) 1994–95 and 2013–14, from ABS Survey of Income and Housing

A1

Source: ABS, Housing Occupancy and Costs, 2013–14 (cat. no. 4130.0)

Proportion of Australian households that own their home outright

Based on the ABS Survey of Income and Housing, the number of owners without a mortgage has declined since 1994–95, from 41.8 per cent of owners to just 31.4 per cent of owners in 2013–14 (see the following table).

The 2016 Census data shows a similar trend, with the number of occupied private dwellings owned outright declining from 32.1 per cent in the 2011 Census, to 31.0 per cent in the 2016 Census.

1994–95 1995–96 1996–97 1997–98 1999–00 2000–01 2002–03
Owner without a mortgage 41.8 42.8 41.3 39.5 38.6 38.2 36.4
Owner with a mortgage 29.6 28.1 28.3 30.9 32.1 32.1 33.1
Total owners 71.4 70.9 69.7 70.3 70.6 70.4 69.5
2003–04 2005–06 2007–08 2009–10 2011–12 2013–14
Owner without a mortgage 34.9 34.3 33.2 32.6 30.9 31.4
Owner with a mortgage 35.1 35.0 35.1 36.2 36.6 35.8
Total owners 70.0 69.3 68.3 68.8 67.4 67.2

Source: ABS, Housing Occupancy and Costs (cat. no. 4130.0) 

Read more at the source:  Trends in home ownership in Australia: a quick guide

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About

Kate Forbes is a National Director Property Strategy at Metropole. She has 15 years of investment experience in financial markets in two continents, is qualified in multiple disciplines and is also a chartered financial analyst (CFA).
Visit www.MelbourneBuyersAgent.com.au


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