Australians have long believed that the key to long term financial security is home ownership. Buying your own home has been high on the agenda in this country for decades, so much so that the commonly referred to ‘Great Australian Dream’ is almost embedded in our DNA, passed down from generation to generation as we strive to have that patch of land to call our own.
However times are changing and the trend toward home ownership is starting to diminish here in the ‘Lucky Country’, with a number of home owners choosing to sell up and rent.
According to recent findings published in The Age, one in five home owners reverted to renting at some point between 2001 and 2009, which is double the rate for Britain.
While just over half later bought back into the property market, many who traded home ownership for tenancy ended up reliant on rental assistance or public housing,
The Household, Income and Labor Dynamics in Australia survey tracked the housing histories of thousands of Australians over nine years and revealed that during this period, 1.65 million ”episodes” of home ownership were terminated as people moved into rental housing. Among people under 50, the ”survival rate” in home ownership was 77 per cent.
Professor of housing and urban research at RMIT University Gavin Wood, says, “It’s no longer necessarily true that buying a home sets you up for life.
”On the face of it these figures suggest a higher proportion of Australian home owners are precariously perched on the margins of home ownership than in the past.”
With a substantial proportion of those who ditched the ideal of home ownership entering the public housing system or seeking rental assistance, it would seem that affordability played a dominant role in the decision to sell up, with financial pressures and increasing housing costs tipping many back into tenancy.
”This suggests they were precipitated out of home ownership by adverse circumstances,” Professor Wood said.
We have a strong private rental market in Australia
However when it comes to the overall health of Australia’s private rental market and our ability to move freely from home ownership into rented accommodation, we are far more fortunate than our British counterparts.
Professor Wood suggests that this relative ease of securing rental dwellings could have contributed to our low arrears rate, with home owners who feel the financial strain of a mortgage selling up before it gets to the point of foreclosure by their lender.
There were some interesting comments in this article. No doubt many Australia’s see owning their home outright when they retire as a means of obtaining financial security.
Owning your own home means you won’t pay rent, but it will certainly not make you rich or even moderately well off.
In this sense, securing your financial future through property does not necessarily go hand in hand with owning your own home, rather building a substantial residential investment portfolio should be the priority for people looking to generate wealth. And there’s no reason why you can’t achieve this as a tenant!
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