A new study showed that a surprising number of home owners sell up and revert to renting.
The RMIT study reveals one in five home owners dropped out of ownership at some point during the period 2001-09, double the rate for Britain.
While just over half the Australians later moved back into the property market, many became reliant on rental assistance or public housing.
”It’s no longer necessarily true that buying a home sets you up for life,” said Gavin Wood, professor of housing and urban research at RMIT University.
Using data from the Household, Income and Labor Dynamics in Australia and reported in domain.com.au , Professor Wood tracked the housing histories of thousands of Australians over nine years. During that time 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.
”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,” Professor Wood said.
It was not clear why so many fell out of home ownership but financial pressures and high housing prices appeared to have played a part. The former owners who did not return quickly to the property market were more likely to enter public housing or qualify for Commonwealth rent assistance than long-term renters.
”This suggests they were precipitated out of home ownership by adverse circumstances,” Professor Wood said.
On the other hand, Australia had a healthy private rental market compared to Britain, allowing people to move more freely between ownership and renting rather than cling on in penury to their homes. The relative ease of renting in Australia might also be a factor in the low mortgage default rates: ”People sell up before it gets to that point,” Professor Wood said.
As a step towards lowering housing prices he suggests replacing stamp duties with a broad-based land tax, and establishing an income-tested housing allowance that would go to struggling home owners as well as renters, and abolishing subsidies for first-home buyers.
For many years the percentage of our population than have managed to buy their own home has hovered around 70%.
But this is slowly decreasing and Australia’s home ownership rates are falling, despite international trends that show home ownership in other countries is rising.
New figures from the OECD show that while the home ownership rate increased in the United States, Britain, Canada and Germany between the 1990s to the first half of the 2000s, the Australian home ownership rate fell from 71.4% to 69.5%.
And is likely to continue to slowly drop, in part because of affordability and partly because of life style choices.
Many Gen Y’s are getting married later and often travel overseas before they settle down. Others have a Hex debt to pay off before they can consider buying a home.
Renting for longer and leaving the decision to buy their first home till they are in their 30’s will mean that more Australian’s will be tenants for all of their lives.
This means there will be an ongoing requirement for good rental accommodation in the future which will underpin rental growth for property investors like you and me.
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