As far as home ownership is concerned, there was nothing particularly surprising about the release of 2016 census data on Tuesday.
There are differing voices claiming that either home ownership is remaining strong or that we are in the midst of an ownership slide. Looking at the numbers reveals home ownership is falling, but whether we are experiencing a dramatic fall is another thing.
“The newly released figures from the 2016 census provide a valuable snapshot of home ownership today,” says CEO of realestateVIEW.com.au, Enzo Raimondo. “It confirms the complexities of what has been a long-term downturn in home ownership in Australia.
“For one thing, if we look towards the future, an increasing number of home owners will still be paying off their mortgage as they enter retirement and this is reflected in the data. Despite a gradual decline in outright home ownership, the percentage of those owning a home with a mortgage has increased since 1991 by 6.5%.”
65.5% of Australian households did own (or were in the process of buying) their home last year, down from 1966 levels of 71%. A more dramatic picture of this can be seen in the fact that outright home ownership (no mortgage) in 1991 was at 41.1% and has dropped to 31% in the latest census figures.
Percentage of home tenures
As the above figures comparing the past 5 years reveal, home tenures have seen little change compared to longer term trends. For instance, while there has been a 10% decline in outright home ownership in the past 25 years, home ownership dropped 1.5% since 2011, leaving the remaining 8.5% drop attributable to the 20 years between 1991 and 2011. If every 5 years saw a 1.5% drop, we would have seen a decline of 7.5%, so there was a slightly larger drop in home ownership between 1991 and 2011. The current figures reflect a continued decline rather than any sort of dramatic fall.
Another continual trend to be seen over the last half century is who among us own our homes.
In 1961, 34% of those aged between 15-25 years owned a home, with this number at 60% for those aged between 25-34 years. In 2011 these numbers had correspondingly dropped to 25% and 47%. In contrast to this, 75% of those aged 45-54 owned a home in 1961, with this number more or less staying above this number, peaking at 81% in 1991 and then falling back to 73% in 2011.
Proportion of Australians living along Australia’s east coast
With nearly 8 out of 10 people living on or near the Eastern Seaboard, it is clear that house prices in the capital cities along Australia’s eastern coast, especially Melbourne and Sydney, will continue to influence home ownership levels as well as driving up the cost of rent and the numbers of those forced to continue renting. Percentages of those renting, as reported below, hasn’t been seen since 1954.
Proportion of Australians renting
Meanwhile, Melbourne’s population increase to 4.4 million is quickly closing ranks on Sydney’s 4.8 million, whose population growth was on the smaller scale (10%) compared to other cities such as Darwin (14%). This slight cessation in Sydney’s population growth can be seen to be both a cause and result of its skyrocketing house prices, which have increased by 70.3% in 5 years, with Melbourne second at 40%.
“House prices aren’t the single driver of home ownership in Australia,” says Mr Raimondo. “Socioeconomic drivers, such as low wage growth, increasing underemployment, and a shift in the priorities of younger generations will continue to change when, where and how people invest in property.”