Rates of homeownership have continued to fall among younger Australians, according to the latest data from the 2016 census.
The Australian Bureau of Statistics (ABS) provided data to The New Daily last Thursday that confirmed homeownership among the core first-home buyer demographic (those aged 20 to 39) had declined in the 2016 census.
The census revealed that a mere 36% of people aged 25-29 said they owned their homes outright or with a mortgage, which is likely the lowest level since at least the 1960s.
Homeownership for the next age group, the 30-34 set, declined to 49%, which is likely another record low. Meanwhile, the 35-39 set also saw a drop to 58%, down from 61% in the 2011 census.
Overall, rates of fully paid or mortgaged homeownership declined in all groups up to the age of 64. However, overall rates of homeownership did not drop dramatically between the 2011 and 2016 census, as older age groups (which are gradually accounting for a larger share of the population), actually increased their ownership.
Australia’s dwindling rates of homeownership can be attributed to numerous factors, according to Judy Yates, a leading housing economist. She placed more than a small part of the blame on the nation’s growing economic inequality.
Yates provided an estimate of ownership rates to the Senate inquiry in 2015, together with a detailed explanation of the causes.
In her submission, Yates blamed the usual culprits – including declining rates of marriage and fertility among young people (making them less willing to buy homes), rising median house prices, tax concessions for property investors, the scarcity of urban land for residential development, and demand pressures from population growth.
However, the main driver of declining rates of homeownership is Australia’s worsening income and wealth inequality, said Yates.
The phenomenon of the “disappearing middle” likely began in the 1970s. “Increasing inequality continued through from the mid-1990s until the late 2000s, having accelerated between 2003-04 and 2009-10 as a result of its uneven economic growth generating disproportionate benefits for those in the top half of the income distribution,” Yates said in her 2015 submission.
Disproportionate growth in incomes – with most of the gains going to the top rung of society – meant that households in the lower rungs often had to take on more debt to enter the property market, said Yates.
The very wealthy eventually became disproportionately represented in both owner-occupied and investment housing. “Encouraged by persistent and high capital gains from the mid-1990s generated by population and real income growth and underpinned by housing supply shortages, established households – the primary beneficiaries of increasing income and wealth inequalities – increased their demand both for owner-occupied housing and, increasingly, for investment housing.”
This is actually good news for those worried that Australia might undergo a crisis similar to the US subprime mortgage crisis. As most of Australia’s mortgage debt is held by high-income households, the economy is less likely to undergo a US-style mortgage crash.
The bad news, bolstered by the latest census, is that younger Australians are increasingly being locked out of the housing market, not just by demographic transformation, but by the accumulation of wealth at the top of society.
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