Australia’s declining rates of home ownership are an indication that governments across the country have failed to address the issue of housing affordability.
The Household, Income and Labour Dynamics in Australia Report (HILDA), released this week, shows that entry-level properties are more expensive than ever and home ownership is dropping.
The report revealed that the number of owner occupied households dropped to 64.9% in 2014, from 68.8% in 2001.
Over the same time, the number of Australian adults who actually own their own home fell from 57% to 51.3%.
Home ownership among Gen Y – those aged between 25 and 34 – declined from 38.7% in 2002 to 29.2% in 2014
Among persons aged 35–44, home ownership declined from 63.2% to 52.4%, and among persons aged 45–54, it declined from 75.6% to 67.4%.
There was also a slight decline in home ownership among persons aged 55–64, from 75.1% in 2002 to 72.9% in 2014. There was essentially no change in home ownership among those aged 65 and over.
“Sliding home ownership is a damning report card on the collective failure of governments to act,” Glenn Byres, Property Council of Australia’s chief of policy and housing said.
“Housing affordability has remained a public policy orphan for too long and there is a compelling case for change given the acute problem in our capital cities,” Byers said.
The fall in home ownership among younger generations may be due to the fact that the 10th percentile of homes – or the cheapest in the market – had grown 108% in value between 2001 and 2014, compared to a 47% growth for 90th percentile properties at the top of the market.
“An implication of this finding is that housing at the ‘affordable’ end of the distribution appears to have become relatively less affordable between 2001 and 2014,” the report states.
While housing affordability was a hot button issue during the recent election campaign, Byers said the debate had been a misguided one.
“Neither side of politics took a comprehensive plan to the last election. Instead we saw a tax debate on negative gearing masquerading as a housing affordability debate. We need the Commonwealth to take the lead by developing a competition-style payments system to address supply blockages.
“The states largely pay lip service to housing affordability and run dysfunctional planning systems that add to the time, cost and red tape of driving supply. The states also need to end their unhealthy dependence on stamp duty, which adds up to $60,000 over the life of an average mortgage.”
While younger people are finding it harder to enter the property market, those that do aren’t benefiting in the same way as their older counterparts.
According to the HILDA figures, from 2002 – 2014, the median equity held in homes owned by those 65 and over has increased 52.4%.
For those aged 55-64 the median equity level has increased 39.4%, while for those 45-54 it has increased 26.3%.
Those aged 35-44 have seen just a 10.9% increase, while for those 25-34 the median equity has declined 7.9%
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