RP Data’s Cameron Kusher has published an interesting report (below) on the steady decline in home ownership rates across Australia, based on the biennial release of the Household Income and Distribution Survey by the Australian Bureau of Statistics:
“Over recent years and evident in today’s accompanying graph, there has been a steady but consistent decline in households that occupy a home without a mortgage. Subsequently, there has been a lift in the proportion of households with a mortgage and those occupied by renters,” he said.
The survey results show that over the period 2011/12, 36.6 per cent of households held a mortgage compared to outright ownership at 30.9 per cent and 30.3 per cent for rentals. Mr Kusher said that an interesting finding was that fifteen years ago, 41.3 per cent of homes were owned outright compared to 28.3 per cent which were mortgaged while 27.9 per cent were rented.
Kusher also identifies the rise in mortgage indebtedness as a key factor dragging on consumer spending:
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…a rise in the proportion of households that are owned with a mortgage is likely to be one of the factors acting as a handbrake on consumer spending.
“With a recent shift in consumer attitudes away from spending and more toward savings, the high proportion of the population with a mortgage is also likely to be having a dampening effect on retail trade and subsequently economic growth. “It’s no wonder we keep hearing of retailers doing it so tough. In fact, retail trade figures released this week for the 2012/13 financial year showed that retail trade increased at is slowest pace over a financial year in 51 years.”
“If we consider that a majority of Australia’s rental accommodation is largely privately owned as opposed to a company or the Government, private owners of rental properties either have a mortgage or would own these properties outright – this additional investment in housing by the private sector is probably hindering spending in other areas of the economy,” Mr Kusher said.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
