ABS report shows Australia is failing on housing

ScreenHunter_01 Jan. 27 23.41

By Martin North, cross-posted from the Digital Finance Analytics blog:

The ABS today released its dashboard style report on Measuring Australia’s progress. Within the various categories there is a section on “Home”. We look at some of the data behind this section, and test their view that there has been no significant change.

By way of background, here is the overall scorecard which the ABS provides. On their web site, it is possible to dig down into the the various metrics.

ABSWealth14The home section considers elements like adequate housing, affordable housing, tenure and belonging. The most significant data in my view are the progress indicators relating to home ownership and mortgages. Between 1994 and 2012 there has been a decline in the proportion of households who own a property from 71% (4.7 million owners) to 67% (5.8 million owners) in 2012.

ABSWealth13This aligns with our own household research which showed that the number of households unable to purchase has risen, because they are unable to afford to enter the market.

ABSWealth15In addition, those who are unable to enter the market as a proportion of the total population has risen.

ABSWealth16The ABS data also shows that more households have a mortgage today. Between 1995 and 2012, there has been a decline in the proportion of Australian households that own their home without a mortgage, from 42% in 1995 to 31% in 2012 and an increase in the proportion of households that own their home with a mortgage, from 30% in 1995 to 37% in 2012. ABS suggests this is in part because of flexible purchase options, but the main reason from our own research is because relative to income, mortgages are higher and held for longer, thanks to rising prices and falling affordability.

My conclusion is that so far as Australia’s Progress is concerned, I rate housing a fail. Participation is down, mortgages are up, affordability is down and current policies are failing. Where are the supply side policies? Where is the macro-economic strategy?

Given this market failure, the rating of “no change” is just not plausible. Its a fail!



  1. It is disappointing that the ABS have neglected to draw attention to data that is deeply concerning.

    But then the RBA also appear to have a blind spot when it comes to data indicating excessive prices and debt secured by residential property. Though the RBA does have an amazing capacity to find ‘helpful’ data from around the world that suggests our housing tumour is consistent with some other tumours.

    Of course there is no connection between these apparent blind spots and the centrality of house prices and the mountainous residential loan books of Megabank to the interest rate lever the RBA uses to drive the economy.

    It is time for the Federal Government to resume central responsibility for the economy.

    It is time for the RBA to return to their cardigans and stomping on inflation.

    Change the RBA charter NOW.

    • pfh you can’t expect the RBA to fix several decades of poor government policy with just one lever.

      One button and we are mutton.

      • “One button and we are mutton.”

        Love it when BS rhymes. 0.25% increase and the whole economy turns to merde yeah right.

      • Yes it was a bit trite, but I think that we can safely say that the car industry was brought down by the high dollar and the absence of meaningful protective tariffs.

        But perhaps it was inevitable. At some point we were always going to struggle against the giants in China, South Korea, and Japan.

      • Yep and our high wages are required to pay for one of the worlds most expensive housing markets. Tragic in a land mass so huge.

      • PF

        I don’t.

        The RBA are a creature of government policy and if the government does not endorse what the RBA does it can make the necessary changes.

        Of course, I believe that public servants, especially the most senior and highly paid ones, have a responsibility to the wider public to speak out if they believe that the public is unaware of risks and failings of current policy.

        In this instance I would expect the RBA to be speaking in very clear terms, on an ongoing basis, about the dangers of the current reliance on interest rates and housing debt as the main tools of economic management.

        Naturally, the pollies hate that idea as they believe the APS stands for Australian Politician Service.

    • Pfh007, fortunately/unfortunately the ABS is not a political machine, so they never ‘analyse’ their own data releases – just present it, as is…

      Hopefully this scorecard/dashboard is a small step in them engaging the community with their data

      • Frederic Bastiat

        “Given this market failure, the rating of “no change” is just not plausible.”

        How in any way is Australian housing a market fail?

        If ever there was an example where people should not be blaming market forces, but instead be blaming policy makers – the Australian housing bubble is it!

        Market failure applies to rare issues such as environmental damage caused to public goods by private companies…but any analysis of the role of the key policy makers suggests they are manipulating and distorting market signals to such as extent that there is actually very few market forces operating.

        RBA – sending rates too low, too often and ‘looking through’ house price / land inflation.

        State Governments – not releasing land and easing planning laws in the face of obvious Supply Side constraints.

        Federal Govervment – FHBG and boosts, which articficially increase deposits allowing for larger mortages and Neg Gearing, which encourages investor speculation at the expense of actual owner-occupiers

        Mr Market sits back and just shakes his head!! He is not to blame for this mess!!!

    • Whether you intended to or not, Peter, your penultimate statement reeks of pure and utter smugness.

      • Why don’t you tell me why you disagree with my statement, We both might learn something from that.

  2. The continued focus on home ownership is disappointing. However, I believe it the stats looked at both rental and home ownership, the results would be similar