ABS report shows Australia is failing on housing

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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!

About the author
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.