The sad death of Australian home ownership

By Leith van Onselen

The Australian dream of home ownership has drifted further out of reach of younger Australians, with the 2018 Household Income and Labour Dynamics in Australia (HILDA) survey, released this week, showing that the proportion of Australians living in rented accommodation has increased from 28.0% in 2001 to 31.3% 2016:

The percentage of renters moving into home ownership has also declined sharply, highlighting the plight of renters:

According to Melbourne Institute deputy director and HILDA report co-author, Roger Wilkins, “renters, particularly younger ones, are finding it increasingly harder to achieve home ownership”. Wilkins also noted that “there has been a growth in inequality across the generations, and this is very much tied to home ownership”.

Last year’s HILDA report also reported a sharp decline in home ownership amongst younger Australians, with Sydney and Melbourne hardest hit:

The 2016 Census, too, recorded a similar large decline in home ownership rates among younger cohorts:

Whereas the Australian Institute of Health & Welfare’s latest report, released last month, showed that “Australia has seen a shift from outright ownership to owning with a mortgage, and a shift from overall home ownership to private rental”:

Whereas “Australia ranks in the lowest quarter in terms of aggregate home ownership rates (twenty-ninth out of thirty-seven countries)” but “ranks in the top third for home owners with a mortgage (twelfth)”:

In short, the Australian dream of home ownership is dying. And the only way to reverse this situation is to tackle the following demand and supply-side distortions at their source:

  • Normalising Australia’s immigration program by returning the permanent intake back to the level that existed before John Howard ramped-up it up in the early-2000s – i.e. below 100,000 from 210,000 currently [reduces demand];
  • Undertaking tax reforms like unwinding negative gearing and the CGT discount [reduces speculative demand];
  • Tightening rules and enforcement on foreign ownership [reduces foreign demand];
  • Extending anti-money laundering rules to real estate gatekeepers [reduces foreign demand];
  • Banning borrowing into property by SMSFs [reduces speculative demand]; and
  • Providing the states with incentive payments to:
    • undertake land-use and planning reforms, as well as provide housing-related infrastructure [boosts supply];
    • swap stamp duties for land taxes [boosts effective supply];
    • reform rental tenancy laws to give greater security of tenure [reduces demand for home ownership and reduces rental turnover]; and
    • force developers to supply housing for lower income earners via inclusionary zoning [boosts supply of affordable rentals].

Sadly, policy makers have shown no intention of actually fixing the problem and instead resort to policy band aids, like first home buyer subsidies, which make the situation worse and are designed as a new profit centre for the property industry.

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Unconventional Economist


      • The drug use is a product of society where all the jobs have gone to china, and the CCP works behind the scenes to remove tariffs in Oz, but not in china.

    • ErmingtonPlumbingMEMBER

      Hanson isn’t particularly sympathetic to the plight of the poor, she shares much in common with the LNP on that front.

      • Did you forget she was preselected by the Liberals in Ipswich and then got booted for what were considered racist comments? she’s one of them at heart, with no heart

  1. … Welcome to the real world …

    Vintage house ads show how dramatically costs have jumped in Sydney since 1965 | Daily Mail Online

    • Real estate guide from Sydney 1965 shows the huge difference 50 years makes

    • It shows houses available in Maroubra, Ashfield, Caringbah and Beverly Hills

    • The Beverly Hills house was for sale for £6,750 and described as ‘immaculate’

    • When inflation of 5.1 per cent a year is noted, this equals price of $179,744 now

    • A similar house is listed on the market today with an asking price of $1.32 million

    Life in Australia: Sydney (1966) – YouTube
    House prices fall by fastest rate in six years … Sydney Morning Herald

    • Google News Search ‘Sydney Housing’

      Garth Turner … Canada … The Greater Fool Blog

      … extract …

      … That’s the funny thing about bubbles. Everybody’s horny to get their hands on rising assets – until they’re not. It always happens fast, whatever the asset and no matter the trigger. Greed is a powerful emotion, but it wilts before the dominance of fear. If enough people fear houses will stop rising (prices don’t even need to decline), they’ll cease making the Herculean sacrifice required to buy one. And down she goes. … read more via hyperlink above …

    • Thanks Hugh, it’s a good idea to look at situations over long time frames, it makes it easier to see how twisted out of shape they’ve become. In the short term many people have done well out of property, but in the long term, at what cost. Our kids can’t get on with having a home of their own without a mountain of debt. Workers that keep everything going (the ones that don’t get big incomes but their jobs do make a difference) live further and further away. This perverse obsession with house prices is a cancer for society. Keep up the good work.

      • New Zealand Government … Getting the reform agenda back on track …

        … Do not under-estimate PM Jacinda Ardern …

        The Prime Minister has again defended her Government in light of recent poor business confidence surveys, imploring firms to look at the ‘real economic indicators’ |
        … and Housing Minister Phil Twyford … giving it straight to the enviros recently …

        Reality check for Ministers (really some … just some … asleep enviros) at environment conference | Politik

        … extract …

        … Attendees probably left last night with more questions than when they arrived as Ministers, who in Opposition had seemed sympathetic to environmental issues were left qualifying and modifying their stance on major issues.

        This was starkly evident in an exchange between Urban Development Minister, Phil Twyford, and the EDS (Environmental Defence Society) CEO, Gary Taylor over urban sprawl.

        Twyford had set out an impassioned description of the impact of high house prices in Auckland and advocated the linking together of transport and other infrastructure and new housing developments.

        But he also advocated the scrapping or urban-rural limits.

        “We believe that we have to manage growth on the fringes of the city,” he said.

        “If we do not allow new land to come into the supply we will never ever fix the problem of absurdly expensive urban land.

        “With good investment in infrastructure and transport, with more planning, not less to create the future urban environment that we want, setting aside areas of special value and open spaces, acquiring land for transport and other infrastructure, if we then allow the city to grow we will bring down urban land prices and it is absolutely critical that we do,” he said.

        Twyford had proposed this when he was in Opposition but, even so, any suggestion that more rural land was going to be absorbed for housing was going to be controversial at an environmental conference.

        And Taylor was quick to respond.

        “Everything makes sense except I worry about why you need to do away with rural-urban boundaries altogether,” said Taylor.

        He said that giving free reign to developers seemed inconsistent with Twyford’s overall objective of having a compact city.

        Twyford replied that it was a question of values.

        “This is for us, for Labour, for our coalition government, this is fundamentally a social justice issue.

        “Our objective is not to build a Copenhagen of the South Pacific.

        “We could build a beautiful city with a whole lot of the policies we have talked about.

        “We could build a Vancouver of the South Pacific; beautiful but utterly unaffordable.

        “I’m interested in us fixing this totally dysfunctional urban land economy.

        “If we don’t deal with affordability we will have completely wasted the opportunity that has been given to our generation.”

        Twyford said the only way to deal with the affordability issue was to deal with the land price issue and that meant dealing with the artificial scarcity of land caused by the planning system and the availability of finance for infrastructure.

        However he didn’t dispute that the Auckland region was going to become more heavily built up.

        “You know what,” he said. “In two or three generations this is going to become a tri-city conurbation between Hamilton, Tauranga and Auckland whether we like it or not.” … read more via hyperlink above …

    • Frank_Hankerston

      Smashed avocado eatin’ whinin’ little bitches…they don’t even remember when interest rates were 67% in 1991.

      • No idea. I was 10 in 1991. Still, that Apple shop is PACKED every time I go past. Must be full of home owners, eh?

    • Are we talking about the cost of housing or the cost of computers? The cost of housing has gone up dramatically over the past twenty years whereas the cost of computers and gizmos have plummeted over that time frame.

      • Indeed. That’s why young people are walking around with powerful and stylish mini computers in their pockets, bought on 2 year finance.

    • Good to see support for the American giant, Huawei? Haha, country is toast, taking us with it is worth the pain

  2. So turning RE into a speculative investment has ramifications and here I thought the market could do no wrong as its the ultimate – information machine – always seeking equilibrium.

  3. reusachtigeMEMBER

    No one I know is sad about this. They’re flat-out making profits from it. See, that’s how you get happy. You find ways to profit from situations rather than get bogged down in negative thoughts. When you profit all sorts of good comes from it!

  4. Isn’t it a tragedy: this was published in 2003 and John Howard rejected it out of hand:

    Innovative Approaches to Reducing the Costs of Home Ownership
    A Report Commissioned by The Menzies Research Centre for the Prime Minister’s Home Ownership Task Force

    A young Chris Joye definitely shone as the lead author of that work; his career since is one of the deepest enigmas in political-economic history. And the quality of officially-recognised analysis of the problem has steadily declined since; Alan Moran’s 2006 “Tragedy of Planning: Losing the Great Australian Dream” was a flare-up of brilliance but it had no official recognition. Neither does the best stuff now, all of which this site admirably covers.

    By the way, if it wasn’t for MB preserving a copy of that 2003 Report, it is un-findable on the internet. It would appear to have been deliberately purged from everywhere else, which included the Menzies Institute, government department websites, Chris Joye’s own sites, etc etc.

  5. Perhaps the renter sees the dream more as a nightmare of unsustainable high debt, rising costs as greed-driven groupthink?

  6. Frank_Hankerston

    This ties in nicely with the punter on the Conversation Hour with Richard Fidler yesterday who was talking about bullshit jobs and meaningless work. Nothing like a mega debt to keep you in a soul destroying pointless job.

  7. Quote from this article shows the young-us are waking up one by one.

    “It’s interesting because everyone in our generation is very empathetic and educated, and so we will march for marriage equality, but we won’t march for housing affordability because we don’t know just how dire the system is — whether its superannuation, housing, or even how much tax we pay into the system, compared to how much is spent on services for young people”

    • reusachtigeMEMBER

      The problem with young people is that they are drained of ambition due to their p0rn, computer game and unsociable drug addiction!

    • Because marching for housing affordability is racist, thats why the ABC quoted an Indian, its an SJW dog whistle

    • I know loads of renters down there who own in Brisbane. They’re only down there for a temporary career boost.

  8. From the UK where the housing issue is likely to do in the Tories … as happened in New Zealand …

    Liz Truss demands laws protecting green fields are ripped up … UK Daily Mail

    Chief Secretary to the Treasury Liz Truss said ‘a lot more’ sites needed to be opened up. She also called for those living in cities to be allowed to … read more via hyperlink above …

    • Hugh,

      That’s what happens when you choke supply and poke demand of housing.
      Choke via zoning ostensibly to save “the environment” (whatever that is).
      Poke via immigration ostensibly to be unracist and to boost “economic growth” (whatever that is).

      Sooner or later the average citizen finds they can no longer get a decent job and obtain a decent house.

      Sooner or later the average man in the street (women too and GBLTFSOFHBE’s) realise it is a giant fraud.

      The average mum and dad finds that their personal economic growth has trickled off somewhere else and their personal environment has turned to shit.