Home ownership still affordable, on the rise, ABS figures show

Home ownership levels have continued to rise over the past two decades and may be at record levels, the industry has tipped after the Australian Bureau of Statistics released new data showing the percentage of income put towards a home loan has stayed steady since 1994.

The figures show that although house prices have actually increased by more than 114%, the average household with a mortgage is still paying 42% of their income, roughly in line with the same figures from 1994.

Moreover, the figures show 36% of Australians had mortgages in 2009-10, up from 30% in 1994. APM economist Andrew Wilson says it is likely that since then, the percentage has continued to rise.

“Home owner occupancy levels have continued to hold up, and I’d suggest those numbers would rise once we get census data because of the great surge we had in first home buyers.”

The data does indeed show of the 1.07 million households that purchased their home in the three years to 2009-10, 40% were first home buyers. Most first home buyers had a reference person aged under 35, while less than 10% had a reference person aged 45 years or over.

“I’d actually expect us to see record levels of home ownership when that data comes through. Of course, we’re suffering from having much lower levels of first home owner stimulus, but I expect that data to still be high,” Wilson says.

And although the data shows housing costs have remained in proportion to income, there are some caveats. Between the two surveys, private renters have seen a 45% increase in weekly housing costs after inflation. For public renters, the proportion of income needed for housing has risen from 17% to 19%.

The figures also show that the number of Australians who own a house with no mortgage has fallen to 33% from 42%, while 24% of Australians are now renting, compared with 18% in 1994.

“The decline in outright home ownership may, in part, reflect increasing uptake of flexible low-cost financing options which allow households to extend their existing home mortgages for purposes other than the original home purchase,” the report states.

However, the figures also show a clear gap between professional singles, young couples without children and dual income families, and then families with single parents.

Younger persons in a couple were more likely to buy than younger singles. But for couples with dependent children, the eldest under five years, 64% owned their home, although this rose to 75% with the eldest aged between five and 14.

But one parent households with dependent children were more likely to rent, 58%, than to own their own home, only 40%. “And they were the life cycle group most likely to be renting through a state or territory housing authority (13%).”

The figures also show a clear trend towards larger homes, with the number of people per house also growing as well.

Households that owned their home with a mortgage had one or more rooms to spare, at 89%, with 68% of couples living with children having at least one spare bedroom.

“On average, dwellings for couples with dependent and non-dependent children contained the highest number of bedrooms (3.9) and housed an average of 4.7 people.”

Experts say this could indicate why construction has not increased and there is a deficiency in dwellings, as more homeowners are using their spare rooms instead of those people moving out into other dwellings.