The great Australian dream of owning a home lives on.
And recent Australian Bureau of Statistics’ (ABS) Housing Occupancy and Costs figures give us a good snapshot of how many of us own a home and how many rent.
The latest stats show that in 2019/20:
66 per cent of Australian households owned their own home, with or without a mortgage - consistent with ownership in 2017/18
31 per cent of households rented their home - a decrease from 32 per cent in 2017/18
Average weekly housing costs were: $493 for owners with a mortgage; $54 for owners without a mortgage; and $379 for renters.
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Other interesting findings
Household spending of gross weekly income on housing costs decreased from 13.9 per cent (2017/18) to 13.6 per cent in 2019/20. Owners with a mortgage spent 16 per cent and renters spent 20 per cent of their income on housing costs. This was consistent with the amount spent on mortgage and rent in 2017/18.
The average number of persons per household remained stable at 2.6, while the average number of bedrooms per dwelling decreased from 3.2 to 3.1.
More than three quarters (77 per cent) of households had at least one bedroom spare.
One in five households (21 per cent) owned one or more residential properties other than their usual residence. Of those that owned another residential property, two thirds (68 per cent) owned a single property, while one in 25 (4 per cent) owned four or more properties.
There was a 6 per cent increase in recent first home buyers where the main reference person for the household was aged under 35 (61 per cent), compared to 2017/18 (55 per cent).
It's all to do with demographics
The trends in tenure type are more or less in line with the change in demographics and life-cycle stages.
This means that the decline in home ownership levels over the past two decades should not be of great concern because it is, in part, related to our changing demographics, with more young people in Australia.
Currently, Zoomers (born 1999-2018) and Millennials (born 1984-1998) make up to 47 per cent of the total population.
They are the largest generational groups in Australia and this, in part, explains why the proportion of renters is increasing.
However, moving forward, more Millennials will be contemplating home ownership as they enter the family-formation stage of their lives and, in general, they'll be moving out of apartments into houses or townhouses and, in many cases, to our urban fringes due to affordability constraints.
The bottom line
Interestingly, when compared to other countries, the home-ownership rate for Australia isn’t particularly high or low.
Largely agrarian and industrial economies - like Romania, Hungary and Bulgaria - have high home-ownership rates, while highly urbanised service economies - like Switzerland, Germany and South Korea - have relatively low home-ownership rates.
However, there is an important benefit of home ownership that many forget - home owners don’t suffer from poverty in old age.
The Grattan Institute found that you were much less likely to retire in financial comfort if you were a renter.
This means the more Australians who own their homes, the less we need to subsidise renter-retirees through the age-pension system.
And we know there’s not enough money in the public coffers to support the vast number of Boomers moving into retirement over the next decade.