Australia embraced the Federation of the States in 1901. At this time, less than half (45%) the country’s households owned or were paying off their homes. After WWI, yet another Great Depression in the 1930s and WWII, home ownership reached just over half (53%) of all households in 1947. Home ownership peaked in the late 1980s, at just over 70%, and has drifted down to two-thirds as we’ve entered the 2020s.
So, just what is causing home ownership to fall? Clearly, Australia’s urbanisation and heavy concentration into coastal cities, especially in Sydney and Melbourne, have led to the land component of the average home across the nation accounting for over 70% of the total home value. This component is higher in the major cities.
And the size, fittings and facilities in a modern home are a far-cry from the humble dwellings of the post-war years. House sizes alone are over double the size they were over 60 years ago, and more often than not they have double car spaces, air conditioning and modern telecommunications. They are also becoming increasingly energy efficient.
So, the average price of dwellings has soared to around $700,000+, some four times the average household income compared with 23/4 times in the 1980s.
However, record-low mortgage rates—at least in nominal terms—have meant the servicing cost of dwellings is nowhere near as frightening as it once was not so long ago.
However, price rises are again in play. Should these be accompanied by rising mortgage rates—not yet on the radar—then there would be a more worrying financial cocktail in sight.
In the meantime, more Australians, young and old, are choosing apartment, flat and villa residences for lifestyle and cost reasons. Even the ‘tiny house’ trend is appealing to some. More are choosing to rent, and the build-to-lease residential property trust concept—which has been in some countries such as Canada for decades—is coming into view.
One way or another, home ownership is taking a number of detours these days.
