The 2016 census data shows that homeownership rates among younger Australians have continued to decline.
The Australian Bureau of Statistics (ABS), who provided data to The New Daily, on Thursday, confirmed that homeownership among those aged 20 to 39 (the core group of first-homebuyers) had declined in 2016’s census.
The census found that only 36% claimed to own their home with a mortgage or outright ownership. This is the lowest level of ownership since the 1960s.
The next age group, between 30 and 34 years old, saw a drop in homeownership of 49% to 49%. This is likely to be another record low. The age group of 35-39 years saw a decline of 58%, compared to 61% in 2011, while 31-4 saw an increase by 58%.
The rates of fully-paid homeownership and mortgaged homeownership declined in all age groups except for those over 64. The overall homeownership rate did not decline between 2011 and 2016, however, older age groups, which make up a greater percentage of the population, saw a gradual increase in their ownership.
Australia’s dwindling rates of homeownership can be attributed to numerous factors, according to Judy Yates, a leading housing economist. She placed more than a small part of the blame on the nation’s growing economic inequality.
Yates supplied estimate of ownership rates to the Senate inquiryThe 2015 explanation will also include details about the causes.
In her submission, Yates blamed the usual culprits – including declining rates of marriage and fertility among young people (making them less willing to buy homes), rising median house prices, tax concessions for property investors, the scarcity of urban land for residential development, and demand pressures from population growth.
However, the main driver of declining rates of homeownership is Australia’s worsening income and wealth inequality, said Yates.
The phenomenon of the “disappearing middle” likely began in the 1970s. “Increasing inequality continued through from the mid-1990s until the late 2000s, having accelerated between 2003-04 and 2009-10 as a result of its uneven economic growth generating disproportionate benefits for those in the top half of the income distribution,” Yates said in her 2015 submission.
Disproportionate growth in incomes – with most of the gains going to the top rung of society – meant that households in the lower rungs often had to take on more debt to enter the property market, said Yates.
In owner-occupied housing and in investor housing, the wealthy were eventually more prominent. “Encouraged by persistent and high capital gains from the mid-1990s generated by population and real income growth and underpinned by housing supply shortages, established households – the primary beneficiaries of increasing income and wealth inequalities – increased their demand both for owner-occupied housing and, increasingly, for investment housing.”
Yates further noted that tax concessions for landlords, such as negative gearing and the capital gains tax concession, were “biased towards high-income households.”
This is good news for those who worry that Australia may be in a similar situation to the US’ subprime crisis. As most of Australia’s mortgage debt is held by high-income households, the economy is less likely to undergo a US-style mortgage crash.
According to the most recent census, more Australians are being excluded form the housing market. This is not because of demographic change, but the accumulation of wealth at the top of society.