Big home ownership lie Australians have all fallen for

In Australian politics, there are relatively few issues outside of foreign policy that the two major parties can agree on. But there is one issue where both sides ostensibly agree – greater levels of home ownership.

More than 70 years ago, there were debates in federal parliament not too dissimilar from today, in which the leaders of the Coalition and Labor made their case on which party would do a better job building more new homes and getting more Australians into homes of their own.

But the peak rate of home ownership was recorded 57 years ago as part of the 1966 census, at which time 73 per cent of households owned homes.

More recently, the Australian Institute Of Health and Welfare recorded a home ownership rate of 71.4 per cent in 1995. As of the latest data from the 2021 census, the home ownership rate has dropped to 66 per cent.

This raises an uncomfortable question for the nation’s leaders. After spending more than $20.5bn on grants and concessions to first-home buyers in the decade to 2021, home ownership rates have continued to decline.

The AIHW data illustrates a very different trend – the rise of the property investor. In 1995, 18.4 per cent of households rented from a private landlord. As of 2020, 26.2 per cent rented from a private landlord.

If we extrapolate that on to the current number of households as determined by the ABS, private landlords have roughly 810,000 more tenant households today than they would have if the ratio of private landlord-held housing to overall housing stock remained the same as 1995.

According to data from the ABS, over the past 12 months, 33.4 per cent of new mortgages for existing properties have flowed to property investors. In terms of new mortgages overall, including construction loans and brand-new properties, that figure rises to 34.3 per cent. By dollar value, the proportion of new mortgage lending flowing to investors hit the highest level since 2017 – 36.2 per cent.

With investors holding 26.2 per cent of occupied housing stock, this level of activity implies a growing proportion of the nation’s housing stock once more flowing to investors, unless otherwise offset by a much greater proportion of owneroccupiers making fully cash purchases or investors selling out of the market at a greater rate than they are buying in.

Which raises the big question in all of this, how is the home ownership rate going to rise when the current set of incentives and policies have delivered 25 years of strong growth in the proportion of investor-held housing stock instead?

In 1999, a household in the 80th percentile for income could purchase a home that was valued in the 80th percentile. Meanwhile, the median earning household could purchase the median house, based on a household having a 20 per cent deposit, additional cash for stamp duty and spending 25 per cent of gross income on the mortgage.

Today, the median earning household can only afford 13 per cent of homes and more affluent households in the 80th percentile are competing for median-priced homes.

Both Labor and the Coalition speak of hard work and the importance of home ownership, yet neither has the makings of a credible plan that would see home ownership rates increase back toward levels seen in the mid-1990s, let alone the all-time peak. Tarric Brooker is a freelance journalist and social commentator @AvidCommentator