Home Insights After A 15-Year Decline, Home Ownership Rates Have Stabilised

After A 15-Year Decline, Home Ownership Rates Have Stabilised

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The first many results of the 2021 census released today show that 67% of Australian households owned their homes completely or with a mortgage in mid-2021.

This figure has decreased by 0.2 percentage points since 2016, which is a small comparison to the 2.7 percentage point decrease observed over the last decade.

Before 2006, the home ownership rate was almost stable for 40 years, but fell for the next 15 years.

So what has changed recently to stop the decline in home ownership?

Government policy support has allowed more homebuyers to enter the market

In recent years, more first home buyers have become available for purchase. In 2021, the number of first home buyers was the highest at any time since 2009.

This purchasing activity is backed by government incentives.

First in 2017, especially after the pandemic began in 2020, the stamp duty concessions of the first homebuyers expanded, and HomeBuilder’s new construction grants and record low interest rates attracted more new buyers. Entered the market.

Investors are leaving the market

On the other side of the ledger, real estate investment is less attractive.

The share of sales by investors (property advertised for rent) has increased over time.

This trend began in late 2014 with changes in financial regulators that raised interest rates on investor loans.

However, investor sales surged during the pandemic, initially as uncertainties about lessee demand and economic conditions peaked, but high demand and prices prompted real estate investors to sell. , Continued at a high rate.

The first home buyers these days are young

You need to wait until more detailed census data is released to discover which age groups are benefiting from increased home ownership.

However, survey data show that the majority of first-home buyers in recent years are young, under the age of 34.

This is good news. The younger age group has seen the largest decline in home ownership in the last 35 years.

From 1981 to 2016, the home ownership rate for 25-34 year olds dropped from 61% to 44%, almost one-third.

How will the home ownership rate change over the next five years?

The next census will be collected in 2026. Results for the last five years have been flat, but it’s still difficult to get into the first home across Australia.

The biggest hurdle for many is to save deposits. 20% of the current price can take years to save.

The new government policy aims to reduce this burden. The first mortgage deposit scheme, now called the New Home Guarantee, allows 10,000 first homebuyers to buy with just 5% deposit without paying mortgage insurance.

In the proposed Help to Buy scheme, the federal government shares the purchase price of new buyers. This is up to 30% of existing homes and requires only 2% deposit. Many state governments have announced similar shared equity schemes.

These policies may mean that home ownership will begin to rise for the first time in 20 years in the next census.

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