Home ownership rate among young Aussies falls by 10%

The percentage of young Australians who own their own home has collapsed by 10 per cent since 2002, while average household debt has risen by nearly 100 per cent.

The Housing, Income and Labour Dynamics in Australia (HILDA) survey has tracked the lives of more than 17,000 Australians each year since 2001. The 2017 data, released this month, found that the home ownership rate for Australians aged 18–39 had fallen from 35.7 per cent in 2002 to 25.2 per cent in 2014, a drop of 10.5 per cent.

Meanwhile, average household debt for young Australians grew to $330,687 in 2014, compared to $120,813 in 2002—an increase of 99 per cent in real terms (or 174 per cent in nominal terms).

Roger Wilkins, the report’s author, noted that, while the average value of the homes held by young Australians also grew in that period from $283,197 to $567,514 in nominal terms, this same value reflected an increase of 46 per cent in real terms: “Which is much less than the 99 per cent real growth in their average home debt.”

­­­­­­He added that the decline in rates of home ownership coincided with house price movements over the 2002 to 2014 period, as measured by the Australian Bureau of Statistics.

A vulnerable position

The high level of debt leaves young Australians particularly vulnerable to interest rate changes. Mr Wilkins said: “The growth in debt renders the economic wellbeing of young home owners much more sensitive to interest rate changes than it was in 2002.

“With average nominal debt in 2014 of $330,687 for all home owners, and $343,346 for new home owners, even small changes in interest rates will have substantial impacts on effective income situation of many home owners aged 18 to 39.”

A further finding in the survey was that when comparing young Australian home ownership across family types the sharpest decline occurred among couples with dependent children, falling from 55.5 per cent in 2002 to 38.6 per cent in 2014.

Mr Wilkins added: “Single parents and single people (without dependent children) had low home ownership rates across the entire 2002 to 2014 period, but nonetheless also experienced significant declines between 2002 (17.6 per cent owned a home) and 2014 (12.5 per cent).”

Additionally, HILDA observed the falling ranks of young Australians with lower levels of educational attainment who owned a home. Mr Wilkins remarked: “As might be expected, home ownership rates in 2014 are ordered by educational attainment, with 37.1 per cent of those holding a university qualification being home owners, compared with 28.2 per cent of those with other post-school qualifications, 14.3 per cent of those who completed high school and 12.6 per cent of those with highest attainment of less than high school completion.”

The report observed that the “clear ordering” by educational qualification was not apparent in 2002 figures, and that the largest decline in home ownership was for the lowest education group (those with less than a high school qualification), falling from 33.1 per cent in 2002 to 12.6 per cent in 2014.

[Related: ANZ wins FHB Canstar Bank of the Year]

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Lucy Dean

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