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Wealth disparity to deteriorate home ownership

Rates of home ownership around the world are set to decline over the next 20 years, as wealth inequality grows, new AHURI research has shown.

According to a study for the Australian Housing and Urban Research Institute (AHURI), undertaken by researchers at Swinburne University of Technology, rates of home ownership for younger generations (aged 25-44) are on the decline around the world.

While rates of home ownership have held strong in Australia over the last number of decades (recorded at 67 per cent in 2016 and 68 per cent in 1976, for example), rates could drop to 60 per cent by 2040, and even lower for those aged under 55, the institute suggested.

The AHURI stated that the current “seemingly high” levels of home ownership in Australia work to “mask the long-term problem” of housing inequality between older and younger generations, exacerbated by wealth inequality.

The lead researcher on the study, Professor Terry Burke, suggested that the issues of housing inequality would come to light over the next 20 years, and the trend could result in a wide range of social disruption.


“A housing system in which one half (predominantly older home owners) acquires wealth and the other half (generally younger renters) doesn’t is a recipe for long-term social problems,” Professor Burke said.

The researchers found this deterioration of home ownership to be a result of a range of complex and interconnected elements, including increasing property values and general unaffordability, the increase in casualised employment, the introduction of financial and tax benefits designed to encourage and favour rental investors, and the inability of housing supply to match population demand.

Another factor found to contribute to this phenomenon around the world was said to be the “financialisation of housing”.

“The financialisation of housing is an international factor and is best understood as the process where housing is treated as a commodity to be invested in rather than a home, meaning more and more money flows into housing but without any necessary improvement in housing supply or quality,” Professor Burke said.

While some anticipate that the COVID-19 economic crisis will lead to a downturn in property prices, the AHURI has noted that the falls in property prices seen globally following the global financial crisis did not lead to an increase in home ownership.

Fiscal austerity, lack of finance and weakened household income, as well as the prevalence of property investors meant that home ownership in most Western countries “fell sharply” following the GFC, rather than increased, according to the researchers.

Professor Burke stated that, in keeping with the new environment, legislative changes would need to be made to protect the rights of Australians who are incapable of getting into the property market, or the risk of social disruption caused by housing and wealth inequality could be heightened.

“Broadly, Australia now has an institutional environment which no longer supports ownership as it did in the past,” Professor Burke said. 

“This means the housing system will become more inequitable irrespective of what incremental housing policy reforms are made. Given this, we have to rethink what sort of housing system is appropriate for Australia’s future.”

He continued: “Either we embrace fundamental and broad-based reforms to rebuild ownership or we accept a retreat from its historical dominance, moving to a system which has more balance between rental and ownership – what we can call a dual tenure system.”

The AHURI noted that policy instruments will be required to give renters the opportunity of greater security, affordability and liveability under private rental agreements, while also investing in social housing.

“But policies beyond housing are also important, including enabling renters to create wealth and/or processes to redistribute some of the asset-generated wealth of owners,” the AHURI added.

Governments would also need to supply greater income support for households in older age, as pension-age residents are required to rent into retirement.

The institute concluded by saying that: “[N]one of these will be achieved unless Australia has a national housing and urban strategy to facilitate a policy conversation around our housing future.”

[Related: Refinance activity surges amid COVID-19]

Wealth disparity to deteriorate home ownership

Hannah Dowling

Hannah Dowling is a journalist for mortgage business, the leading source of news, opinion and strategy for professionals working in the mortgage industry.

Prior to joining the team at Mortgage Business, Hannah worked as a content producer for a podcast catering to property investors. She also spent 6 years working in the real estate sector at a local agency. 

Hannah graduated from Macquarie University with a Bachelor of Media and Journalism. 

You can email Hannah at: This email address is being protected from spambots. You need JavaScript enabled to view it.

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