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4102.0 - Australian Social Trends, 2006  
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Contents >> Housing >> Housing for Young Adult Households

Housing for Young Adult Households

Between 1994–95 and 2003–04, the proportion of young adult households who owned their home fell from 48% to 44%.

Young adults typically experience a number of transitions in their living arrangements such as the change from living with parents to independent living and, perhaps, buying their own home. These transitions are related to other major milestones such as starting or finishing education, entering the labour force, partnering and having children. (EndNote 1)

Since the late 1970s, young Australians have tended to reach some of these milestones in their life cycles at later ages (see Australian Social Trends 2005, People in their 20s: then and now), and these changes are reflected in their housing arrangements. For example, the median age of first home buyer households has increased over the past nine years, from 30.5 years in 1994–95 to 31.8 years in 2003–04.

Young adults are more mobile than people in other age groups. In the 12 months prior to the 2001 Census, 34% of people aged 18–34 years had moved address, compared with 12% for the population aged over 34 years. Research suggests that young people's housing careers (or housing pathways) will be increasingly varied as they enter different stages in their life cycles.(EndNote 2)

This article focuses on housing tenure (such as renting from a private landlord or owning a house with a mortgage) of young adult households. It also discusses the characteristics of the households such as their living arrangements, income and housing costs associated with different types of tenure.

TENURE TYPE OF YOUNG ADULT HOUSEHOLDS — 1994–95 and 2003–04

1994–95
2003–04


Tenure type
'000
%
'000
%

Owner
795.2
47.7
769.7
44.3
Owner without a mortgage
142.9
8.6
77.4
4.5
Owner with mortgage
652.4
39.2
692.2
39.9
Renter(a)
801.8
48.1
904.6
52.1
State/territory housing authority
89.4
5.4
61.2
3.5
Private landlord
667.7
40.1
803.7
46.3
Total(b)
1 665.5
100.0
1 735.7
100.0

(a) Includes other landlord type.
(b) Includes other tenure type.
Source: ABS 1994–95 and 2003–04 Surveys of Income and Housing.

Young adults and housing

The majority of this article draws on data from the ABS 1994–95 and 2003–04 Surveys of Income and Housing (SIH).

Young adults in this article are persons aged 18–34 years.

Young adult households refers to households with a reference person aged 18–34 years.

The reference person for each household is chosen by applying, to all household members aged 15 years and over, the selection criteria below, in the order listed, until a single reference person is identified:
  • one of the partners in a registered or de facto marriage, with dependent children
  • one of the partners in a registered or de facto marriage, without dependent children
  • a lone parent with dependent children
  • the person with the highest income
  • the eldest person.

The nature of a household's legal right to occupy the dwelling in which the household members usually reside is known as tenure type. Tenure is based on whether the dwelling is owned outright, is being purchased, is having rent paid to live in the dwelling or has some other occupying arrangement.

In Australia, the concept of the housing career has been used to explain the strong connection between a person's housing tenure and their life cycle stage, and the movement between tenure types over a lifetime.(EndNote 2)


YOUNG ADULTS

In 2003–04, there were 4.7 million young adults (aged 18–34 years) in Australia and 71% (3.3 million) of them lived away from their parent(s). This was similar to the situation in 1994–95 (70%). Of the young adults living away from their parents in 2003–04, the great majority (88% or
2.9 million) were living in young adult households (i.e. households where the reference person was aged 18–34 years).


HOUSING TENURE PATTERNS

In 2003–04, there were 1.7 million young adult households, making up 22% of all households. Between 1994–95 and 2003–04, the proportion of young adult households who owned their home fell from 48% to 44%. The proportion who owned their home with a mortgage remained around 40%, while the proportion that owned their home outright decreased from 9% to 5%.

Home ownership is a widely held aspiration in Australia, and there has been debate over the fall in the rate of home ownership for those aged less than 35 years. Some argue that the fall is due to declining affordability which could mean that a higher proportion of Australians will never purchase a home.(EndNote 3) Others argue that home purchase is being postponed, and not cancelled outright, due to changes in the timing of certain life cycle events such as partnering and having children.(EndNote 1)

TENURE AND HOUSEHOLD COMPOSITION

Tenure patterns are often linked to life cycle stages and can coincide with particular household compositions. In general, home ownership is more prevalent among couple families, either with or without children. Renting, on the other hand, is more common among one parent, lone person and group households.

…HOME OWNERS

In 2003–04, home ownership among young adult households was highest (63%) among couple families with dependent children. Couple only households had the second highest home ownership with 57%, followed by other family households with 46%. Other family households were the household type with the highest level of outright ownership with 19% owning their homes without a mortgage compared with 5% of all young adult households. The other family households (who make up 9% of young adult households) are a diverse group including multi-family households, sibling households and couples living with other adults.

While home ownership rates for most types of family households decreased between 1994–95 and 2003–04, home ownership for other family households moved against this overall trend and increased from 38% to 46% over the period.


Living arrangements

A family consists of two or more people, one of whom is at least 15 years of age, who are related by blood, marriage (registered or de facto), adoption, step or fostering and who usually live in the same household.

A household is a group of related or unrelated people who usually live in the same dwelling.

A couple is two people in a registered or de facto marriage who usually live together.

A one family household consisting of a couple with at least one dependent child is a couple family with dependent children household.

A one parent with dependent children household is a one family household comprising a lone parent with at least one dependent child.

Other family households make up the balance (9% of the young adult households in 2003–04). These included: 5% other one family households (such as sibling households); 2% couples without dependent children, but with non-dependent children or other persons and 2% multi-family households.

Lone person households consist of a person living alone.

A group household is a household consisting of two or more unrelated people where all people are aged 15 years and over and there are no couple relationships, parent-child relationships or other blood relationships between household members.

TENURE AND LIVING ARRANGEMENTS OF YOUNG ADULT HOUSEHOLDS — 2003–04

Couple family
with dependent children
One parent family with dependent children
Couple only
Other family households(a)
Lone person
Group household
Total

%
%
%
%
%
%
%

Owner
63.1
19.7
57.4
45.7
28.4
14.6
44.3
    Owner without a mortgage
4.6
2.1
2.9
18.8
3.0
0.7
4.5
    Owner with mortgage
58.6
17.5
54.5
26.9
25.4
13.9
39.9
Renter(b)
34.1
77.8
38.4
50.5
66.6
83.2
52.1
    State/territory housing authority
1.8
20.3
0.3
2.7
3.4
0.7
3.5
    Private landlord
29.9
53.3
35.7
46.7
61.4
80.6
46.3
Total(c)
100.0
100.0
100.0
100.0
100.0
100.0
100.0

'000
'000
'000
'000
'000
'000
'000
Total number of households
493.5
170.5
410.0
148.3
336.1
177.3
1 735.7

(a) Includes other single family households and multiple family households.
(b) Includes other landlord type.
(c) Includes other tenure type.
Source: ABS 2003–04 Survey of Income and Housing.

HOME OWNERSHIP OF YOUNG ADULT HOUSEHOLDS — 1994–95 and 2003–04

GRAPH: HOME OWNERSHIP OF YOUNG ADULT HOUSEHOLDS — 1994–95 and 2003–04



…RENTERS

In 2003–04, group households had the highest rate of renting among young adult households at 83%. More than three-quarters (78%) of one parent families with dependent children were renting, as were two-thirds (67%) of lone person households. One parent families had the highest rate of renting public housing with 20% of all one parent families with dependent children renting from state/territory housing authorities.

In contrast with the decline in home ownership from 1994–95 to 2003–04, levels of renting have increased across all household compositions except the other family households.


Housing costs

Housing costs refer to mortgage repayments and general and water rates for owners, and rent for others. Housing costs include mortgage/loan repayment if the purpose of the loan were primarily to buy, build, add to or alter the occupied dwelling. Housing costs are measured on a gross basis i.e. before deducting refunds or subsidies such as rent assistance received as income support from Centrelink. Maintenance and repair costs are not included.

Commonwealth rent assistance (CRA) is a non-taxable supplementary payment paid through Centrelink to help people on low incomes with the cost of private rental housing. It is only available to income support recipients (including those who receive more than the base rate of Family Tax Benefit Part A) who rent in the private market and pay rent that is more than a set minimum.


HOUSING COSTS

Housing costs can be a major part of a household's budget and can influence the amount of household income that is available for other living expenses. Housing costs vary according to different tenure type and household composition. Average housing costs are lowest for owners without a mortgage, highest for owners with a mortgage and fall somewhere in between for renters.

In 2003–04 the mean weekly cost of housing for young adult owner households with a mortgage was $348, which was equivalent to 24% of their average gross weekly household income. This compares with 23% of gross household income spent on housing costs in 1994–95, indicating that housing costs for young mortgagees have largely kept pace with household income.

Young adult households with mortgages in capital cities spent 24% of their income on housing costs, compared with 22% for those with mortgages in the non-capital city regions in 2003–04.

HOUSING COSTS FOR YOUNG ADULT HOUSEHOLDS — 2003–04

Mean housing costs as a proportion of gross income
Mean weekly housing costs


1994–95
2003–04
2003–04
Tenure
%
%
$

Owner without mortgage
2.2
1.8
23
Owner with mortgage
23.2
23.7
348
Renter – state/territory housing authority
17.6
19.0
91
Renter – private landlord
(a)
(a)
199

(a) Housing costs as a proportion of gross income for private renters are not published because a proportion of private renters are in receipt of rent assistance and they are generally unable to report CRA separately from other government income support.

Source: ABS 1994–95 and 2003–04 Surveys of Income and Housing.

TENURE OF YOUNG ADULT HOUSEHOLDS — 2003–04
GRAPH: TENURE OF YOUNG ADULT HOUSEHOLDS — 2003–04


INCOME

A majority (60%) of young adult households who had high equivalised disposable income owned their homes in 2003–04. This compares with ownership rates of 47% for middle income households and 35% for low income households. Conversely, 62% of households in the low income group were renters compared with 51% of middle income and 37% of high income households.

This tenure pattern was also reflected in the main source of household income. Around half (51%) of households whose main source was from wage or salary or their own unincorporated business owned their home. In contrast, more than three-quarters (77%) of households whose main source of income was government pensions or allowances were renter households.

In three-quarters (75%) of young adult households the reference person was either employed full-time or self-employed. In these households the rate of home ownership was 52%. Households that had an unemployed person or a full-time student reference person were overwhelmingly renter households (87% and 92% respectively).

DWELLING TYPE

Separate houses were the most common type of dwelling occupied by young adult households in 2003–04. Just over two-thirds (68%) of young adults households lived in separate houses, one-fifth (20%) lived in flats, units and apartments, while 11% lived in semi-detached, row or town houses. Not surprisingly, greater proportions of young adult households living outside the capital cities lived in separate houses (81%) compared with their capital city counterparts (61%).

The type of dwelling lived in was strongly associated with both tenure type and household composition. Among young adult households who owned their home, 87% owned a separate house. In contrast only around half (52%) of households who rented lived in a separate house.

Almost all (95%) of couple families with dependent children who owned their home lived in separate houses. In contrast just 28% of lone person renter households lived in a separate house, residing instead in flats, units and apartments (53%) or semi-detached, row or town houses (18%)

FIRST HOME BUYERS

In 2003–04 there were 271,000 (13%) young adult households who had bought their first home within the previous three years. These households made up 69% of all first home buyer households in 2003–04 compared with 73% in 1994–95.

New houses made up almost one-fifth (19%) of all first homes purchased by young adult households. This was around the same proportion of new houses purchased by young adult households who were changing homes (19%). Older first home buyer households (with a reference person aged 35 years and over) had a similar proportion (20%) which purchased a new home as their first home.

The median value of first homes purchased by young adult households in the three years prior to 2003–04 was $250,000 (as valued by the householder) and the median value of their mortgages was $148,000. The median value of mortgages of young adult first home buyers (who purchased in the three years prior to 2003–04) was equivalent to 2.9 times the annual average earnings of a male full-time worker in that financial year, an increase from the ratio of 2.0 in 1994–95. However, over this period there has been a fall in home loan interest rates and an increase in the average number of income earners per household. These factors should also be taken into account in any overall assessment of change in housing affordability.

ENDNOTES
1 Baxter, J and McDonald, P 2004, Trends in home ownership rates in Australia: the relative importance of affordability trends and changes in population composition Australian Housing and Urban Research Institute, ANU Research Centre, Canberra.
2 Beer, A, Faulkner, D and Gabriel, M 2006, 21st Century Housing Careers and Australia's Housing Future: Literature Review, Sydney, Australian Housing and Urban Research Institute, Southern Research Centre.
3 Yates, J 2002, Housing implications of social, spatial and structural change, Australian Housing and Urban Research Institute, Sydney Research Centre, Sydney.


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