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4102.0 - Australian Social Trends, 2002  
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Contents >> Housing >> Housing Arrangements: Renter households

Housing Arrangements: Renter households

In 1999, a quarter of all Australian households rented their home. The majority of renter households were renting from a private landlord.

Renting, especially privately, is sometimes viewed as a transitory phase between leaving the parental home and purchasing one’s own. Many renters aspire to home ownership because it can provide greater security of tenure, improved lifestyle and an investment for the future.1 Despite this, the rental sector grew at a faster rate than home ownership between 1986 and 1996.2

Young people are now likely to start their housing career later in life and to remain renting for a longer period than in the past.3 This can be attributed to factors such as the delay in family formation as well as longer periods spent studying, compulsory Higher Education Contribution Scheme (HECS) repayments, increased superannuation payments and reduced job stability, all of which result in lower incomes and a reduced ability to save towards a home deposit.1

There has been a decline in the affordability of home purchase in recent decades.4 Associated with this is an increased reliance on dual incomes to afford home purchase, at a time when lone-person and lone-parent households (which are characterised by single incomes) are becoming more common. Government policy encourages home ownership through, for example, grants and tax benefits, but also provides rental assistance for those in need. While 5% of households rent from State housing authorities, increasingly rental assistance is provided in the form of income support rather than provision of government (State housing authority) housing.4

In addition, a small but increasing proportion of people rent through choice. Some influencing factors include a shift to reliance on superannuation, rather than one’s home, as the main source of investment for retirement, and increased job mobility.1


Housing and tenure type
Data in this article come from the 1999 ABS Australian Housing Survey.

Private renter households are those which pay rent to a private landlord (who is either a real estate agent or another person not in the same dwelling).

State housing authority renter households are those which pay rent to the government housing authority in their State or Territory.

Other renter households are those which pay rent to the owner or manager of a caravan park; their employer, a housing co-op, community or church group; or another landlord not included elsewhere.

The reference person for each household is chosen by using the following criteria, in order of precedence:
  • the person with the highest tenure type ranked by renter then other tenure; then
  • the person with the highest income; and
  • the eldest person.


Renter households
There were nearly 2.0 million renter households in Australia in 1999, representing a quarter of all households. This article focusses on private renter households (almost 1.5 million) and those renting from a State housing authority (369,000) which together account for 93% of all renter households. The remaining 7% (134,600 households) include those renting from other landlords.

Private renter households represented 20% of all households and 74% of all renter households in 1999. In the same year, those renting from State housing authorities represented 5% of all households and 19% of renter households. In recent decades, households renting privately have represented a slowly increasing proportion of all households, while the proportion of State housing authority renters has remained relatively stable.

TENURE AND LANDLORD TYPES - 1999

All households

‘000
%

Tenure type
    Owner(a)
5,056.4
70.1
    Renter
1,966.6
27.2
    Other
193.9
2.7
All households
7,216.9
100.0
Landlord type(b)
    Private
1,463.2
74.4
    State housing authority
368.8
18.8
    Other
134.6
6.8
All renter households
1,966.6
100.0

(a) Includes owners with and without a mortgage.
(b) Includes renter households only.

Source: Australian Housing Survey: Housing Characteristics, Costs and Conditions, 1999 (ABS cat. no. 4182.0).


Age
Households where the reference person was aged under 35 years made up over half of all private renter households in 1999. Just over 70% of households with a reference person aged 15-24 years rented privately. This dropped to 22% of households with a reference person aged 35-44 years, and 7% of those where the reference person was aged 65 years or over. The age profile of private renters supports the notion that renting is often a transitory phase. In contrast, similar proportions (between 4% and 7%) of all age groups rented from a State housing authority.

AGE OF REFERENCE PERSON IN RENTER HOUSEHOLDS(a) - 1999

(a) As a proportion of all households in this age group.

Source: ABS 1999 Australian Housing Survey.


Renting through life-cycle stages
The age of a household's reference person is generally linked to its life-cycle stage. As households progress through the life cycle, their composition and the needs of their members change. Their financial situations also tend to vary with these changes, as do their tenure types (see Australian Social Trends 2001, Housing experience through life-cycle stages).

As with households which had young reference persons, those in the early life-cycle stages were the most likely to be renting privately. Group households were the most likely to be renters, with 68% renting from a private landlord. Over half of all young (under 35 years) lone-person households also rented privately. The high proportion of renters for these life-cycle groups reflects other characteristics of these households, such as their below-average incomes and the higher proportion of household members who are studying. In contrast, few young lone-person (2%) or group households (5%) rented from a State housing authority.

The next stages in the life cycle are linked with the formation and growth of families. Associated with this is a decrease in the proportion who rent privately, as home ownership increases. Young couple-only households were more likely than couple households with small children to rent privately (41% and 25% respectively). However, couples with children aged 15-24 years were unlikely to be renting privately (9%). As with the earlier life-cycle stages, a small proportion of each group rented from a State housing authority.

Lone-parent households tend not to follow the general pattern of progressing through renting to home ownership, because of their reduced incomes, as frequently they have been disrupted by the breakdown of a marriage and the division of household assets. The 22% of lone parents who rented from a State housing authority was higher than for any other group. In addition, a high proportion (38%) were private renters.

Couple households in the later life-cycle stages were the most likely to have purchased their own home and so were less likely to be renting. Older couple-only households were the least likely to be renting privately (3%) while older lone-person households were somewhat more likely (7%). Older lone-person households were also the second most likely (after lone-parent households) to rent from a State housing authority (10%), reflecting their lower (single) incomes.

RENTER HOUSEHOLDS AND LIFE CYCLE - 1999

Landlord type

Private
State housing authority
Selected life-cycle groups
%(a)
%(a)

    Group households
68.1
2.1
    Lone person under 35 years
52.3
4.9
    Couple only, reference person under 35 years
41.0
0.7
    Couple with eldest child under 5 years
25.3
1.5
    Couple with dependant children only, eldest child 15-24 years(b)
8.7
1.5
    Lone parent with dependant children
37.5
21.6
    Couple only, reference person 65 years or over
3.2
3.3
    Lone person 65 years or over
7.1
10.0
All households(c)
20.3
5.1

(a) As a proportion of all households in this life-cycle group.
(b) Dependant children are aged under 15 years or full-time students aged 15 to 24 years.
(c) Includes life-cycle groups not defined above.

Source: ABS 1999 Australian Housing Survey.


Income and renting costs
The amount of rent a household pays generally increases with income. On average, privately renting households paid more than those renting from a State housing authority. However, renter households spent a similar proportion of their income on rent regardless of landlord type (on average, about 19%).

Households renting from a State housing authority spent an average of $66 per week on rent, or 18% of their total income. They were more likely to be in the lower income quintiles, in keeping with the eligibility requirements for housing assistance.

Private renters were more evenly spread across the income quintiles, with a slight concentration around the middle quintiles. Their average weekly rent increased from $125 for households in the lowest income quintile to $240 for those in the highest. While rent payments increased with income, the proportion of income spent on rent decreased, with 64% for those in the lowest income quintile and 11% for those in the highest income quintile. The lower costs for households in the lower quintiles are related to their renting at the lower end of the rental market. For the one-third of private renters who received rental assistance, this does much to balance the differences in the proportion of income spent on housing costs.

The comparatively high proportion of income spent on rent by low income households can pose affordability problems. Those in the lowest two income quintiles who spent more than 30% of their income on rent can be said to be suffering from housing-related income stress (see Australian Social Trends 2000, Housing costs). In 1999, 28% of private renters (or 68% of those in the lowest two quintiles) and 8% of State housing authority renters were in this group.

The likelihood of a change to rent payments since a household first occupied its current dwelling increased with their length of residence. In 1999, privately renting households were less likely than those renting from a State housing authority to have experienced a change in rent since they occupied their current dwelling. This is partly due to the shorter period of residence of private renter households. Rent payments had changed for 16% of private renters and 72% of State housing authority renters. Most of these changes were increases. The most common reasons identified for changes to private renters’ payments were a new lease (17%) or a tight rental market (11%). In contrast, for State housing authority renters it was a change in income (68%) as their rents are regularly adjusted according to their income (hence the greater overall propensity for their rent to change).4

RENTER HOUSEHOLDS AND INCOME QUINTILES - 1999

Mean weekly rent
Rent as a proportion of income
Number of households
$
%
‘000

Private renter households
    Income quintiles(a)
      Lowest
125
64.4
248.5
      Second
143
32.0
345.7
      Third
156
20.2
373.8
      Fourth
175
14.7
284.6
      Highest
240
11.3
210.6
All private renter households
163
18.7
1,463.2
All State housing authority renter households
66
18.4
368.8

(a) Income quintiles are formed by ranking all households in ascending order by level of income, then dividing them into five groups, each containing 20% of the population.

Source: Australian Housing Survey: Housing Characteristics, Costs and Conditions, 1999 (ABS cat. no. 4182.0).


Rental arrangements and changes
Renters, especially those renting from a private landlord, tend to be more mobile than owners. Further, renting privately is also closely linked with younger people, who are themselves experiencing many changes, such as completing study, finding employment and forming partnerships. On the other hand, households renting from a State housing authority are less likely to contain young adults, are less mobile and, once in a dwelling, are unlikely to move unless they move out of government housing. In 1999, 717,000 households who had at some stage rented from a State housing authority, were currently living in other tenures.

Nearly half of private renter households had a fixed term lease and one-quarter had a month-by-month lease. In comparison, 83% of households renting from a State housing authority had indefinite tenure. In keeping with this, a higher proportion of State housing authority renters were satisfied with their security of tenure (94% compared with 86% of private renters). However, they were slightly less likely to be satisfied with the service provided by their landlord (72% compared with 76%).

RENTER HOUSEHOLDS WHOSE RENT HAD CHANGED(a) - 1999

(a) Since members first occupied their current dwelling.

Source: ABS 1999 Australian Housing Survey.


In 1999, almost half of private renter households had lived in their current dwelling for less than one year and 88% had moved in the previous five years. They were also more likely than State housing authority renters to have experienced changes to the composition of their household in the previous year (34% compared with 15%). The higher propensity for change is associated with the high proportions of private renters who are in the early life-cycle stages and living in group households, both of which are characterised by change (see Australian Social Trends 2002, Transitions in living arrangements).

In keeping with the high proportion of households renting from a State housing authority who had indefinite tenure, in 1999 52% had lived in their current dwelling for more than five years, with just 16% having been there for less than one year. Households renting from a State housing authority were more likely to have had the same household composition over the last year (86%) than private renter households (66%).

CHARACTERISTICS OF RENTER HOUSEHOLDS - 1999

Landlord type

Private
State housing authority
%
%

Had a fixed-term lease
47.6
5.9
Had a month-by-month lease
25.1
6.6
Had indefinite tenure
22.5
82.6
Satisfied with security of tenure
86.0
94.4
Satisfied with service provided by landlord
76.0
72.0
Change to household composition in previous year
33.6
14.5
Had lived in current dwelling for less than 1 year
47.7
15.9
Had lived in current dwelling for 5 years or more
12.4
51.7
Tenure of previous dwelling same as current dwelling
59.4
35.8
Owned another residential dwelling
11.0
**

Source: ABS 1999 Australian Housing Survey.


Of private renters who had moved in the past eight years, over half had rented their previous dwelling privately, while a smaller proportion had owned their previous dwelling. Of those currently renting from a State housing authority who had moved in the past eight years, 36% had remained in government housing, while a slightly larger group (37%) had rented their previous dwelling privately.

There is a relatively small group of private renters who have made a decision to rent, for lifestyle, financial or other reasons. The fact that in 1999, 11% of private renters owned a residential dwelling other than their current home, supports this notion.


GEOGRAPHY
There was some variation between the States and Territories in the proportion of households who rented in 1999. Victoria had the lowest proportion of renters (22%), while the two Territories had the highest proportions - 50% in the Northern Territory and 31% in the Australian Capital Territory. Australia-wide, similar proportions of capital city and balance of State residents were renters (28% and 26% respectively).

DISTRIBUTION OF RENTERS - 1999

%
‘000

State/Territory
    New South Wales
28.3
684.2
    Victoria
22.4
394.0
    Queensland
29.8
399.2
    South Australia
27.6
169.8
    Western Australia
28.6
206.4
    Tasmania
26.2
49.4
    Australian Capital Territory
30.5
36.9
    Northern Territory
50.4
26.7
Area
    Capital city
27.7
1,269.4
    Balance of State
26.5
697.2
Australia
27.3
1,966.6

Source: ABS 1999 Australian Housing Survey.


Endnotes
1 Baum, S. and Wulff, M. 2001, Housing aspirations of Australian households: Positioning paper, Australian Housing and Urban Research Institute.

2 Australian Institute of Health and Welfare 2001, Australia’s Welfare 2001, AIHW, Canberra.

3 Committee for Economic Development of Australia 2001, Future Directions in Australian Social Policy, Committee for Economic Development of Australia.

4 Wulff, M. 2000, 'Changing families, changing households: Australian housing assistance policy', in Reshaping Australian Social Policy: Changes in Work, Welfare and Families, Committee for Economic Development of Australia.


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