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Housing Stock: Home ownership
In 1994, of the 6.8 million households in Australia, 42% were outright owners, 28% were purchasers, 6% were public renters and 21% were other renters. Over the previous one and a half decades the combined proportion of households who were outright owners or purchasers of their homes had been stable at approximately 70%. However, there was a shift in the respective proportions owning outright and purchasing. Between 1980 and 1994, the proportion of outright owners increased by 4 percentage points and the proportion of purchasers decreased by 5 percentage points. This partly reflects the overall ageing of the population, with households consisting of older people being more likely to own their homes outright.
Tenure type varies with population age structure and differences in housing affordability (see Population - State summary tables and Housing - State summary tables). Tasmania had the highest proportion of households who owned their homes outright (45%), reflecting both the older median age of its population (33 years) and also its more affordable housing. The Northern Territory had the lowest proportion of households who owned their homes outright (14%) and the youngest median age (28 years). More than half of the households in the Northern Territory rented their homes (52%), significantly higher than the national figure of 28%. 21% of households in the Northern Territory were public renters, reflecting the higher proportion of Indigenous households (see Housing conditions of Indigenous people). The Australian Capital Territory had the highest proportion of households purchasing their homes (36%), reflecting the relatively young median age (30 years) of its population.
TRENDS IN TENURE TYPE
HOUSEHOLD TENURE TYPE BY STATE, 1994
In their late teens and early 20s people often leave the parental home and start renting. In 1994, 77% of households with a reference person aged 15-24 years were renting. By their mid 20s and 30s people are likely to start buying their first home and in 1994, 56% of recent first home buyer households had a reference person aged 25-34. By their 40s and 50s, many people have paid off their mortgage. In 1994, 50% of households with a reference person aged 45-54 years owned their homes outright. At age 65 and over, this had increased to 79%.
TENURE TYPE BY AGE OF HOUSEHOLD REFERENCE PERSON, 1994Source: Australian Housing Survey (unpublished data).
Outright owners are generally older than purchasers and renters, reflecting the time taken to repay a housing loan. Many are in the later stages of the life-cycle and have children who have left home. In 1994, the median age of reference persons in outright owner households was 59 years. 81% of people who owned their homes outright were aged 45 or over.
Couple only households are more likely than other household types to own their homes. In 1994, 57% of couple only households owned their homes outright, compared to 37% of two parent households and 29% of one parent households.
Most outright owner households (90%) lived in separate houses, even though other types of housing made up 21% of the total housing stock.
Purchasers are in an earlier stage of the life-cycle than outright owners and many have children living at home. In 1994, the median age of reference persons who were purchasers was 39 years. Almost 50% of reference persons aged 35-44 years were purchasing a home. Over half (54%) of purchasers in 1994 were two parent households.
Of two parent households, 44% were purchasing their homes. In contrast, 20% of one parent households were purchasing and 49% were renting. This reflects the economic disadvantage of one parent households and the difficulty they may have in establishing themselves as purchasers.
Most purchasers (91%) were buying separate houses, but 5% were buying semidetached, row or terrace houses, or townhouses and 4% were buying flats, units, or apartments.
TENURE TYPE OF SELECTED HOUSEHOLD TYPES, 1994
Recent first home buyers
In 1994, 13% (895,000) of total households were recent home buyers. Of these, 37% (334,000) were first home buyers. Many Australians buy their first homes at an early stage in their lives. The median age of reference persons in recent first home buyer households in 1994 was 30 years. Over 70% were under 35, and 16% were under 25.
Recent first home buyer households in 1994 were most likely to consist of couple households, with or without children. 34% were couple only households and another 34% were couple households with dependent and/or non-dependant children. 16% of recent first home buyer households were lone person households and 5% were one parent households.
82% of recent first home buyer households purchased separate houses, 9% purchased semi-detached, row or terrace houses, or townhouses, and 9% purchased flats, units or apartments. The median price paid by recent first home buyers for separate houses was $106,000. 13% bought houses priced over $160,000. The majority of recent first home buyers were paying off a loan or mortgage for their dwellings. Only 11% bought their homes outright.
Almost two-thirds (63%) of recent first home buyer households had three bedrooms while 13% had four or more bedrooms. Slightly less than one-quarter (22%) had more than one bathroom. About three-quarters of recent first home buyers bought established dwellings.
Recent changeover buyers
In 1994, over half a million households, or 8% of all households, were recent changeover buyers. For many people, increasing age and the progression through the life-cycle means changing family or work arrangements and consequently different housing needs.
The median age of reference persons in recent changeover buyer households was 43 years. Recent changeover buyer households in 1994 were most likely to consist of couple households, with or without children. 28% were couple only households and another 42% were couple households with dependent and/or non-dependant children living at home. 17% of recent changeover buyer households were lone person households and 5% were one parent households.
The increasing affluence of many people through the life-cycle is reflected in the greater price paid by recent changeover buyers for their dwellings compared to recent first home buyers. Generally the changeover homes purchased are of higher quality than those purchased by first home buyers. 29% of recent changeover buyer households had four or more bedrooms and 43% had two or more bathrooms.
The median price paid by recent changeover buyers for all dwelling types was $134,000. This price is 26% higher than that paid by recent first home buyers for their homes. 32% of recent changeover buyers purchased new dwellings and 24% paid more than $185,000 for their homes. 35% of recent changeover buyers bought their new homes outright.
RECENT HOME BUYER HOUSEHOLDS, 1994
Source: Australian Housing Survey: Selected Findings (cat. no. 4181.0)
There is no single standard measure of housing affordability. One measure used in housing research is the ratio of housing costs to income2. Households can be considered to have affordability problems if they are in the lowest two income quintiles (each quintile contains 20% of total households ranked on household income) and spend more than 30% of their incomes on housing costs.
In 1994, 30% of households in the lowest quintile and 25% of households in the second quintile spent more than 30% of their gross weekly incomes on housing. However, within these two groups, housing affordability problems were not equally distributed across different tenure types.
14% of outright owners in the lowest quintile and 4% of outright owners in the second quintile spent more than 30% of their gross weekly incomes on housing. In contrast, over half of purchasers and about half of renters in the lowest two quintiles spent more than 30% of their gross weekly incomes on housing costs.
In the lowest and second quintiles recent changeover buyers experienced fewer housing affordability problems than recent first home buyers. 27% of recent changeover buyers in both the lowest and second quintiles spent over 30% of their gross weekly incomes on housing. In comparison over 50% of recent first home buyers in both the lowest and second quintiles spent over 30% of their gross weekly incomes on housing.
Housing affordability problems experienced by some purchasers may be voluntary. This is because purchasers may choose to pay off a mortgage that is difficult to service in the short-term, but which will ultimately result in the long-term advantage of outright ownership.
HOUSEHOLDS SPENDING MORE THAN 30% OF THEIR GROSS WEEKLY INCOMES ON HOUSING, 1994
1 National Housing Strategy (1992) The Role of Home Ownership Background paper No. 10.
2 National Housing Strategy (1992) National Housing Strategy: summary of papers.