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30/04/2008 Note: Some percentages in this article have been recalculated to include non-responses to selected Census questions relating to household tenure type and landlord type.
TASMANIAN HOUSING INDICATORS
Economy and Employment
Housing Commitments (Owner Occupation)
First Home Buyers, Housing Finance
Occupied Private Dwellings by Tenure Type
Occupied Private Dwellings by Landlord Type
Median Household Housing Loan Repayment and Rent Paid (Tasmania)
The aim of this article is to contribute to the debate on recent increases in housing costs and house prices and assist informed decision making by providing information from some available ABS data sources in relation to this issue.
For most people, buying a house is the single largest financial decision they have to make. Recent economic trends in the country, solid economic growth, low unemployment rates and low interest rates have all contributed to the boom in housing prices. For home owners, an increase in house prices represents an increase in their wealth. However, for people looking to purchase their first home in a period of increasing housing prices, entry into the real estate market will require a larger commitment to servicing home loan repayments. Due to the segmented nature of the housing market, the difference in the regional characteristics as well as the differences in circumstances between the first home buyers, changeover buyers and rental investors, care should be taken when analysing housing costs and the impact on the individual household.
Housing costs are a major component of total living costs. People with relatively low economic resources (income and wealth) and high housing costs may experience hardship. Some people pay high rent or mortgage repayments, especially if they live in areas with high land and house values. Others have smaller rent or mortgage repayments because, for example, they live in subsidised housing or areas with relatively low property prices, or have relatively small mortgages.
In comparing households' housing costs with their income, it should be borne in mind that households have a variety of housing preferences. People may choose to live in an area with high land values because it is close to their place of employment and therefore they would have lower transport costs. Some people may choose to incur relatively high housing costs because they prefer a relatively high standard of housing, or wish to pay off a mortgage relatively rapidly as a form of investment. In any case, all repayments of mortgage principal are additions to the wealth of the household.
While housing costs can be a major component of total living costs, the difference between the housing costs of a larger household and a smaller household would not be expected to be as great as the difference in many other costs, such as food or clothing. In other words, larger households can be expected to experience economies of scale in the supply of housing. This means that if a larger household and smaller household both have the same standard of living, it could be expected that on average the larger household will have a lower housing costs/income ratio. Therefore relatively high housing costs/income ratios are more of a concern with respect to larger households than smaller households. This should be borne in mind when comparing ratios across different household sizes.
It should be stressed that care should be exercised when comparing data from the different sources due to the different methodologies used in these surveys.
The change in the population size, population characteristics and population movement can all have a strong influence on the supply/demand, and prices of housing. An increase in the population has a direct impact on the demand for more houses. Strong positive net migration into Tasmania in recent times, together with an increased birth rate, change in household composition and smaller households all have strengthened the demand for more houses.
ESTIMATED RESIDENT POPULATION
(Annual percentage change)
The number of households and their characteristics are important factors and have a direct influence on the housing demand. The number of households is increasing at a faster rate than the population number, and as the population ages, households are tending to decrease in size. This in return increases the pressure on the demand for houses.
In recent years Australia has enjoyed favourable economic and employment conditions, with solid economic growth and historically low unemployment. Economic and employment stability plays a vital role in people's confidence in making their financial decisions. Personal commitment to buy a house is a decision that people are more likely to make in a low unemployment and more stable economic environment.
AVERAGE WEEKLY GROSS HOUSEHOLD INCOME
Continuing strong demand for housing led to an increase in the building approvals in recent years. Since 2000-01, building approvals in Tasmania have been showing strong signs of recovery after a period of lesser activity in the late 1990s.
Since 2002 the house price index and the median price of established house transfers for established homes in Hobart have been showing a strong increase. While the house price index shows a continuing strong increase in prices of established houses, the number of established house transfers in the established house market shows a steep decline indicating tightening of the housing market.
PRICE INDEX OF ESTABLISHED HOMES
HOUSING COMMITMENTS (Owner Occupation)
In recent times, favourable economic conditions, low unemployment, low interest rates and strong economic growth, have all contributed to a strong business sentiment in Tasmania and the country as a whole. These conditions have created the environment for a strong increase in housing lending commitments. The increase in house prices across the country has resulted in an increase in the personal wealth of homeowners, however for first home buyers this situation has increased the amount many are required to borrow to enter the housing market.
FIRST HOME BUYERS, HOUSING FINANCE
In the first two years of this decade, there was a sharp increase in Tasmania in the number of first time home buyers, coinciding with the introduction of the Commonwealth First Home Owners Grant in 2000. However, after this peak in 2001-02, there was a noticeable decline which bottomed out in 2003-04. Since then, there has been some recovery in numbers in 2005-06.
OCCUPIED PRIVATE DWELLINGS BY TENURE TYPE
On the 2006 Census night the proportion of occupied private dwellings that were fully owned by their occupants, in relative terms, had decreased in Tasmania as well as in Australia. This change may in part reflect the increasing uptake of low-cost financing options which allow households to extend their existing home mortgages for purposes other than the original home purchase.
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OCCUPIED PRIVATE DWELLINGS BY LANDLORD TYPE
The 2006 Census results showed there were an increased number of dwellings, in relative terms, in Tasmania being rented from real estate agents and fewer rented from the state housing authority. A general decline in public housing rental stock and greater access to Commonwealth Rent Assistance (CRA) payments may have influenced this change in direction.
MEDIAN HOUSEHOLD HOUSING LOAN REPAYMENT AND RENT PAID (Tasmania)
The results of the 2006 Census show Tasmanian households spent more on housing costs than in 2001 (after adjustment for inflation). Median housing loan repayments and median rent in Tasmania, have increased in real terms over 2001 Census estimates. However, the effect of Commonwealth Rent Assistance (CRA) should be taken into consideration when comparing the housing costs of private renters to those of other households. Eligible social security recipients may receive a non-taxable income supplement in the form of CRA if the private rent they pay is above a threshold level.
MEDIAN HOUSING LOAN REPAYMENT AND RENT PAID
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