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Housing for Young Adult Households
TENURE TYPE OF YOUNG ADULT HOUSEHOLDS — 1994–95 and 2003–04
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.
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.
TENURE AND LIVING ARRANGEMENTS OF YOUNG ADULT HOUSEHOLDS — 2003–04
HOME OWNERSHIP OF YOUNG ADULT HOUSEHOLDS — 1994–95 and 2003–04
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 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
TENURE OF YOUNG ADULT HOUSEHOLDS — 2003–04
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).
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.
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.