First Home Owner

Home ownership in Australia in decline for three decades: Grattan Institute

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The number of Australian homeowners has been falling for three decades, and it could take just as long to turn the situation around, researchers say.

Independent think tank the Grattan Institute analysed census data and found home ownership was declining among people aged under 55.

It has prompted warnings many young Australians are destined to be "permanent renters".

In 1986, 58 per cent of 25 to 34-year-olds owned their home. That number is now 45 per cent, and the drop has been particularly dramatic in the last decade.

"That might have been written off as a result of the delay in household formation — people are getting married and starting families later, so they're buying homes later — but we see the same trends amongst older age groups as well," said Brendan Coates, a fellow at the Grattan Institute.

Ownership in the 35–44 and 45–54 age groups has also fallen over the same period.

A graph showing the decline in home ownership in the past 36 years. Photo: Mortgages now represent a quarter of household incomes. (Supplied: Grattan Institute)

Australia's housing boom is no secret, and has been going for 20 years, Mr Coates said. It has been more acute in recent years, with house prices across the country rising 40 per cent in the past five years.

"What these numbers show is that there's clearly a problem linked to housing affordability. It shows we have a really big problem in ensuring the younger generations can afford to purchase a home," he said.

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Terry Burke, a professor of housing studies at Swinburne University, said the drop in home ownership would have far-reaching consequences.

"The younger generation of Australians has to appreciate a good proportion of them will not become homeowners in their lifetime, they probably will be permanent renters," he said.

"For example, in 1981, the median mortgage for 25-34-year-olds was only 17 per cent of their household income, but by 2011 that was already 25 per cent.

"They borrowed a lot more to achieve a similar home purchase than their parents would have 20 or 30 years ago.

"Back in the 60s and 70s and 80s you didn't have to have a dual income to become a home purchaser, now it's virtually an essential requirement."

Professor Burke said single-income households had been almost cut out of home ownership.

(Australian Broadcasting Corporation )