“Dream on”: Declining Homeownership Among Young People in Australia?

ABSTRACT

The basis on which policy-makers, researchers and commentators promote the idea that Australia has witnessed a major decline in homeownership is reliant on measurements that are rarely scrutinized. In this article, certain findings about changes in homeownership rates are examined while also pointing to the ways that counting processes informed by certain assumptions that are problematic. While the material used in this article is Australian, we suggest that many of the issues raised are also common to other western nations and for this reason the arguments and conclusions made have a more general application. We note that considerable variations exist in purported changes in homeownership rates, while also arguing that reliance on census data does not allow strong conclusions to be drawn about homeownership rates or movements in and out of homeownership over the past few decades of young people, or indeed any age cohort. Different data and analyses are required. Homeownership rates involve definitions and interpretations, which have significance that are too often are fully appreciated by policy-makers. This, it is argued, has serious implications for housing policy.

KEY WORDS:

• Homeownership
• Young adults
• Policy
• Research

Notes

1. Flood and Baker (2010) in acknowledging the “liquidity” of the financial system after 1996, the fourfold expansion of the local money supply and “exotic derivatives” were mystified that homeownership rates did not improve significantly. They also note that real household debt increased by 1000% from 1990 on or to put it differently increased from 33% of total household disposable income to 160% total household disposable income.

2. Why housing affordability became a problem is a question that has a complexity of answers. Some say the “strategy” of purchasing before prices became too high contributed to the “housing price bubble”. It was a development said to have been facilitated by an easier access to credit compared to home buyers from previous generations, a factor that allowed buyers to make higher bids for properties which in turn drove up prices (Saunders & Siminski 2005:346–367). Other contributing factors to the hike in prices included the tax advantage of negative gearing that stimulates investment in rental housing, and the government’s decision to loosen up of the Foreign investment review board restrictions on foreign ownership which saw Australia’s housing market become a major investment site for overseas investors. The latest change of mind on the part of the federal government to reinstate restrictions on foreign ownership may see some changes. Other contributing factors include: high immigration leading to an increase in demand, limited government release of new land which reduced supply, government grants and incentives which increase demand (i.e. first home owners grant, stamp duty exemptions on new construction).

3. Here “identity” includes both the subjective experience and the social expectations associated with being a young adult.

4. It is significant that the Commission repeatedly put a caveat in on all their estimates pointing to “methodological issues” (Australian Productivity Commission 2004, p. 32) observing that, “As noted above, all of these estimates are sensitive to the detailed methodologies employed” (Australian Productivity Commission 2004, p. 33).

5. The 2006 Census like the 1996 and 2001 censuses established “whether a household is purchasing, rents or owns, the dwelling in which it was enumerated on Census Night, or whether the household occupies it under another arrangement. Tenure type is established using responses to a series of questions: ‘Is this dwelling Owned outright? Owned with a mortgage? Being purchased under a rent/buy scheme? Being rented? Being occupied rent free/Being occupied under a life tenure scheme? Other? The 2006 census similarly used the Household reference person as with previous Censuses. ‘The Family/Household Reference Person Indicator (RPIP) identifies the household member used in Census coding as the starting point for identifying the relationships between usual residents of a household. Familial relationships are defined in terms of the relationship between the family reference person and all other family members. This variable has limited statistical value but is included for use in population and dwelling projection models. On the Census form, people are asked to state their relationship to Person 1. If suitable, Person 1 will then be used as the basis for coding family and relationship details. If Person 1 is not the most appropriate reference person, coders assign a reference person based on age, marital status and relationship considerations. A “reference person” must be a usual resident of the dwelling aged 15 years and over, and also present on Census Night i.e. not temporarily absent.’

6. In terms of age, the Housing 21 Survey had an under-representation of younger participants and an over-representation of female participants. The point of comparison was the 2006 census. In relation to household type the general distribution was the same although the survey had an over-representation of households that classified themselves as a “family household” and a “couple only household”. The representation of labour force status and household income in the Housing 21 Survey was similar to the 2006 census.