Majority of Australian adults will opt to rent homes by next year, HILDA survey shows

Homeownership rates to fall below 50% by 2017
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Australian homeownership declines
An aerial view of houses located in Sydney's eastern suburbs June 5, 2014. Reuters/David Gray

Less than half of Australian adults will be homeowners by next year as homeownership rates in the country steadily drop since 2001, a recent study shows.

According to a University of Melbourne survey, the number of adults who own their homes has fallen from 57 percent in 2002 to 51.7 percent in 2014. Based on the trends, homeownership ration will likely fall under 50 percent come 2017.

The survey was conducted among 20,000 Australians annually since 2001 as part of the Household, Income and Labour Dynamics Australia (HILDA) survey.

The recent HILDA survey also shows that the sharpest decline in homeownership was observed in Victoria as numbers fell from 72 percent in 2007 to 66 percent in the most recent survey. Homeownership rate has also dropped in in New South Wales to 63 percent from 67 percent, while Western Australia, Queensland and South Australia reported minor ownership rate hike.

Boils down to affordability

HILDA deputy director Roger Wilkins said the declining Australian homeownership rate is a “real cause for concern” since “home ownership is strongly ­associated with being invested in your local community, feeling a part of your community and contributing to it. It is important to the social fabric.”

“I don’t think there has been a real decline in people's aspiration to own their own home other than the fact people have just given up on it because it seems unattainable,” he told The Australian.

“This decline is driven by ­affordability, not changes in preferences to home ownership. For a society like Australia, this has undesirable social consequences,” Wilkins added.

Meanwhile, data from the Australian Bureau of Statistics for 2013-2014 show that 67 percent of Australian households own their homes. Of this number, 31 percent owned their home without a mortgage, while 36 percent of households had a mortgage secured against their dwelling.

Households renting levels remained at 31 percent with 26 percent of the households renting privately, while 4 percent renting from state or government housing authorities. This is despite the 4 percent rise in housing costs among renters.

According to the ABS, households spend an average of 14 percent of their gross weekly income on housing costs.