Australia’s housing crisis has been decades in the making, the chair of the National Housing Supply and Affordability Council, Susan Lloyd-Hurwitz, says.
It’s true that Australia’s home ownership rate peaked decades ago, but many countries have experienced similar patterns of stagnating or declining homeowner numbers.
Some academics have concluded “ownership is in retreat in most developed countries”, projecting that an ageing population will drive the rate even lower.
You can explore home ownership over the last hundred years for Australia and other OECD countries below:
About half of Australians were homeowners at the turn of last century – significantly higher than in the UK and many other comparable countries.
Australia saw an 18 percentage point jump in home ownership between 1947 and 1966. Dr Chris Martin, a senior research fellow in the City Futures Research Centre at the University of New South Wales, says a number of institutions, policies and factors combined to achieve this.
These variables include war loans, subsidies for building societies, government-owned banks, governments directly constructing (and then selling) public housing, high wages, policies targeted at full employment, preferential taxation and financing for owner-occupiers, and rent control.
“We made a number of economic, housing and planning decisions in the 40s, 50s and 60s [that supported and enabled home ownership],” says Prof Andi Nygaard from Swinburne University of Technology.
“The combined effect of the institutional and economic decisions and environment in the postwar period on the increasing rate of home ownership was much, much greater than the little tinkering that we do at the moment.”
He describes “the first homeowner grants and so on” as “drops in the ocean compared to what historically enabled home ownership”.
This is a pattern you can see across many developed countries.
In the UK, home ownership expanded significantly later than Australia. Others, such as Spain, Norway and Singapore achieved rates much higher than Australia ever did. Home ownership continues to grow in some parts of Europe and elsewhere, but often off much smaller bases.
Australian home ownership dropped 3 percentage points between the 2001 and 2021 census. And we weren’t alone. Many other countries experienced retreats after peaking in the second half of the 20th century.
The reasons are as varied as the explanations for the increase, but there are some key themes: the financialisation of property, how much prices have increased relative to income, globalised and weakened labour markets, and governments retreating from policies they previously championed.
Nygaard notes Australia did a version of Margaret Thatcher’s famous “right to buy” – where government-built public housing is sold off – about 20 years before the UK.
In Singapore, where more than 90% of citizens are owner-occupiers, the government is the major developer of new housing and there are grants available for first home buyers that can often exceed the deposit required for a home loan.
And many of the policies that led to the increase in home ownership started working differently as the rate increased. Rather than encouraging more home ownership, they encouraged existing homeowners to accumulate more.
The younger generations have missed out. More than half of 25-29-year-old households were homeowners in the 1980s but this was less than 40% in the 2021 census.
“That long list of things were all working together to produce that rapid rise in home ownership,” says Martin. “[But then] things started to change, and bits started to drop out, and then the rest started to work in a different way.”
Martin says at that time Australia was winding back rent controls, expanding the number of lenders and evening up the finance terms being provided to investors and to owner-occupiers.
“As a result, this pro-home ownership array of policies and settings became a pro [existing] homeowner array of policies.”
You can see this more clearly if we follow the home ownership rates of generations across time. By the time baby boomers (those born between 1946 and 1964) were in their 30s, more than 60% were homeowners. This only kept rising and is still above 80%.
Subsequent generations have seen home ownership rates taper off at much lower levels.
Nygaard says the differences across age groups is one of the reasons the home ownership rate hasn’t collapsed even further. Older generations with much higher home ownership rates have also become bigger proportions of the population. This will soon reverse but it won’t necessarily mean increasing home ownership for younger Australians.
“The ageing of the population buffered the decline somewhat, but that obviously is going to disappear,” says Nygaard.
“Those people are going to move out of the system, and those younger cohorts are going to become dominant in the population and tenure structures. That will cause a further decline in home ownership.”
Nygaard and his co-authors estimate home ownership could decline to about 63% by 2040. And the rate for the 25-55 age bracket could be “not much more than 50%” – down from 60% in 1981.
