[#8]
The expanding multiple between property prices and single full-time incomes do not necessarily equate to lessened affordability. The characteristics of household income have evolved and female participation in employment is rising over time.
Previously, a household might have earned a single (1.0) salary of $100 and house prices may have been $300. Now, a household might earn a dual (2.0) salary of $200 (2x $100) and house prices may be $600. This is now 6 times a single full-time income, but for the household aggregate is still 3 times income. The multiple between income-to-property-prices has further magnified as the cost of borrowing has become cheaper over time (lower interest rates) meaning households can repay a larger loan amount using the same portion of income so they can buy a more expensive house without compromising income affordability.
The below table illustrates % of Australian households owning their own home with a mortgage outstanding. The data suggests home ownership rates have risen over time as households are able to borrow more at cheaper prices to make ownership a reality.
Percentage of total occupied private dwellings owner with a mortgage in Australia (%)- 1947 = 8% (source:Census)
- 1954 = 15% (source:Census)
- 1961 = 23% (source:Census)
- 1976 = 36% (source:Census)
- 1981 = 34% (source:Census)
- 1986 = 32% (source:Census)
- 1991 = 27% (source:Census)
- 1996 = 27% (source:Census)
- 1997-98 = 31% (source:ABS 4130)
- 1999-00 = 32% (source:ABS 4130)
- 2000-01 = 32% (source:ABS 4130)
- 2002-03 = 33% (source:ABS 4130)
- 2003-04 = 35% (source:ABS 4130)
- 2005-06 = 35% (source:ABS 4130)
- 2007-08 = 35% (source:ABS 4130)
- 2009-10 = 36% (source:ABS 4130)
- 2011-12 = 37% (source:ABS 4130)
- 2013-14 = 36% (source:ABS 4130)
- 2015-16 = 37% (source:ABS 4130)
- 2017-18 = 37% (source:ABS 4130)
The data in isolation doesn’t always tell the full story and context must be considered to understand the full picture. Based on these datasets, there is evidence to suggest home ownership is actually more accessible than before with 35%+ home ownership rates with mortgages now (latest data available) vs less than 27% home ownership rates with mortgages 15 years ago (1996).
