Home ownership predicted to plummet
The rate of home ownership among Australians aged 25-55 is predicted to plummet to 51 per cent by 2040, creating a "recipe for long-term social problems".
This is a finding of a new Australian Housing and Urban Research Institute report, which also determined coronavirus-driven price falls were unlikely to positively contribute to the figure by allowing more people to get their feet on the property ladder.
But lead researcher Professor Terry Burke, of Swinburne University, said the COVID-19 crisis should be viewed as "an opportunity we haven't really had" since World War II to review and improve the nation's housing policies.
The AHURI report also forecast the home ownership rate across all Australian age groups would fall to 63 per cent by 2040.
The figure sat at 67 per cent at the time of the most recent census, in 2016, having held up since it was 68 per cent in the '70s.
Prof Burke said the enduring ethos of home ownership being the Great Australian Dream had helped sustain the rate. But the report noted this was "masking a long-term problem of serious housing inequality" between the old and young, wealthy and poor, and the figure would have fallen further if not for our ageing population.
Home ownership rates among Australia's 25-34 and 35-44 age groups had already plunged 11 percentage points between 1986 and 2016.
"A housing system in which one half - predominantly older homeowners - acquires wealth and the other half - generally younger renters - doesn't is a recipe for long-term social problems," Prof Burke said.
The report said no single political decision or policy or market failure had eroded Australians' ability to own their homes. It blamed factors including worsening housing affordability, an increase in casualised employment, a financial and tax environment favouring investors, and the inability of housing supply to match population growth.
Another cause was the fact housing was now "treated as a commodity to be invested in rather than a home".
It also dubbed Victoria the nation's "biggest loser", having fallen from being the dominant home ownership state with a 75.6 per cent rate in 1966, to experiencing the sharpest decline (4.8 percentage points) since 1991.
This was due to its worsening affordability and high migration rate, which weakened ownership in the short term.
Despite worst-case predictions of a 30 per cent house price fall for Melbourne during COVID-19, Prof Burke said history showed the crisis was unlikely to foster a rise in home ownership.
During the global financial crisis, austerity economics, weakened household incomes, and reduced or investor-focused lending meant ownership in most western countries actually "fell sharply".
But he said the pandemic could be an opportunity for Australia to create a "national housing and urban strategy" to develop a "system which has more balance between rental and ownership" tenures.
This should include plans to increase social and public housing supply, make the private rental sector a more attractive long-term prospect for tenants and landlords, and address existing housing and housing-adjacent policies including taxation, migration and urban development.
"At the end of WWII, another crisis, we asked, 'what sort of housing system do we want for the next 20, 30, 40 years?'" Prof Burke said.
"That drove successful outcomes."
Originally published as Home ownership predicted to plummet