Home Ownership Falling, Debt Rising – Its Looking Grim For The Under 40s

Home ownership among young people is declining, as mortgage debt almost doubles for the same age group, results from the Household Income and Labour Dynamics in Australia (HILDA) survey show. It also shows young people are living with their parents longer.

The Melbourne Institute of Applied Economic and Social Research undertakes the survey every year. It’s Australia’s only nationally representative household longitudinal study, and has followed the same individuals and households since 2001.

The survey shows the rate of home ownership among 18 to 39 year olds declined from 36% in 2002 to 25% in 2014. In the same age group, the decline in home ownership has been largest for families with dependent children, falling from 56% to 39%.

Chart: Household Income and Labour Dynamics in Australia (HILDA) survey 2002 Source: HILDA

Even for those in this group who manage to buy a home, mortgage debt has risen dramatically. In 2002, 89% of home owners in this age range had mortgage debt. By 2014 this had risen to 94%.

Chart: Household Income and Labour Dynamics in Australia (HILDA) survey 2014 Source: HILDA

More significantly, the average home debt rose considerably. Expressed in December 2015 prices, average home debt grew from about A$169,000 in 2002 to about A$337,000 in 2014. Low interest rates since the global financial crisis have meant mortgage repayments for these home owners have remained manageable, but this group is very vulnerable to rate rises.

Chart: Home loan repayments – percentage ahead Source: HILDA

Detailed wealth data in the survey, collected every four years since 2002, show this increase in debt and decrease in ownership are part of a trend in the wider population. HILDA shows 65% of households were in owner-occupied dwellings in 2015, down from 69% in 2001.

Chart: Home loan repayments – percentage behind Source: HILDA

In fact, the decline in home ownership has been greater than the decline in owner-occupied households. This is largely because adult children are living with their parents for longer.

For example, the HILDA data show that the proportion of women aged 22 to 25 living with their parents rose from 28% in 2001 to 48% in 2015. For men this proportion rose from 42% to 60%.

Among those who manage to access the housing market, the data shows that the growth in home debt is not simply because they are borrowing more to purchase their home. A surprisingly high proportion of young home owners (between 30% and 40%) actually increase their debt from one year to the next, despite most of them remaining in the same home. Even over a four-year period – for example, from 2010 to 2014 – at least 40% of young home owners with a mortgage increase their nominal home debt.

Chart: From the Household Income and Labour Dynamics in Australia (HILDA) survey

The proportion of people with home debt that exceeds the value of their home – that is, negative equity – has also risen. In 2002, 2.4% of people had negative equity in their home; in 2014, 3.9% had negative equity. This is a relatively small proportion, but this could change as even small decreases in house prices will result in substantial increases in the prevalence of negative equity.

Home owners – How this changes with location, income and profession

In 2014, less than 20% of Sydneysiders aged 18 to 39 were home owners, compared with 36% or more in the ACT, urban Northern Territory and non-urban regions of Australia. To a significant extent this reflects differences across regions in house prices.

Sydney and Melbourne have particularly high house prices, while non-urban areas generally have comparatively low house prices. Regional differences in the incomes of 18 to 39 year olds also play a role.

Those with the highest home-ownership rates are professionals and, to a lesser extent, managers. They experienced relatively little decline in home ownership.

For workers in other occupations, home ownership has declined substantially. In 2014 home ownership was especially rare among community and personal services workers, sales workers and labourers.

This decline represents profound social change among this age group, where renting is increasingly becoming the dominant form of housing. In 2002, 61% of people aged 35 to 39 were home owners – a clear majority of their age group. By 2014, this proportion had fallen to 48%.

The changing housing situation of young adults is part of a broader change in the distribution of wealth in Australia. The HILDA Survey shows that differences in average wealth by age have grown since 2002. For example, in 2002, median net wealth of those aged 65 and over was 2.8 times that of people aged 25 to 34. In 2014, this ratio had increased to 4.5.

Chart: From the Household Income and Labour Dynamics in Australia (HILDA) survey

The decline in home ownership among young adults and this broader trend in wealth have implications for their long-term economic wellbeing and indeed for the retirement income system.

Even if house price growth moderates and many of those currently aged under 40 ultimately enter the housing market, it’s likely that a rising proportion will not have paid off the mortgage by the time they retire. It may be that many will resort to drawing on superannuation balances to repay home loans, in turn increasing demands on the Age Pension.

Author: Roger Wilkins, Professional Research Fellow and Deputy Director (Research), HILDA Survey, Melbourne INstructure of Applied Economic and Social Research, University of Melbourne

Further reading:

Australia’s City/Country Divide Is Not As Wide As You Might Think

Magnetic Island – Top Price Property Winner of the Week – 3-5 Endeavour Road – $520,000

Durie Is Out! Gay And Green Thumb Poster-Boy Snapped Duplicity Of Premier On Townsville Water Security

Veteran Diggers Fall Victim To National Housing Scheme Spruiker

First home buyers grant “pitted” by the Queensland Treasurer

Townsville sold out by PM Turnbull Smart City Deal

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Veteran Diggers fall victim to national housing scheme spruiker

Veteran Diggers that served in Iraq and Afghanistan have fallen victim to the lure of promised returns from National Rental Affordability Scheme (NRAS) residential housing projects promoted by a spruiker working on commissions with the National Australia Bank and property developers.

As many as two hundred Aussie veterans lost up to $160,000 each on NRAS property developments in Darwin promoted by ex-Royal Australian Navy diver, Mr. Hugh Ochremienko from the Gold Coast.

In a statement to the Herald Sun, the ex-navy diver said, “a citywide decline in prices and general delay in receiving government subsidies were offset by tax benefits built into the deals.”

Some Middle East war veterans including Officers and Special Air Service (SAS) personnel are deep in debt and reached into their superannuation funds to enter the deals.

Image: Mr. Ochremienko property investment planner at centre of Diggers fury Photo: David Clark – Herald Sun

Although the actions of Mr. Ochremienko are not illegal, he used his trust as an ex-serviceman to win the fellow soldiers business. “He claimed to be able to make their pay slips work for them, that he knew the system well so he could help them create wealth,” federal MP Andrew Hastie stated to the Herald Sun reporter.

Townsville soldiers were also targeted by the property development salesmen. He took them out for meals near Lavarack Barracks promoting cheap properties that were being subsidised by the federal government mainly in the outer suburbs of Darwin.

As the property market softened and the demand from tenants dropped, properties were left vacant in Darwin. A similar scenario occurred in Townsville with its record vacancy rates. In this horrific case of ‘buyers beware’, the soldiers had to wait up to 2 years for the government tax incentives to go through.

The NRAS investors struggled to sell and clear their mortgages because the property prices in the market had dropped and the balance of equity or loan to value would not cover their debts.

Mr. Ochremienko denied any responsibility and questioned whether the veterans had lost any money at all. “But have they really? I’m say no.” he said. The development middleman has not been licensed to offer financial advice since 2008 and said he helps investors with financial planning and his advice is general in nature.

Veteran investors appeal to come forward

Mr. John Rolfe, the reporter from the Herald Sun who broke the story asked if anyone knows more or has been affected to come forward.

TREN has broken similar stories in Townsville about the impact of NRAS and property spruikers luring unsuspecting investors into property developments that have damaged their financial history and even caused some people to file for bankruptcy.

We encourage people to come forward with any information. Do you have a story? Submit story.

Further reading:

Treasurer sparks free market concerns over Domain Central $6 million revamp

Turnbull federal budget could wipe out Townsville property owners

Bank fees in billions for home owners

Townsville sold out by PM Turnbull Smart City Deal

Guide to selling a luxury home

Guide to 22 knockout marketing tips to sell a home

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Why Apartment Dwellers Need Indoor Plants

Image: Girl leaning on open window drawing outdoor greenery to the indoors
Photo: Fickr Alexandra-Cohen

Apartment – The number of Australians living in high-rise apartments doubled between 1991 and 2011and that trend has continued since then. The quarter-acre dream is fast disappearing and larger blocks and family gardens along with it. As more people move from country areas to the city and as land to build homes near the city centre becomes scarce, we’re getting further and further away from nature. It turns out this isn’t great for our health.

The change in urban environments because of development, associated with a rapid increase in chronic disease, is a global phenomenon in developed countries. In the past children grew up running on bare soil and grass, explored backyard farms and gardens, climbed trees and were exposed to a high level of bacteria. And the diversity of the bacteria can change if an individual is exposed to different environmental conditions.

One of these conditions is living in a high-rise apartment far away from land, soil, trees and plants. Being close to nature is linked to positive mental well-being – and people living in urban areas have been shown to have a disadvantage in processing stress. This can be at least partially attributed to increased exposure to air pollution and heat stress, and decrease in exercise and fitness through lack of access to a garden or nearby park.

The less exposure to nature we have, the less diverse the bacteria in our microbiota. The microbiota is the community of bacteria, fungi and viruses that live in our gut and on our skin. We need a diverse exposure for our body to fight inflammation effectively.

Alteration in the human bacterial communities, including the disappearance of ancient microbiotic species, is thought to cause inflammation in the body. These ancient species were known to encourage development of cells that regulate the immune system (T-cells). When our immune system stays on high alert all the time, instead of resting when no threats are present, this causes inflammation, which can lead to chronic disease.

Where plants come in

The bacteria we have are similar to those of plants in that we both carry trillions of good and bad bacteria. The diversity of the microbiota is measured by how many families of bacteria are present. We know the diverse plant microbiome influences plant growth, and humans benefit by eating plant foods. An important research question remains: do we gain another benefit simply by having contact with plants?

Plants also remove volatile compounds from the air including ozone and carbon dioxide. They turn the carbon dioxide into oxygen, meaning air quality is drastically improved. Higher oxygen levels inside a small apartment mean well-being may be improved for the occupants. Viewing plants reduces stress and is pleasing to the human eye.

Nature therapy (shinrin-yoku), first invented in Japan, has proven beneficial for our health by lowering blood pressure and boosting mental health. This is done by simply going for a mindful walk in the forest.

It has also been established that plants confer positive changes in the brain’s electrical activity, muscle tension and heart activity.

Some plants that are beneficial in the home

Peace Lily: if this plant is placed in the hallway it will reduce many toxins such as benzene, ammonia, acetone and ethyl and will prevent toxins from spreading between rooms in the apartment.

Image: Peaceful Lilly Photo: Peace Lily. H is for Hom/Flickr, CC BY

Aloe vera and Mother-in-Law’s Tongue: these plants placed in the bedroom emit oxygen, which improves sleep quality.

Image: Mother-in-laws tongue Photo: Mark Solarski/Unsplash, CC BY

Gerbera Daisy: if placed in the laundry these plants remove formaldehyde and benzene from the air, which are in common household detergents.

Image: Gerbera daisies. Photo: Marcia O’Connor/Flickr, CC BY

Devil’s Ivy (Golden Pothos): this plant can be placed in low light and cool temperatures such as an air-conditioned office or an outdoor garage. It will remove ozone, which is found in car exhaust fumes.

Image: Devil’s Ivy. Photo: DianesDigitals/Flickr, CC BY

How about plants outside apartment buildings?

Outdoor plants such as trees and shrubs help to shade our buildings and streets, cooling our concrete jungles. They also help with water runoff, preventing flooding and nutrient dispersal. Suburbs with more canopy cover have a perceived higher quality of living and attract better property prices.

Outdoor plants and soil have an abundance of ecological communities compared to indoor environments, a higher diversity of microbes, and therefore increase the numbers of insects, birds and other fauna. Viewing and being among large parks and green areas has been shown to improve the mental and physical well-being of people living in urban areas.

With backyards becoming increasingly rare, diversity is decreasing in urban areas. In response, the City of Toronto has written into local law that all new buildings must have green roofs that include vegetation, drainage, waterproofing and slope stability. The reasoning for the law was that green roofs provide:

energy savings from better solar reflectivity, evapotranspiration and insulation, green roofs last up to twice as long as regular roofs, and green roofs can beautify and add value to Toronto’s buildings by providing scenic views and recreational areas in dense urban areas.

A similarly bold strategy here would benefit not only the health of our apartment dwellers, but also the environment.

Author:  Danica-Lea Larcombe PhD Candidate in Biodiversity and Human Health, Edith Cowan University from

Further reading:

Idalia – Top Price Property Winner of the Week – 15 Edgewater Terrace – $1 Million

First home buyers grant “pitted” by the Queensland Treasurer

Townsville sold out by PM Turnbull Smart City Deal

Guide to selling a luxury home

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Click on image above to Join TREN

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Taxing empty homes: a step towards affordable housing, but much more can be done

Vacant housing rates are rising in our major cities. Across Australia on census night, 11.2% of housing was recorded as unoccupied – a total of 1,089,165 dwellings. With housing affordability stress also intensifying, the moment for a push on empty property taxes looks to have arrived.

The 2016 Census showed empty property numbers up by 19% in Melbourne and 15% in Sydney over the past five years alone. Considering that thousands of people sleep rough – almost 7,000 on census night in 2011, more than 400 per night in Sydney in 2017 – and that hundreds of thousands face overcrowded homes or unaffordable rents, these seem like cruel and immoral revelations.

Public awareness of unused homes has been growing in Australia and globally. In London, Vancouver and elsewhere – just as in Sydney and Melbourne – the night-time spectacle of dark spaces in newly built “luxury towers” has triggered outrage.

This has struck a chord with the public not only because of its connotations of obscene wealth inequality and waste, but also because of the contended link to foreign ownership.

Early movers on vacancy tax

Against this backdrop, the Victorian state government has felt sufficiently emboldened to legislate an empty homes tax. Federally, the shadow treasurer, Chris Bowen, recently backed a standard vacant dwelling tax across all the nation’s major cities.

Similar measures have come into force in Vancouver and Paris. And Ontario’s provincial government recently granted Toronto new powers to tax empty properties.

Emulating Vancouver, Victoria’s tax is a 1% capital value charge on homes vacant for at least six months in a year. Curiously, though, it applies only in Melbourne’s inner and middle suburbs. And there are exceptions – if the property is a grossly under-used second home you pay only if you’re a foreigner.

Also, as in Vancouver, tax liability relies on self-reporting, which is seemingly a loophole. This might be less problematic if all owners were required to confirm their properties were occupied for at least six months of the past year. But that would be administratively cumbersome.

This highlights a broader “practicability challenge” for empty property taxes. For example, how do you define acceptable reasons for a property being empty?

In principle, such a tax should probably be limited to habitable dwellings. So, if you own a speculative vacancy, what do you do? Remove the kitchen sink to declare it unliveable?

How can we be sure a home is empty?

Lack of reliable data on empty homes is a major problem in Australia. Census figures are useful mainly because they indicate trends over time, but they substantially overstate the true number of long-term vacant habitable properties because they include temporarily empty dwellings (including second homes).

Using Victorian water records, Prosper Australia estimates about half of Melbourne’s census-recorded vacant properties are long-term “speculative vacancies”. That’s 82,000 homes.

Applying a similar “conversion factor” to Sydney’s census numbers would indicate around 68,000 speculative vacancies. Australia-wide, the Prosper Australia findings imply around 300,000 speculative vacancies – 3% of all housing. That’s equivalent to two years’ house building at current rates.

According to University of Queensland real estate economics expert Cameron Murray, a national tax that entirely eliminated this glut might moderate the price of housing by 1-2%. Therefore, although worthwhile, dealing with this element of our inefficient use of land and property would provide only a small easing of Australia’s broader affordability problem.

Making better use of a scarce resource

Taxing long-term empty properties is consistent with making more efficient use of our housing stock – a scarce resource. A big-picture implication is that tackling Australia’s housing stress shouldn’t be seen as purely about boosting new housing supply – as commonly portrayed by governments.

It should also be about making more efficient and equitable use of existing housing and housing-designated land.

Penalising empty dwellings is fine if it can be practicably achieved. That’s especially if the revenue is used to enhance the trivial amount of public funding going into building affordable rental housing in most of our states and territories.

But empty homes represent just a small element of our increasingly inefficient and wasteful use of housing and the increasingly unequal distribution of our national wealth.

One aspect of this is the under-utilisation of occupied housing. Australian Bureau of Statistics survey data show that, across Australia, more than a million homes (mainly owner-occupied) have three or more spare bedrooms. A comparison of the latest statistics (for 2013-14) with those for 2007-08 suggests this body of “grossly under-utilised” properties grew by more than 250,000 in the last six years.

Our tax system does nothing to discourage this increasingly wasteful use of housing. It’s arguably encouraged by the “tax on mobility” constituted by stamp duty and the exemption of the family home from the pension assets test.

A parallel issue is the speculative land banks owned by developers. The volume of development approvals far exceeds the amount of actual building. In the past year in Sydney, for example, 56,000 development approvals were granted – but only 38,000 homes were built.

In many cases, getting an approval is just part of land speculation. The owner then hoards the site until “market conditions are right” for on-selling as approved for development at a fat profit.

Properly addressing these issues calls for something much more ambitious than an empty property tax. The federal government should be encouraging all states and territories to follow the ACT’s lead by phasing in a broad-based land tax to replace stamp duty.

Such a tax will provide a stronger financial incentive to make effective use of land and property. The Grattan Institute estimates this switch would also “add up to A$9 billion annually to gross domestic product”. How much longer can we afford to ignore this obvious policy innovation?

Author: Hal Pawson, Associate Director - City Futures - Urban Policy and Strategy, City Futures Centre, Housing Policy and Practice, UNSW from

Further reading:

Smart city Townsville, creative city...whose city is it?

Real truth about negative gearing changes in Morisson federal budget 

Botched media coverage of Turnbull spin? Negative gearing in Federal Budget

First home buyers grant "pitted" by the Queensland Treasurer

Townsville sold out by PM Turnbull Smart City Deal

Guide to selling a luxury home

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Click on image above to Join TREN

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