One of Australia’s greatest social and economic issues at present is housing affordability. The housing market over the past quarter century has undergone significant changes due to factors such as rising home values, shifting home ownership patterns and growing financial strain. This project examines the trends and patterns in housing affordability over the last two decades (1994–95 to 2019–20) and the implications for Australian households.
The proportion of households in different housing tenures in Australia has significantly shifted over the period 1994–95 to 2019–20. The percentage of households with a mortgage held by owners fell from around 42% to around 30% of households, representing a decrease of 12 percentage points during the study period. The percentage of households with owned housing with a mortgage, on the other hand, rose from about 30% to 37%, indicating an increase in dependence on housing finance. Renting also became more prevalent, rising from some 26% to 32% of households. The trends indicated that the increasing cost of housing and affordability issues have made it very difficult for people to buy a home without having a mortgage; thus, reliance on mortgage and rental housing has increased.
The chart shows that there are significant variations between the weekly housing costs in the major housing tenure categories in Australia in 2019–20. Those households that have housing loans had the highest housing cost per week average of $493 per week and thus the biggest direct housing cost burden. The second highest housing cost was recorded by private renters, where housing was spent at ~$415 per week. Households whose housing was free of mortgage payments, however, had much lower housing costs at $54 a week.
One of the biggest disparities is in the number of people who are mortgage-holders versus full property owners. Households that owned their housing units paid more than nine times what renters paid, showing the significant financial burden of owning a housing unit with a mortgage. Likewise, private tenants also had cost of housing that was nearly eight times greater than homeowners.
The results indicate that housing affordability problems are specifically experienced by those households that have an active housing payment, especially those on rents and those with a housing loan. Whilst buying a home free and clear can be a great financial relief, many Australian households still spend a significant share of their weekly income on housing costs. The findings highlight the importance of housing affordability and suggest that the cost of housing continues to be a major issue for some households, including those that own a home with a mortgage, and renters in Australia.
This scatter plot displays the percentage of housing costs to gross household income for the three groups of people who are living in private dwellings with housing loans, housing private renters and rental households in state or territory housing authorities, for the years 1994–95 and 2019–20. The percentages are higher the greater the pressure on affordability.
Those in private rental accommodation had the highest HCRs, with expenditure of approximately 18-20% of income. Those who live in state and territory housing authority housing also had relatively high housing costs, with rent ratios growing over 20% in later years. Overall, the typical house-holding unit with a mortgage averaged 16–19% of income in housing together with an overall reduction in the level of housing affordability pressure over time.
On a broad level, the results indicate that renting is more difficult than owning, and underscores the financial burden of renting in Australia.
The pie chart represents the tenure of dwellings of all households in Australia in 2019-20. The largest group was that of households with a mortgage, about 37.5% of all households. This means that a high percentage of Australians use mortgage loans to obtain home ownership. The second largest group were renters accounting for 32.3%, emphasising the increasing significance of the rental market in Australia’s housing system. Meanwhile, the home-owning rate for households who lived in their own dwellings was 30.2%.
The housing market is becoming more polarised among the three groups, with mortgage ownership and renting growing, and owner-occupancy contracting decreasing, relative to each other, although the relative proportions are somewhat similar. Nearly 70% of households have a mortgage or rent their homes, which means there is a financial burden that continues to be a part of housing. This is a result of a number of affordability issues and shows that more and more Australians have been finding it less easy over time to become mortgage-free.
Key Message
More people were mortgage holders (37.5%) and renters (32.3%) than outright homeowners (30.2%) in 2019–20, reflecting the increasing reliance on housing finance and rental accommodation in Australia.
The box plot displays the cost of housing for each housing tenure group in 1994-95 and 2019-20, by the type of housing tenure, at the weekly level. Housing costs were highest for households that are mortgage holders, and most variable over time, which suggests significant financial stress. Other people who rent privately also had relatively high and variable housing costs. Households, on the other hand, that had paid off their mortgages, had the lowest housing costs and the least variation. The overall pattern of the chart shows that a significant proportion of housing costs, particularly mortgage repayments and rental payments, are leading to a decline in housing affordability in Australia.
The Australian Bureau of Statistics data, this analysis focused on how housing tenure, housing costs and housing affordability in Australia have changed from 1994-95 to 2019-20. The results show that there has been a definite trend of the Australian housing market, with mortgage-free home ownership decreasing and mortgage dependence and renting rising. Mortgage households and private renters had the highest housing costs, reflecting the increased cost of acquiring and sustaining housing.
The affordability comparison also revealed that renters tend to dedicate a higher share of their income to rent compared to homeowners, which suggests a higher financial strain on renters. Further, the housing tenure mix illustrates the difficulties of achieving an outright home ownership as most Australian households are either renting or holding a mortgage.
In total, the visualisations indicate that, in the last twenty-five years, housing affordability has emerged as an important social and economic concern. The housing picture has changed in many ways because of the high cost of housing, increased borrowing on housing, and increased demand for rents. These trends show that policies that promote affordable and accessible housing are crucial for the long-term security of housing for future generations.
All data used in this report were obtained from the Australian Bureau of Statistics (ABS) Housing Occupancy and Costs, Australia, 2019–20 dataset.
Australian Bureau of Statistics. (2022). Housing occupancy and costs, Australia, 2019–20. Australian Bureau of Statistics. https://www.abs.gov.au
Australian Bureau of Statistics. (2022). Survey of income and housing. Australian Bureau of Statistics. https://www.abs.gov.au