What the latest Census reveals about Australian housing

The great Australian dream of homeownership is alive and well, but is the picture changing?

Article published 11 July 2022

The latest five-yearly snapshot of the nation’s population has revealed some interesting insights into the way we live.  

On Census night in August 2021, the Australian Bureau of Statistics estimates around half of the population was in lockdown1.

Despite being in the middle of a global pandemic, the proportion of Australia’s homeowners and renters hasn’t seen a significant change compared to five years earlier.

But the Census is backward looking, and a lot has changed in the months since – particularly in the housing market.

Five housing facts from the 2021 Census

1. Homeownership rates haven’t changed much over recent decades

Two-thirds of households reported on Census night that they owned their home (66%), which is a similar proportion to what was recorded in 19962.

2. But fewer people now own their home outright

The proportion of households that own a home mortgage-free has dropped from 42% in 1996 to 31% in 2021.

Meanwhile, the share of households paying off their home loan has risen from 25.5% in 1996 to 35% in 2021.

3. Apartment living is back in vogue 

Even as lockdowns and remote working drove demand for larger homes, more Australians than ever are taking up apartment living3.

Of the nearly 11 million private dwellings in Australia, 70% were separate houses, 16% were apartments, and town houses accounted for 13%.

The ABS says apartments account for nearly one-third (30.9%) of the increase in private dwellings since 2016.

All up, more than 2.5 million people – or 10.3% of us – now live in apartments.

4. People living outside the box

With COVID-19 restrictions in place across the country in August last year, 96% of people counted were at home rather than travelling.

But while most of us remain firmly on land, many spent Census night on wheels or water.

Almost 60,000 people were in caravans (58,155), and another 29,369 people were in cabins and houseboats.

5. Fewer households are in mortgage stress

Nationwide, fewer borrowers reported being in mortgage stress – defined as spending more than 30% of their income on mortgage repayments.

One-in-seven (14.5%) households spent more than 30% of their income on home loan repayments in 2021, compared to one-in-five (19.3%) in 20164.

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The picture may be changing

Australian statistician David Gruen AO said the 2021 Census was conducted at an unprecedented time in the midst of the COVID-19 pandemic.

“Deeper insights on the impacts of COVID-19 will be available in the second release of Census data in October,” Dr Gruen said.

“We expect the second release data will show some very interesting changes and patterns in mobility of the population between Censuses, including employment arrangements, journey to work, occupation, and internal migration.”

While providing an important snapshot in time, a lot has changed since the Census was conducted.

Households have taken on larger mortgages to keep up with soaring property prices5, while rising interest rates and inflation are putting pressure on household budgets.

Data from SQM Research’s latest Distressed Properties Report6 found the number of properties being listed for sale under ‘distressed conditions’ has been rising since the first interest rate rise occurred in May, although still remains less than half that of pre-Covid levels.

As interest rates continue to rise, SQM managing director Louis Christopher said he expects to see distressed listings activity return to levels recorded prior to Covid.

“While it’s likely we will keep reporting rises over the next few months, it is not something I would be overly concerned about unless numbers rise well above 15,000 properties,” Mr Christopher said.

As of the end of June, SQM said there were 6014 residential properties nationwide selling under distressed conditions – which includes listings with terms such as ‘mortgagee in possession’, ‘urgent’, and ‘bank forced sale’.

AMP chief economist Shane Oliver said high levels of household debt have made the housing sector more vulnerable to interest rate rises7.

“In 1990, there was on average $69 of household debt for every $100 of average household income after tax. Today, it’s $187 of debt for every $100 of after-tax income,” Dr Oliver said.

“The rise in debt means that moves in interest rates are now nearly three times as potent compared to 30 years ago.”

The RBA raised the official cash rate by an extra-large 50 basis points to 1.35% in July, the third hike in a row8.

But elevated levels of household savings and increased home equity should provide a buffer for most households, PropTrack economist Eleanor Creagh said.

“Mortgage rates have moved higher, and many can no longer borrow the same amount as this time last year. This is being reflected in the slowing housing market,” Ms Creagh said.

“While high household debt and weak sentiment are risks, these factors are offset by the tight labour market promoting a degree of confidence and job security, and hopefully in turn [leading to] stronger wages growth.

“In addition, households are sitting on large savings buffers. For many, substantial home equity has been accumulated after the significant rise in home prices over the past two years, and many have taken advantage of falling interest rates to pay down debt quicker. The RBA estimates the typical owner-occupier borrower is around two years ahead on their mortgage.”

Borrowers are also proactively trying to get themselves in a better financial position ahead of further rate rises, with Mortgage Choice data showing refinancing accounting for 43% of all loans submitted in June, compared to 38% in April.

Mortgage Choice national sales director David Zammit said borrowers should get ahead of the next rate hike and speak to their mortgage broker to ensure they’re on the best loan they can access.

“In a changing rate environment, it’s particularly important to have someone proactively managing your home loan to ensure you’re not paying more than you need to be,” Mr Zammit said.

“Now is the time to speak to your broker and find out if you could be getting a better rate.”

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Posted in: Property market

1 https://www.youtube.com/watch?v=oXjtnKrnvY8 [timecode: 20:21]
3 https://www.realestate.com.au/insights/more-aussies-than-ever-live-in-apartments-and-not-even-covid-slowed-down-the-trend-heres-why/
4 https://www.abs.gov.au/census/find-census-data/quickstats/2021/AUS
5 https://www.abs.gov.au/statistics/economy/finance/lending-indicators/latest-release#housing-finance-detailed-
6 https://sqmresearch.com.au/distressedpropertiesreport.php
7 https://www.ampcapital.com/au/en/insights-hub/articles/2022/june/australias-achilles-heel-high-household-debt-and-rising-interest-rates
8 https://www.rba.gov.au/media-releases/2022/mr-22-20.html