With the Aussie dream of home ownership in steady decline, Australia’s housing landscape is changing.
Millennials are bypassing traditional ownership in favour of rental agreements which offer the flexibility to suit their lifestyle – as well as provide a solution to tightening housing affordability.
In a world of increased mobility and migration, people are seeking alternatives to the Baby Boomer method of buying their home with a 30-year mortgage.
Enter investment property, which offers adaptable rental housing to fit the changing lifestyles, means and preferences of a new era.
Figures provided by the Australian Bureau of Statistics show that the proportion of Australian households owning their own home (with or without a mortgage) declined from 71% in 1994-95 to 67% in 2011-12.
The proportion of households renting on the private market rose during this period from 18% to 25%.
There appears to be a direct link between changes in the rate of home ownership and the level of housing affordability between 1996 and 2011, according to Census findings and Real Estate Institute of Australia (REIA) data.
With most jobs located in Australia’s cities and the most affordable housing sited in city outskirts and regions, the Real Estate Conversation reports that many people and families are renting homes to deal with the mismatch.
The figures become even more compelling when examined from an international perspective.
The United Kingdom has seen a rapid fall in the number of people owning their own home and a significant increase in those renting, as reported by the Daily Telegraph.
After peaking at 69% in 2001, home ownership numbers fell to 64% in 2015. The trend is the same in other countries:
The US has seen a major shift towards the rental market since the Great Financial Crisis of 2008, as reported by CityLab.
This has been most notable among the Millennials, with renters jumping from 62.5% in 2006 to 71.6% in 2014.
Yet shifts from home ownership to renting are noted across all US demographics during the last decade – and are most pronounced for wealthy Americans. CityLab say rental rates increased by:
So there is far more at play than just housing affordability when it comes to global shifts from home ownership to renting.
The Telegraph points out some key factors which are reducing home ownership and moving people into rental markets across the world.
The CityLab research shows that less developed countries have consistently higher levels of home ownership, while nations with more advanced economic development favour renting.
With Australia’s extensive growth in world-class infrastructure, services and medical/scientific advances, it seems likely that the decline in home ownership will continue – making property investment a sound choice to secure your future.
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