…rising prosperity versus housing affordability…

Australia’s property fascination

Australians have long had a fascination with property. It’s evident in waves of speculative booms and busts that periodically grip our cities. For example, this was observed over four decades ago in relation to Sydney and documented by M.T. Daly in his book ‘Sydney Boom Sydney Bust’ which was published way back in 1982:

“City land booms have always been a snare of the people of the Australian colonies” and “despite various efforts of governments, the [Sydney real estate] system seems to have run out of control and the inflated values have become institutionalised”.

Since then, of course the fascination has arguably grown more intense facilitated by more ready access to data on the property market. But it’s also historically evident in relatively high levels of home ownership in Australia, particularly in the post-World War Two period. Since the mid- 1960s, though, the home ownership rate has declined as documented in a fascinating report by the well-known demographer Bernard Salt together with AMP entitled ‘What wealthy means to Australians in 2023’.

Peak home ownership

In my view, the most interesting chart in the report is that of home ownership based on ABS Census data dating back to 1911 that Bernard Salt and his team discovered peaked around 1966. Just before World War One, Australia’s home ownership rate was just below 50%, but from even this relatively high rate it surged in the post-World War Two years to reach a peak of 73% in 1966 as home ownership was seen as delivering financial security after the malaise of the Great Depression and World War Two. As the report notes, at the time it was all about “getting married, having kids, buying a house and holding a steady job”.Retirement planning was rarely on the radar with life expectancy at around 70 in the late 1950s and early 1960s. In the aftermath of the Depression and World War Two, the concept of wealth was seen as tied up to owning a home. However, from the peak in 1966, housing affordability has trended down to now being around 63%. The question is whether this decline reflects deteriorating housing affordability flowing from years of property booms, leading to a fading in the “Aussie dream” which is centred on home ownership or whether it’s something deeper.

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