If you're looking for a housing market recovery, look first for a federal election

There may be some reservation involved when it comes to census time. Handing over details such as family income and household budgets when you’ve got no idea where the data will go once it’s been collated understandably causes hesitation. However, I have no qualms – I’m one of those annoying people who will fill out the form online before the hard copy even hits the doormat. The results simply fascinate me. They provide a wealth of information for property investors, home owners, renters, and just plain nosy citizens wanting to gain perspective on where we stand in this broad, diverse society of ours.

The results however are hardly surprising for most that keep track of price movements and pressures of affordability.  Despite the recent downward spiral in property prices, housing – particularly along the eastern seaboard – is becoming increasingly unaffordable for a large proportion of young residents.

It’s therefore no surprise to see the numbers renting across the nation increasing from 27.2% to 28.7% since 2006, with yields up by a whopping 50% (and up as high as 77% in Western Australia).

The figures reported indicate 34.5% of 30- to 39-year-olds now live in rented accommodation and clearly struggle to save a deposit while servicing rising rental costs. Wage growth for the vast proportion of ordinary folk simply isn’t keeping pace – particularly if you haven’t got your foot on the ladder in the first place.

It’s not a case of home ownership being out of vogue, given the option between renting for life or owning, most would choose the latter. However, the debt-fuelled inflation that spiked property prices prior to the GFC, along with poor planning for population growth and other policy initiatives such as first-home owners’ grant – often laughably promoted as “aiding” housing affordability – have in turn pushed ownership off the table for a growing proportion of young residents.

Along with this data, outright home ownership is also declining. Families with children in particular are suffering – recording a decrease in their ownership rate from 79.5% to 77.2%. Other reports suggest, had ownership percentages stayed at the same level as the “peak” recorded in the 2006 census, we’d have welcomed an additional 34,000 into the property market and yet meanwhile, we hear our leaders proclaim their intention to increase the number of home owners, because if nothing else, it makes good policy speak.

The question seems to reside around whether, as a nation, we have a responsibility to provide ownership as a national right for all (importantly, low-income families) who hanker after the great “Australian Dream”. In truth, more than expressing it as such, it became viewed as such after World War II. Along with this came a range of policy initiatives intended to assist low-income households gain finance expressly for the purpose of obtaining a foothold on the property ladder. The uptake was naturally and predictably followed by a series of boom cycles buoyed on by investor speculation as most came to expect they’d retire with a property or two worth substantially more than it had been when first purchased.

However to afford the luxury of ownership, Australia’s household debt as a percentage of disposable income has sat stubbornly at around 150% for the past five years. For those unaware, this is the highest in the world.  Back in the early 1980’s, during which home ownership levels were 70.1%, household debt to disposable income was only 50%.  You can try and justify the data all you like – stressing income growth, lower borrowing costs and so forth, however it doesn’t take away the physiological impact and significant risk employed in holding such high levels of debt against residential housing – particularly in light of the GFC’s catastrophic effects both in Europe and the USA. However, from Australia’s current prospectus, a crash of similar proportions is something we’ll hopefully avoid.

So are we on our way to becoming a rental nation? Well, according to the stats, yes. Should ownership rates keep dropping at the same rate, in some 80 years’ time, 50% of Australia’s population will be living in rental accommodation – it’s hardly encouraging, is it?