One in five home owners quit property ownership, some not to return: Academic
A surprisingly high number of home owners sell then revert to renting, never to own again, says Professor Gavin Wood, director of the RMIT Research Centre of the Australian Housing and Urban Research Institute. The study reveals one in five home owners dropped out of ownership at some point during the period 2001 to 2009.
Using data from the Household, Income and Labour Dynamics in Australia survey, Wood tracked the housing histories of thousands of Australians over nine years from 2001.
During that time 1.65 million “episodes” of home ownership were terminated as people moved into rental housing. Among people under 50, the “survival rate” in home ownership was 77%.
“On the face of it these figures suggest a higher proportion of Australian home owners are precariously perched on the margins of home ownership than in the past,” Wood says.
He maintains the idea that housing careers progress smoothly from leaving the parental home through renting and then into ownership, with low housing costs matching lower income post-retirement, is losing its relevance in the 21st century.
“It's no longer necessarily true that buying a home sets you up for life,” says Wood.
He says it was not clear why so many fell out of home ownership but financial pressures and high housing prices had played a part.
It was noted while just over half the Australians later moved back into the property market, many became reliant on rental assistance or public housing.
The former owners who did not return quickly to the property market were more likely to enter public housing or qualify for Commonwealth rent assistance than long-term renters, the report suggested.
This suggests they were precipitated out of home ownership by adverse circumstances”' Wood says.
The report noted Australia had a healthy private rental market compared with Britain, allowing people to move more freely between ownership and renting rather than clinging on in penury to their homes.
The relative ease of renting in Australia might also be a factor in the low mortgage default rates. “People sell up before it gets to that point,” Wood told SMH reporter Adele Horin.
As a step towards lowering housing prices he suggests replacing stamp duties with a broad-based land tax, and establishing an income-tested housing allowance that would go to struggling home owners as well as renters, and abolishing subsidies for first-home buyers.
