Housing demos by tenure + more

There is little surprise that most homeowners are either couples or live alone as they are typically older Australians.

Many who own their home outright live in a detached dwelling and most pay less than 25% of their gross household income towards housing costs.

See table 1.

Table 1 also shows that many Aussie households with a mortgage have dependent children.

They are also middle aged, live in mostly detached houses and only 17% pay, on average, more than 30% of their gross pay on housing costs.

In contrast, Australian renters are more of a ‘mixed grill’ when it comes to household type, with private long-term tenants skewed towards a younger demographic than owners or mortgagees.

More renters, these days, live in something attached rather than detached housing.  Over one third of tenants reside in an apartment.  See chart 1.

Also, of note – revisit table 1 – is that close to a third (31%) of renters pay more than a third of their wages on the cost of their abode.

And whilst this has been the case for the last five years the situation is likely to get worse as vacancy rates tighten due to the return of immigration and as new building starts tightened.

Chart 2 shows that more tenants have been ‘renting’ from family and friends in recent years.  As rents rise many more renters will be forced to either boomerang back home, share with other tenants or accept much lower digs, assuming they are available.

Some of my contemporaries have been suggesting that one reason for the decline in the rental vacancy rate in recent years is because more renters are either living alone or in a couple situation.  They say that Covid drove this change.  But the latest housing occupancy survey shows that there has been no change in the average private rental occupancy rate of 2.6 per dwelling.

A lack of investment in new rental housing is the main driver for the decline in available rental space along with many investors deciding to keep their dwellings vacant.  

Whilst some landlords have opted to list on the short-term rental market via Airbnb most have opted for capital growth over a rental yield and in some locations, investors were put off by the state/territory government pro-renter Covid-related prescriptions and memorandums.

For mine, investors are better off buying a dwelling that is designed for tenants to share.

In summary it is renters that are really facing housing affordability issues.

One of Labor’s better policy suggestions is their “Help to Buy” scheme, which should help renters get into the housing market, with a 40% government down payment assisting buyers.  Ten thousand starts have been allocated in the first batch.  This is one way to lift the amount of available ‘public’ housing.

Outside of the mid-1980s renegotiation of the Commonwealth-State Housing Agreement (CSHA) by the Hawke government – which helped lift new housing starts by over 50% over the next two years – and the GFC related emergency funding provided by the Rudd government, charts 3 and 4 show that there has been a massive decline in the amount of public housing provided across Australia in recent years.

Building more public housing is one way to increase housing supply without adding fuel to dwelling prices and weekly rents.

There is some debate as to if the 10,000 “Help to Buy” spaces will actually be taken up.  I hope that they are, because as shown in chart 3, there is a need to at least repeat this volume of new public assisted builds on an annual basis.

Ideally, 10% of Australia’s new housing starts should be in the public space each year, which means about 15,000 ‘public’ new homes per annum.

Also, a topical concept at present is taxing Airbnb as per the Brisbane City Council’s latest budget.  Such moves should be popular with some residents but will do very little to switch landlords back to leasing to long term renters.

Another current notion is replacing stamp duties with higher land tax.

Stamps are ridiculously expensive, reduce housing affordability (at the time of purchase, where it matters most) and stops mobility.

Having an option to either pay stamp duty on settlement or pay a higher annual land tax is a good idea and one, if enacted in NSW, is likely to spread across the country.

There is little doubt that a lot of households don’t move – either to downsize or to a new area for work/lifestyle – because of the high cost of selling and buying.

Regulating real estate agent’s selling fees to a maximum set amount regardless of sale price – something like $10,000 – would also help.  These days the digital property promotional platforms do most of the heavy lifting.

And real estate types please take a breath before shooting me a nasty email.

As I have written about many times before making it easier to build would also help with rental affordability.

Australia’s planning rules are highly restrictive (now that’s an understatement!) and favours “nimbyism” that really only serves those that own a home (or are paying one off) over those that wish to become owners.

We need a lot more “missing middle” in our capital cities and major regional towns too.

Finally in this space – of increasing supply without boosting prices – more housing co-operatives should be provided.

Here residents are either members (i.e., renters) or joint owners.  It is all about providing housing and not wealth creation.

Over 20% of Sweden’s housing is via co-operatives.  In Norway is it 15%, with 40% of Oslo’s housing supplied this way.

Build to Rent is a general move in this direction.

Housing investor demographics

About two (2) million or 21% of Australian households hold an investment property.

The number of housing investors have increased by 240,000 or 13% over the last five years.

Of the two million investor households, some 68% hold just one investment property, whilst 20% hold two.

When looking at the total 9.7 million Australian households, 14% hold one investment home, 4% hold two, 2% hold three and just 1% or 87,000 households hold four or more investment properties.

About half of the growth in investment households over the last five years, has been in households holding two investment properties and another 25% of the lift has been in households holding three investments.

Our table this post shows that homeowners hold 80% of the investment properties and 20% of renters hold an investment property.

Not surprising, housing investments are mainly held by older residents.

Many investment properties are estimated to be worth around $500,000, yet there is a wide range in appraised values.

Also, numerous property investors live in New South Wales (32%) and Victoria (29%).

One thing that was a surprise in this recent ABS release – and it is something that they haven’t monitored before – is that around 29% of investment properties are not rented out.  They are sitting there vacant.

So, whilst there are about two million investment properties across Australia (as at 2020) only 1,442,000 hold tenants and a big 577,000 are sitting vacant.

Somewhat amazing is that 170,000 of these 577,000 vacant investment properties are held by renters.  This implies that 42% of the investment properties currently held by those renting are unoccupied.

This goes some way to explain why vacancy rates have plummeted in recent years.

As I have written about before – and especially assuming that these figures ring true (remember they are the results of an ABS survey) – something should be done to discharge these under utilised homes.

A stick could work.  An annual tax or separate charge for empty homes are two examples.  But maybe a carrot would be better.  A tax break or rental supplement maybe.

Yet, once price growth slows down and even reverses for a time, then maybe these landlords without a tenant will seek a rental yield instead of relying solely on capital gains.

Rising interest rates should also see more investors seek a rental return to help cover holding costs.

Recent buyer demographics

The latest statistics from a great ABS series titled housing occupancy and costs have just been released.

Over the next couple of weeks, I will feature some of the key findings with you.

Two tables and two charts are included in this post.

Some observations from table 1 include:

  • There were 1.1 million Australian dwelling transactions during 2020, of which 14% were for new homes and 86% for established abodes.
  • There were some 9.732 million households across Australia in 2020, so some 11% of households either bought, sold, and moved or bought an additional home that year.
  • First home buyers accounted for 37% of the sales, whilst changeover buyers, 63%.
  • The average price paid was $700,000 (remember these statistics cover fiscal 2020) and the average equity held buy all buyers was 52%.
  • According to the ABS first home buyers had a 35% equity stake in their purchase, whilst changeover buyers held a 60% share of the dwelling’s worth.
  • Buyers are paying a premium – ranging from 7% to 12% – for a new dwelling when compared to something established.

My end note here is twofold, firstly if this equity stake has remained stable since 2020 – and in contrast to recent media comments – recent buyers should be okay if (when) housing values take a bit of a slide.

And secondly, due to material shortages and rising labour costs, new homes over the past two years have become more expensive, making established digs (to many I would suggest) better value for money.   This in turn will contribute to a fall in new housing starts over the next couple of years.

My observations from table 2 are:

  • Somewhat surprisingly 65% of recent changeover buyers have a mortgage.
  • About half of the recent buyers live in a family household; whilst 30% are couples (with no dependent children) and 19% live alone. Lucky buggers!
  • Detached houses are still the most popular housing purchase for changeover buyers (75%), less so for first timers (67%).
  • Nearly all first home buyers are aged between 25 and 44 years, whilst the majority (61%) of changeover buyers are over 45 years old. Some 23% of changeover buyers during 2020 were over 65.

My end comments include that it isn’t maybe that surprising that buyers have been taking advantage of record low interest rates.  Chart 1 shows that homeowners with full equity have been in decline for some time.

Whilst detached housing remains the preferred dwelling type across Australia, there have been clear trends in recent years – due often to the rapid rise in detached house prices – that more first home buyers are opting for something attached instead.  Apartments seem to be an increasing choice.  See chart 2.


My May 2022 playlist is below.

50 songs that I have liked listening to this month.  The usual caveat applies being some tunes are new, many old.  No rhyme or reason for their inclusion, playlist order or genre.


Home buyers

Another stocking filler this week …. busy, busy, busy with consultancy work.

The table shows fewer first home buyers in the mix.  Accelerating dwelling prices has made buying a home expensive, and now with rising interest rates, prohibitive.

For mine – and despite what government incentives are on offer – first home buyers’ interest will decline further over coming years.  Many buyers, including first timers, brought their buying decisions forward over the past 12 to 18 months.

It is not until we see immigration rise – and then only after a few years of elevated overseas migration – will first home buyers rise up the pecking order.

Investment interest is largely steady, with a 20% market share of the established market and 30% of the new housing space.

One of the things further exhausting the rental housing supply is that some 50% of the homes listed for sale across Australia at present are being sold by investors, whilst investors represent between 20% to 30% of buyers.

This dislocation is more noted in regional markets, where investors represent some 75% of those selling, yet investor buyer interest is much lower, at around 35%.

Little wonder regional vacancy rates remain tight, and in many locations, are still falling.

Finally, it is not surprising to see more expats and foreigners in our buying mix.

Top 50 urban areas

A stocking filler this week, flat chat of late with project advice consultancy work.

The table below shows the list of the top 50 urban areas across Australia.  It contains last year’s (fiscal 2021) population growth versus the previous five-year annual rate of change.

These top 50 urban areas, whilst comprising just under 5% of the countries land mass, holds 83% of Australia’s 25.8 million residents.


Recent project advice work

I undertake all this work myself these days – so you get me (sadly) and my work in this space is based on – a clear brief, site inspection, SWOT, relevant local property market and demographic demand/outlooks, plus an in-depth analysis of existing and future supply.  A draft report is supplied; followed by a debriefing (in person or digitally) and then final documentation.

My aim with this work is to maximise each site’s potential return whilst reducing risk.  Risk can involve sales, renting, future capital appreciation and timing of release/development.

For most commissions I recommend:

  • Development type/s
  • Product descriptions/dimensions/mix
  • Target market origins/type/characteristics and wants
  • Market depth and outlook
  • Competitive set, now and into the future
  • Potential pricing/rents and future potential escalations/declines
  • Best timing for release/development
  • Key marketing points
  • Marketing overview/ base strategy

 The investment to undertake such work typically ranges between $7,500 to $12,500 per site.  Excludes GST and, sometimes, direct costs.

Time budget is usually four (4) weeks from commission to completion.

Recent work includes:

  • Yeppoon subdivision
  • Coomera infill housing development
  • Toowoomba apartment complex
  • Melbourne mixed use housing estate
  • Gatton subdivision site sale
  • Richlands infill housing development
  • BTR various: Brisbane, Melbourne, Canberra and on the Gold Coast

Interested in knowing more? 

Email me on missive@matusik.com.au

House price outlook #5

As the heading suggests I have covered this topic several times in the recent past.

Our analysis is proving to be a reliable indicator of short-term house price growth.

We know that Australian house prices rose 18% during the 12 months to March 2022 and the just released official lending statistics suggest that house prices could now rise by 12% for fiscal 2022 and median house values appear set to rise by just 5% for the year ending September 2022.

So, house price growth is expected to continue – despite the recent lift in interest rates – over the next couple of months but then start to fall (slightly) on a quarterly growth basis into the September quarter.

In simple terms and from the bird’s eye view,  if you bought a house in June last year, it could be worth 12% more come this June and a home bought around September 2021 could have grown by 5% more in value by September this year.

But if you bought a house this June, then it could be potentially worth 2% less within three months’ time.  See table 1.

Two charts are also included in this post.


Home loans

Let’s start with some numbers.

Number of new home loans

There were 717,000 new home loans across Australia over the last twelve months.  This excludes refinancing.

This is up by 31% on the year before.

Around half of these loans were to owner residents who have bought a dwelling in the past.  These borrowers are what the real estate industry like to label “second and subsequent” buyers.

Another 28% of the 717,000 home loans were taken up by second and subsequent investors.  These 200,000-odd investors were up from 124,000 such loans the year before, an increase of 60%.

And 22%, with about 160,000 loans, were first time owner-occupier buyers.  This volume was up just 11% on a year earlier.

Finally, just 1% or 10,500 loans last year went to first time investors.  But this volume has increased by two-thirds in the past twelve months.

So, in summary, experienced home buyers make up about 75% of the market at present, with first home buyers holding 25%.  And investors hold a 30% market share.

Investment interest is currently growing a two and half times the pace of the second and subsequent owner occupier interest and six times the speed when compared to first time owner resident buyers.

For more details see table 1 at the end of this post.

Also of interest is the size of new home loans.

Price of new home loans

The average new housing home loan for owner residents is currently $570,000 across Australia.

Over the past ten years, the size of Australian home loans has been growing by 8% per annum.  Last year the rate of growth was 18%.  The average Australian home loan size was $100,000 cheaper at the start of the pandemic.

Chart 1 shows the relationship between the RBA cash rate and home loan size.

Chart 2 and table 2 (at the end of the post) shows the size and recent growth in home loan size by buyer type.

Both tables 1 and 2 provide the relevant data by state and territory too.

End comment

There is little doubt now that interest rates are going to rise.

Some are saying that this will occur faster and at a great amount than previously thought.

This change in tone is somewhat astonishing given that most economic talking heads – just a few months ago – were lockstep with the RBA’s ‘promise’ of no change in the cash rate until at least 2024.

Nevertheless, I am sticking to my original forecast.  Well almost.

 I said in November last year.

 “…a limited increase in official interest rates this cycle should be enough to adequately dampened inflation and lessen irrational exuberance.

 For mine I don’t see the RBA overreacting and as a result I see the official cash rate lifting between 1.75% and 2.0% by the end of 2024, with the first lift being just 0.15% – bringing the cash rate to 0.25% – sometime in late 2022.  After which I see 0.25% increases, and most likely on a quarterly basis, during calendar 2023 and 2024.

 A few are now forecasting house price falls during 2023 as a result of rising interest rates, a lift in the number of dwellings for sale, affordability limits and even buyer fatigue.”

Those house price falls were modest.  But now we have punters calling for 15% plus price declines.

Again, this change in tone is amazing, bordering on duplicitous.

Yet, there is no precedent for the RBA increasing the cash rate through prolonged double digit declines in Australian housing values.

Plus, this time around – given how low interest rates are plus the size of mortgages these days (and for mine that there is little real wage growth forthcoming) – there will be greater household sensitivity to interest rate changes.

For example, a 1% to 1.5% rise in the home loan rate, doesn’t seem like a lot (especially to those among us that were paying 15% to 17% when we bought our first home) but that 1% to 1.5% increase represents a whopping 37% to 55% lift over the current 2.7% average home loan rate.

This will see many home borrowers paying between $500 and $750 extra per month.  That will have an impact and the housing market should slow accordingly.

So, for mine, at best there could be a plateauing for housing values, on average, over the next five plus years.  This might even extend to a decade.

There will be falls in median housing values at times along the way and those falls could reach double digits (at times) in terms of an annual percentage change.

But if I was to place a bet, I reckon that the median Australian house price in late 2022 will be about the same number at the end of the decade.

To finish let’s revisit that well almost.

Well almost

Given inflation’s propensity to get out of hand, the RBA was right to have lifted the cash rate yesterday.

I think it should have been increased by 0.4%, bringing the cash rate to 0.5%.

Why – well unless you have been hiding under a rock during the past week – Australia’s annual inflation rate currently exceeds 5%.

Remember the RBA is supposed to try and keep inflation in the 2% to 3% band.

But it is an election month after all.

Then my earlier interest rate outlook comes back into play.  That is 0.25% lifts, roughly six weeks, after each quarter until we get a cash rate somewhere between 1.5% to 2.0%.

The RBA has always lifted interest rates – well going back to the 1990s – the meeting immediately after the latest inflation figures.

But of course, the world is in an increasing state of flux, so who really knows what will happen.


My April 2022 playlist is below.

50 songs that I have liked listening to last month.  The usual caveat applies being some tunes are new, many old.  No rhyme or reason for their inclusion, playlist order or genre.  And the cartoon is again by the very talented Avi Steinberg.


A slap

This topic has got a massive head of steam.

To be a bit flippant, it needs a good slapping down.

Below is a recent press clipping from The Oz newspaper.

To repeat there is no race to the regions.

If my recent conversations are any guide, then a lot of people are making real estate buying decisions, on this shallow analysis and associated exposure.

To deliver a final smack here, let’s focus on the population growth figures for New South Wales, Victoria, and Queensland.

The table in the media article correctly states that Sydney’s population lost -5,200 people over the twelve months to 20th June 2021, whilst NSW’s regional locations gained 26,800 peeps.

Melbourne lost 60,500 people yet regional Victoria’s headcount was up 15,700.

And the Brisbane capital region grew by 21,900 folks and the Qld regions rose by 24,100 people during fiscal 2021.

As explained several times over the last two years, much of this regional growth is in the areas immediately adjacent to the major capital city boundaries and more often than not within commuting distance to the big smoke.

In NSW some 38% of the recent regional population growth was in the Newcastle area; followed by 19% in the Wollongong region and another 9% in Richmond/Tweed adjacent to Queensland’s Gold Coast.

Ballarat, Bendigo, and Geelong accounted for 70% of Victoria’s regional increase last year.

And in Queensland the Gold Coast held a 35% market share of the state’s regional population growth: with the Sunshine Coast coming in second with 30%.

The next biggest regional Queensland growth market was the Fraser Coast (think Hervey Bay) with a 1,670 population increase – or 7% of the overall regional growth tally – during financial 2021.

In fact, all but three Queensland regions, saw their annual population growth rates fall during 2021.

The exceptions were Mackay, with an 840 increase in 2021, compared to the 300 previous five year annual average.  Gympie, up 790 last year, compared with its 680 average and Gladstone, with 335 versus 235.

For mine charts 1 and 2 hammers the final nail in the ‘trend setting’ regional growth coffin.

Chart 1 shows that annual population growth in Australia has plummeted.  It is at its lowest level since the first world war.

The big reason for this fall is that overseas migration has stopped due to Covid restrictions.  Some 70% of the population growth in our capitals comes from immigration.

Chart 2 shows that big fall in population growth in our major cities and importantly very little change in regional growth numbers.

Our truly regional centres aren’t growing any faster than usual.  The absence of overseas migration makes their recent population growth rates look ballistic when compared to our bigger cities.

Despite headlines and the talking heads spruiking otherwise there isn’t really much to see here.

Oh, and both my charts this post – and whilst I would argue such action needs some really careful deliberation – indicates that our annual net immigration intake is about to ramp up and big time.

Rate race

The ABS a few weeks ago released some updated population growth figures.

In short, for the year ending September 2021, Australia’s population grew by 70,000 people.  The big winners in the population growth stakes were Queensland, up 58,000; New South Wales, up 24,000; and Western Australia, up 18,000.

Victoria lost some 33,000 people over that twelve month period.

When I present stats about population growth – and especially when asked by friends or relatives around the dinner table (or more likely firepit these days) – I see eyes glaze over.  Many cannot process what, say an increase like 70,000, actually looks like.

So, when answering such questions, l like to provide the answers as a weekly figure.

Table 1 outlines such.

Therefore, Queensland’s total population growth is increasing by 1,100 people every week; whilst Tasmania’s (and despite what the locals will tell you) is only seeing its population lift by four (4) people each week.  That is just 190 people over the last 12 months.

The long trend interstate migration results for both Queensland and Tasmania are charted below.

Many people in business applaud high population growth numbers.

There is a lot of debate that population growth without accompanying economic grunt doesn’t help much when it comes to the monetary welfare of the local population.

And more bums on seats means more cars.  The latest figures (2021) suggests that for every 1,000 increase in population across Australia equates to 785 additional cars.  This figure is 830 cars per 1,000 in Qld and SA.  And rises to 870 in WA and 955 in Tasmania.

On one of my recent regular work trips to Queensland many punters wanted to tell me about the rapid rise in net interstate migration to the sunshine state.

Yes, again as at the September Qtr. last year, the net interstate migration result saw 1,400 people per week move to Queensland.  This was up from 600 people per week over the same twelve week period a year ago.

Some 60% of the most recent interstate migrants to Queensland came from NSW, with another 30% coming from Victoria.

Is this sustainable?

Hmmm, I don’t think so.

I think the recent flooding; cooling NSW and Victorian housing markets; office call backs and the removal of most Covid-related restrictions will most likely see interstate migration patterns settle back down to the longer term averages.

If I am correct, then Queensland’s’ net interstate movement will still average something like 800 new people per week.

It really is a rat race after all.

Easter 22: Stuff worth reading + listening

It is that time of the year again to share with you some books and albums I have enjoyed over recent months.

Einstein was a very smart man, as time is relative indeed.

It speeds up the older you get!

For mine it was just Christmas a few minutes ago.

With that message in mind, please spend some time this Easter with those that matter.

I find that turning off all your devices helps.  It is only for a few days.  It makes a big difference.  And on this theme, maybe read Johnann Hari’s Stolen Focus over the Easter break.


And to those that are interested in my regular music playlists see below my March 2022 playlist.  50 songs that I have liked listening to last month.  Some are new, many old.  No rhyme or reason for their inclusion, playlist order or genre.  And the cartoon is by the very talented Avi Steinberg. Enjoy!

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