4102.0 - Australian Social Trends, 1999  
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 24/06/1999   
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Contents >> Housing >> Housing & Lifestyle: First home buyers

Housing and Lifestyle: First home buyers

Young Australians are staying in education longer, marrying later, having children later, and buying their first home later in life than they used to. The median age of recent first home buyers rose from 30.2 to 31.8 years between 1988 and 1996-97.

Buying a first home represents a major commitment for any couple or individual. Those involved will generally need to have accumulated funds to make the initial deposit on the home and to have a steady income to meet on-going mortgage repayments.

Despite a general increase in the affordability of housing over the last decade (see Australian Social Trends 1999, Housing - National summary tables), young Australians have become less likely to embrace home ownership.

The reduced likelihood of young people purchasing a home is evident from changes in age-specific home ownership rates over the last decade. Between 1988 and 1996-97, home ownership rates among income units in which the age of the reference person was 25-34 declined from 42% to 32%. Substantial declines were also evident among those aged 35-44 (70% in 1988 compared to 63% in 1996-97).

These trends may in part be associated with changing patterns of family formation among young people, particularly since young people are staying in education longer, delaying marriage, and having their first child later in life (see Australian Social Trends 1997, Age at first marriage and Australian Social Trends 1996, Trends in fertility). Consistent with these changes, young people have been delaying buying their first home. Between 1988 and 1996-97, the proportion of first home buyer income units whose reference person was aged less than 35 declined from 70% to 62%. As a result, the median age of first home buyers (median age of reference person) increased from 30.2 years to 31.8 years.

A declining home ownership rate for young Australians means that they have become more likely to rent, board or live rent free. Part of the shift to these forms of tenure is related to substantial increases in the proportion of young adults, those aged in their twenties, continuing to live with their parents (see Australian Social Trends 1999, Families - National summary tables).


Home owners

The information for this review has mostly been taken from the 1988 Housing Survey and the 1996-97 Survey of Income and Housing Costs.

Income units are single persons, or groups of related persons within a household whose income is assumed to be shared. Income sharing is assumed to take place within couples and between parents and dependent children. It is assumed that decisions concerning the purchase of a home are also generally made by adults in such units.

Owner occupiers are income units who own their home, with or without a mortgage. First home buyers are a subset of owner occupiers.

First home buyers are income units who bought their first home in the three years prior to the survey reference period. The number of recent home buyers should not be compared across surveys as the nature of the three-year period is different for the two surveys. To be regarded as a first home buying income unit, neither the income unit reference person nor the income unit reference person's spouse could have owned a home previously in Australia.

Changeover buyers are income units who bought their home within the same periods described for first home buyers. However, the income unit reference person and/or the income unit reference person's spouse had owned a home previously in Australia.

AGE DISTRIBUTION OF FIRST HOME BUYERS, AND AGE-SPECIFIC HOME OWNERSHIP RATES(a), 1988 AND 1996-97
First home buyers
All owner occupiers
1988
1996-97
1988
1996-97
Age of income unit reference person
%
%
rate(a)
rate(a)
15-24
14.6
13.6
4.6
4.2
25-34
55.8
48.4
42.3
32.1
35-44
19.2
26.7
70.5
62.5
45-54
5.7
6.8
76.7
74.8
55 or older
4.7
4.4*
78.4
77.7
Total income units
100.0
100.0
53.9
52.8
Total income units ('000)
391.0
393.9
4 095.8
4 795.8
Median age (years)
30.2
31.8
49.4
50.9
(a) As a proportion of all income units in each age group.

Source: Unpublished data, 1988 Housing Survey; 1996-97 Survey of Income and Housing Costs.


Changing pre-conditions for buying the first home
Some young people purchase their first home before they establish family relationships of their own. In 1996-97, as in 1988, about 3% of one-person income units aged under 35 (and slightly higher proportions of men than women) had recently purchased their first home. Although there were slightly more owner occupiers among young people in this age range in 1996-97 (7%) than in 1988 (6%), there had been little change over the decade to the strongly prevailing social norm of partnering prior to purchasing property.

Of all income unit types, young couples are most likely to be first home buyers. In 1996-97, 19% of all couples in which the reference person was aged less than 35 were first home buyers. Moreover, 56% of young couples lived in a home that they owned with or without a mortgage. Young couples who were in a registered marriage were more likely than those who were in a de facto marriage to own their home (62% compared to 34%). Nevertheless, while clearly still strong, the importance of registered marriage has diminished for making the commitment that accompanies purchasing a home. Between 1988 and 1996-97, the proportion of young de facto married couples who owned their home increased (by 5 percentage points, up from 29%), while it decreased among young registered married couples (by 4 percentage points, down from 66%).

FIRST HOME BUYER AND OVERALL HOME OWNERSHIP RATES(a) FOR SELECTED INCOME UNIT TYPES, 1988 AND 1996-97
First home buyers
All owner occupiers
1988
1996-97
1988
1996-97
Total income
units 1996-97
Age of reference person
by income unit type
%(a)
%(a)
'000
%(a)
%(a)
'000
'000
Less than 35 years
    One-person
3.4
3.3
76.3
6.0
7.3
169.7
2,311.0
    Men
3.5
3.4
46.2
6.3
8.1
112.2
1,376.6
    Women
3.1
3.2
30.2
5.6
6.2
57.6
934.4
    Couple
20.2
19.2
164.3
61.1
55.7
477.7
857.2
    Registered marriage
20.7
18.6
123.7
66.1
62.0
412.3
664.7
    De facto marriage
16.5
21.1
40.6
29.0
33.9
65.4
192.6
35 years or more
    One-person
2.3
2.2
46.3
59.5
54.9
1,138.8
2,073.2
    Couple
2.8
2.7
92.4
85.3
85.1
2,864.7
3,367.2
    Registered marriage
2.7
2.6
83.7
86.0
85.7
2,776.7
3,239.6
    De facto marriage
5.4*
6.8*
8.7*
59.7
69.0
88.0
127.6
Total income units(b)
5.1
4.3
393.9
53.9
52.8
4,795.8
9,083.3
(a) As a proportion of all income units of each type.
(b) Includes one-parent income units.

Source: Unpublished data, 1988 Housing Survey; 1996-97 Survey of Income and Housing Costs.


Types and characteristics of dwellings purchased
Although separate houses have continued to be the most favoured form of housing, there has been some shift among first home buyers towards higher density housing. In 1996-97, 17% of first home buyers had purchased medium-high density accommodation (such as a semi-detached, row or terrace house, flat, unit or high rise apartment) as opposed to a separate house, up from 14% in 1988. A similar shift has occurred among changeover buyers.

Between 1988 and 1996-97, there was also, among first home buyers, some movement away from buying new homes towards buying homes that had been lived in previously. The proportion of first home buyers who bought a new home fell from 23% in 1988 to 21% in 1996-97. This change, as well as the move away from separate houses, suggests that homes in more established areas have become more popular with first home buyers than homes in urban fringe developments.

Another trend has been for first home buyers to purchase larger dwellings as measured by the number of bedrooms. Higher proportions of first home buyers bought a home with more than three bedrooms in 1996-97 (20%) than in 1988 (13%). Even though most first home buyers purchase established homes, this trend partly reflects an increase in the size of new dwellings being built (see Australian Social Trends 1998, Smaller households, larger dwellings).

DWELLING STRUCTURE CHOSEN BY RECENT HOME BUYERS, 1988 AND 1996-97
1988
1996-97
First home buyers
Changeover buyers
First home buyers
Changeover buyers
Dwelling structure
%
%
%
%
Separate house
85.3
85.3
82.1
83.3
Semi-detached houses and flats(a)
13.9
13.7
17.1
15.9
Total income units(b)
100.0
100.0
100.0
100.0
Total income units(b) ('000)
391.0
600.1
393.9
686.8
(a) Includes all semi-detached, row, terrace and townhouses, flats and units but excludes houses/flats attached to shops etc.
(b) Includes income units living in a dwelling structure other than a separate house, semi-detached house or flat.

Source: Unpublished data, 1988 Housing Survey; 1996-97 Survey of Income and Housing Costs.


Dwelling problems
When buying a home, first home buyers have appeared to be more likely than recent second or subsequent home buyers to tolerate property troubled by problems such as pests, electrical faults, draughts, defective windows, mould and mildew. According to the 1994 Australian Housing Survey, only 25% of recent first home buyer income units reported no problems with their home, compared to 35% of recent changeover buyer income units. At the same time, 11% of recent first home buyers were troubled with 5 or more problems, compared with only 7% of recent changeover buyers. However, these differences may also reflect relatively less knowledge and experience of housing problems among first home buyers.

AGE AND SIZE OF HOMES BOUGHT BY FIRST HOME BUYERS, 1988 AND 1996-97
1988
1996-97
%
%
Age of home
    New home
23.1
21.0
    Established home
76.9
79.0
Number of bedrooms
    One(a)
4.2
3.1*
    Two
23.0
21.1
    Three
59.8
56.0
    Four
11.8
18.1
    Five or more
1.3
1.7*
Total income units
100.0
100.0
Total income units ('000)
391.0
393.9
(a) Includes bedsitters.

Source: Unpublished data, 1988 Housing Survey; 1996-97 Survey of Income and Housing Costs.


Affordability
The cost of purchasing a home, and of meeting the associated establishment costs, is a major issue of concern to first home buyers. Broad measures of housing affordability suggest that purchase of a first home is within much closer reach in the late 1990s than it was in the late 1980s (see Housing - national summary table, p. 148). Yet recent first home buyers spent about the same share of their income on housing in 1988 and 1996-97 (about 22%).

For some owner occupiers with a mortgage, housing affordability problems may be self-imposed. Such owner occupiers may choose to repay large amounts in the short term to acquire an asset that tends to appreciate in value over the long term.

There is no single standard method for defining people who are experiencing housing affordability problems. However, one measure used in housing research is the ratio of housing costs to income for those income units whose income is relatively low (that is, those in the bottom 40% of the income unit income distribution). Among these units, those whose housing costs consume more than 30% of their income, are considered to be experiencing affordability problems.1 In 1996-97, 7% of first home buyers experienced housing affordability problems according to this criterion. One-parent income units (24%) were more likely than one-person income units (16%), and considerably more likely than couple income units (5%) to be experiencing such affordability problems.

HOUSING COSTS AS A PROPORTION OF INCOME, 1988 AND 1996-97
1988
1996-97
Housing tenure
%
%
First home buyers
22.5
21.7
All owners without a mortgage
3.2
3.4
All owners with a mortgage
19.6
20.5
Renters
20.5
20.8
All income units(a)
12.4
13.3
(a) Includes other forms of housing tenure such as boarding and living rent free.

Source: Unpublished data, 1988 Housing Survey; 1996-97 Survey of Income and Housing Costs.


Endnotes
1 National Housing Strategy 1992, The Affordability of Australian Housing, Issues Paper No.2, AGPS, Canberra.



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