Lyla Lindsey
Australia has around 10.8 million residences, with 3.2 million of these mortgaged (excluding investment loans). In 2021, 35% of Australia's 9.8 million homes were mortgaged, with 31% owned outright and 30% rented. The average home loan size in Australia was $580,240 in the June 2023 quarter. However, this varies across states and territories, with housing markets like Sydney's being significantly more expensive than smaller regions. Mortgage loans are essential for the average Australian to achieve homeownership, but high property prices and mortgage rate hikes have made this inaccessible for many young people and low-income earners.
| Characteristics | Values |
|---|---|
| Total number of households in Australia | 9.8 million |
| Number of homes owned with a mortgage | 3.2-3.3 million |
| Percentage of homes owned with a mortgage | 35% |
| Average home loan size | $580,000 |
| Average housing cost for homeowners with a mortgage | $493 per week |
| Average interest rate for owner-occupied variable rate home loans | 7.26% |
| Number of households with other tenure types | 192,200 |
| Percentage of 30-34-year-olds who own homes | 50% |
| Percentage of 25-29-year-olds who own homes | 36% |
| Percentage of 50-54-year-olds who own homes | 72% |
| State/Territory with the highest proportion of people in disadvantaged households | Northern Territory (30.3%) |
| State/Territory with the lowest proportion of people in disadvantaged households | Australian Capital Territory (9.8%) |
| State/Territory with the highest proportion of people in advantaged households | Australian Capital Territory (48.2%) |
| State/Territory with the lowest proportion of people in advantaged households | Tasmania (23.4%) |
| Government programs to support home buyers | First Home Owner Grant Scheme, First Home Super Saver Scheme, Home Guarantee Scheme, First Home Buyer Deposit Scheme |
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What You'll Learn
35% of Australia's homes are mortgaged
Australia has approximately 10.8 million residences, and as of 2021, 35% of these—or 3.3 million homes—are mortgaged. This figure has doubled since 1996, when the number of homes owned with a mortgage was 15%. While the number of homes owned without a mortgage has not changed significantly in this period, the proportion of homes owned with a mortgage has been growing.
The high cost of housing in Australia has made homeownership difficult for many. As a result, the number of home loan commitments to first-time buyers has been decreasing, with many potential buyers deterred by the financial stress associated with taking out a mortgage. In addition, rising mortgage interest rates and recovering house prices have made lending activities less appealing to aspiring homeowners. The proportion of income spent on mortgage repayments is increasing, and the share of owner-occupied mortgage holders at risk of mortgage repayment stress in Australia is also rising.
The Australian government has responded to this situation by extending existing programs such as the first home buyer deposit scheme, and state governments have introduced incentives such as stamp duty. The average home loan size in Australia was $580,240 in the June 2023 quarter, although this varies by state and territory. The average housing cost for homeowners with a home loan was $493 per week in 2020.
Despite the challenges, the Australian dream of homeownership persists, and many Aussies continue to make the huge financial commitment.
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Homeownership rates decreasing
Australia's homeownership rate has been declining for decades. In 2021, there were approximately 9.8 million households in Australia, with 35% owned with a mortgage, 31% owned outright, and 30% rented. While the number of homes owned has not changed significantly since 1996, the proportion of homes owned with a mortgage has been increasing. This shift towards mortgage ownership is particularly prominent among younger generations, with homeownership rates for 25-29-year-olds decreasing from 50% in 1971 to 36% in 2021. Similarly, the 30-34 age group experienced a 14% decrease in homeownership rates during the same time period.
Various factors contribute to the decreasing homeownership rates in Australia. One factor is the increase in single-person and single-parent households, which tend to have lower homeownership rates. In 2017-18, 47% of single-parent households were renting, reflecting a rise from 42% a decade earlier. Additionally, the proportion of couples with children renting has also increased from 20% to 24% during the same 10-year period. Population growth, including overseas migration and the influx of international students, further drives up housing demand, particularly in major cities.
The Australian government has implemented initiatives to address the housing crisis and support aspiring homeowners. These include the Indigenous Home Ownership Program, which provides First Nations people with access to affordable home loan finance and the knowledge, skills, and networks needed to navigate the home-buying process. Additionally, the First Home Super Saver Scheme allows first-time buyers to save for a house deposit using their superannuation fund, with tax benefits included. Other support measures include home purchase assistance, the First Home Owner Grant scheme, and the Home Guarantee Scheme.
Despite these efforts, the dream of homeownership remains out of reach for many young Australians. The housing crisis has been decades in the making, shaped by economic decisions, planning policies, and demographic shifts. Academics attribute the decline in homeownership rates to various factors, including population ageing and institutional changes that favour existing homeowners over first-time buyers.
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Average mortgage size
The average mortgage size in Australia varies depending on the state and territory. As of February 2024, the national average mortgage size was $598,624, a decrease from the all-time high of $624,383 in December 2023.
Mortgages are the highest in New South Wales (NSW), with the average loan amount being $721,599 as of February 2024, and $767,584 as of April 2024. The Australian Capital Territory (ACT) has the second-highest average mortgage amount, at $628,411 in February 2024. The Northern Territory (NT) has the lowest average loan size, at $437,427 as of April 2024.
It is important to note that the average mortgage size reflects the amount owed by both long-term homeowners and new homebuyers in the current market. Additionally, the average interest rate on an owner-occupier home loan, as of May 2024, is 6.27% for new loans, according to the Reserve Bank of Australia (RBA). This rate is used to calculate the average mortgage repayment amount, which can vary depending on the loan term and other factors.
The calculation of average mortgage repayment can be complex due to various factors influencing it. These factors include the location of the property, whether it is an investor or owner-occupier loan, and whether it is for an existing or new property. Furthermore, the loan can be a fixed-rate or variable-rate loan, which impacts the cost of monthly repayments.
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Mortgage interest rates
The Australian housing market is predicted to experience volatility over the next few years, with rising interest rates influencing property prices. The interest rates on mortgages in Australia have been fluctuating, with rates at a low in 2022, starting at 0.10% in April, and then rising in 2023 and 2024. The Reserve Bank of Australia (RBA) cash rate, which is the primary benchmark for interest rates, was 4.35% as of May 29, 2024, and has been gradually increasing to combat inflation.
There are three primary types of home loan interest rates in Australia: fixed-rate, variable-rate, and split loans. Fixed-rate loans offer a specific interest rate that is beneficial for budgeting, but borrowers may miss out on the advantages of a lowering interest rate. Variable-rate loans are attractive for those seeking lower rates initially, but they can be unpredictable for budgeting purposes. Split loans offer a combination of both fixed and variable rates.
The share of fixed-rate mortgage lending and the term of these loans influence how policy rate changes affect the interest rates faced by indebted households. During the COVID-19 pandemic, the share of mortgages with fixed interest rates increased significantly in Australia, reaching almost 40% in early 2022. This was due to the pricing of fixed-rate loans becoming more favourable compared to variable rates. However, in countries like Australia, most fixed-rate mortgages will reprice at new market rates within two years, unlike in the United States, where fixed-rate terms can be as long as 30 years.
The Australian government provides financial support to assist first-time home buyers, low-income households, First Nations people, and vulnerable individuals. Various schemes are available, such as the First Home Owner Grant Scheme, the First Home Super Saver Scheme, and the Home Guarantee Scheme, which aim to improve access to home ownership and provide financial assistance.
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Government support for first-time buyers
In Australia, more than a third (35%) of the country's 9.8 million homes are owned with a mortgage. The Australian government provides financial support to assist first-time home buyers, low-income households, First Nations people, and vulnerable people in purchasing a house. Here are some of the government support initiatives for first-time home buyers:
Home Purchase Assistance
This program provides financial assistance in the form of direct lending, concessional loans, and mortgage relief to eligible low-income households. The aim is to improve their access to homeownership and help them maintain it.
First Home Owner Grant Scheme
Introduced in 2000, this scheme is funded by state and territory governments. It offers a one-off grant to low-income first-time homeowners who meet the eligibility criteria. For instance, at least one applicant must be an Australian citizen or permanent resident.
First Home Super Saver Scheme
Implemented in 2017, this scheme helps first-time home buyers save for a house deposit using their superannuation fund. As of July 2022, buyers can voluntarily contribute up to $15,000 annually, up to a total of $50,000. They also benefit from the tax advantages of saving through superannuation contributions.
Home Guarantee Scheme (HGS)
The HGS comprises the First Home Guarantee, the Family Home Guarantee, and the Regional First Home Buyer Guarantee. It is not a cash payment or deposit for a home. Instead, it guarantees that Housing Australia will pay the lender a shortfall of up to a pre-agreed limit if a home buyer defaults on their loan and the property's sale doesn't cover the outstanding amount. The pre-agreed limit varies depending on the specific guarantee within the HGS.
First Home Buyers Assistance Scheme (NSW)
This scheme offers a full exemption from transfer duty for first-time home buyers purchasing a new or existing home valued up to $800,000 in New South Wales. Homes valued between $800,000 and $1,000,000 may qualify for a concessional rate. Additionally, buyers purchasing vacant land to build a home may receive exemptions or concessional rates depending on the land's value.
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Frequently asked questions
As of 2023, there are approximately 3.2 million homes with mortgages in Australia. This number has likely changed since then.
As of 2020, 66% of Australians owned their homes, either with or without a home loan. This is a slight decrease from 1996, when 71% of Australians owned their homes.
As of 2021, 30% of Australians rent their homes.
High property prices and mortgage rate hikes have made it difficult for many young people and low-income earners to get a mortgage in Australia. In addition, keeping up with mortgage repayments is the second most prevalent financial concern for first-time home buyers.
