Home ownership in Australia is considered a key cultural icon,and part of the Australian tradition known as the Great Australian Dream of "owning a detached house on a fenced block of land." Home ownership has been seen as creating a responsible citizenry; according to a former Premier of Victoria: "The home owner feels that he has a stake in the country, and that he has something worth working for, living for, fighting for."
The Australian Dream or Great Australian Dream is a belief that in Australia, home-ownership can lead to a better life and is an expression of success and security. Although this standard of living is enjoyed by many in the existing Australian population, rising house prices compared to average wages are making it increasingly difficult for many to achieve the "great Australian Dream", especially for those living in large cities. It is also noted as having led to urbanisation, causing extensive urban sprawl in the major cities. The term itself is derived from the American Dream, which first described the same phenomenon in the United States, starting in the 1940s.
Owner-occupancy or home-ownership is a form of housing tenure where a person, called the owner-occupier, owner-occupant, or home owner, owns the home in which they live. This home can be house, apartment, condominium, or a housing cooperative. In addition to providing housing, owner-occupancy also functions as a real estate investment.
The Premier of Victoria is the Head of government in the Australian state of Victoria. The Premier is appointed by the Governor of Victoria, and is the leader of the political party able to secure a majority in the Legislative Assembly.
In 2016 there were about 9.0 million private dwellings in Australia, each with, on average, 2.6 occupants.In 1966 about 70% of dwellings were owner-occupied – one of the largest proportions of any country. The remainder were rented dwellings. About half of the owner-occupied dwellings were under mortgage.
Australian governments have encouraged broad-scale home ownership through tax incentives,[ citation needed ] although mortgage interest is not tax deductible as, for example, in the United States. The owner-occupied residential home is not subject to the capital gains tax on sale and is not counted in the assets test for Centrelink pension purposes. It is also not taxed for land tax or other property tax.
A tax incentive is an aspect of a country's tax code designed to incentivize or encourage a particular economic activity.
Capital gains tax (CGT), in the context of the Australian taxation system, is a tax applied to the capital gain made on the disposal of any asset, with a number of specific exemptions, the most significant one being the family home. Rollover provisions apply to some disposals, one of the most significant of which are transfers to beneficiaries on death, so that the CGT is not a quasi estate tax.
In the past, home ownership has been a sort of equalising factor; in postwar Australia, immigrant Australians could often buy homes as quickly as native-born Australians.Additionally, Australian suburbs have been more socio-economically mixed than those in America and to a lesser extent Britain. In Melbourne, for instance, one early observer noted that "a poor house stands side by side with a good house."
Income segregation is the separation of various peoples by class based on income. For example, certain people cannot get into country clubs because of insufficient funds. Many residential areas are segregated as a practical matter by income due to exclusionary zoning, which may require limit dwellings to detached single family homes and require minimum lot sizes and minimum square footage for the house.
There are significant regional differences in rates of homeownership around Australia, reflecting average age differences (e.g., older age people tend to own houses more than younger people), as well as socio-economic differences.
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In the 2015–16 Survey of Income and Housing, it was found that an estimated 30% of households owned their homes outright (i.e. without a mortgage) and 37% were owners with a mortgage. A further 25% were renting from a private landlord and 4% were renting from a state or territory housing authority.
Between June 1996 and June 2010, the proportion of households without a mortgage declined from 43% to 33%, while the proportion with a mortgage rose from 28% to 36%.Since 1995–96, the proportion of households renting from state/territory housing authorities has declined slightly while the proportion renting privately increased from 19% to 24% in 2009–10. While a greater proportion of all renting households are renting from private landlords, there is an increased number of private renters receiving Commonwealth rent assistance.
Home ownership in Australia decreased to 67% in 2011, the lowest level in over 50 years. Tasmania has the highest home-ownership rate at 70%, and the Northern Territory the lowest at 46%.
As of the 2016 Census, home ownership in Australia decreased even further, to 65%.
The 25% of dwellings which are rented by private landlords may be considered income-producing or investment properties, and the private landlords as investors, though some owner-occupiers may also view their dwellings as investments. The main difference is that the rent paid by a tenant is income of the landlord-investor, while an owner-occupier does not generally derive any income from the property. Similarly, the investor can claim expenses relating to the property, including property taxes, interest and depreciation, which the owner-occupier cannot. The rent paid by a tenant for private or domestic purposes is not generally an allowable deduction of the tenant, as are any expenses relating to the property.
The owner-occupied dwelling is not subject to the capital gains tax on sale, while the investment property is, though entitled to a CGT discount of 50%.
Home ownership in Australia is becoming more exclusive. The ratio of the price of the average home to Australians' average income was at an all-time high in the late 1990s.Young people are buying homes at the lowest rates ever, and changes in work patterns are reducing many households' ability to retain their homes.
At the same time, homes that are being constructed are increasing in sizeand holding fewer people on average than in the past. The proportion of houses with four or more bedrooms has increased from 15% in 1971 to greater than 30% in 2001.
A number of economists, such as Macquarie Bank analyst Rory Robertson, assert that high immigration and the propensity of new arrivals to cluster in the capital cities is exacerbating the nation's housing affordability problem.According to Robertson, Federal Government policies that fuel demand for housing, such as the currently high levels of immigration, as well as capital gains tax discounts and subsidies to boost fertility, have had a greater impact on housing affordability than land release on urban fringes.
The Productivity Commission Inquiry Report No. 28 First Home Ownership (2004) also stated, in relation to housing, "that Growth in immigration since the mid-1990s has been an important contributor to underlying demand, particularly in Sydney and Melbourne."This has been exacerbated by Australian lenders relaxing credit guidelines for temporary residents, allowing them to buy a home with a 10 percent deposit.
The RBA in its submission to the same PC Report also stated "rapid growth in overseas visitors such as students may have boosted demand for rental housing".However, in question in the report was the statistical coverage of resident population. The "ABS population growth figures omit certain household formation groups – namely, overseas students and business migrants who do not continuously stay for 12 months in Australia." This statistical omission lead to the admission: "The Commission recognises that the ABS resident population estimates have limitations when used for assessing housing demand. Given the significant influx of foreigners coming to work or study in Australia in recent years, it seems highly likely that short-stay visitor movements may have added to the demand for housing. However, the Commissions are unaware of any research that quantifies the effects."
Some individuals and interest groups have also argued that immigration causes overburdened infrastructure.
In December 2008, the federal government introduced legislation relaxing rules for foreign buyers of Australian property. According to FIRB (Foreign Investment Review Board) data released in August 2009, foreign investment in Australian real estate had increased by more than 30% year to date. One agent said that "overseas investors buy them to land bank, not to rent them out. The houses just sit vacant because they are after capital growth."
To cope with the high demand of housing, the desirability in renting, and most significantly an influx of immigration, major Australian cities have seen a boom in high-rise apartment construction. According to ABC News and UBS, the number of cranes on Australian high-rise sites levelled out at a peak of 548, having surged 323% since late-2013.
In June 2011, The CEO of ANZ Bank, one of the big 4 banks in Australia and New Zealand said housing should not be a vehicle for speculative price growth, but simply as shelter.He also criticised the Federal Government's policy on negative gearing tax breaks which increases the focus on housing as an investment rather than shelter and decrease affordability.
A property tax or millage rate is an ad valorem tax on the value of a property, usually levied on real estate. The tax is levied by the governing authority of the jurisdiction in which the property is located. This can be a national government, a federated state, a county or geographical region or a municipality. Multiple jurisdictions may tax the same property. This tax can be contrasted to a rent tax which is based on rental income or imputed rent, and a land value tax, which is a levy on the value of land, excluding the value of buildings and other improvements.
Imputed rent is an estimate in economic theory of the rent a house owner would be willing to pay to live in his or her own house. Imputed rent can thus serve as an important measure between home owners and tenants. Imputed rent is the economic theory of imputation applied to real estate: that the value of a good is more a matter of what the buyer is willing to pay than the cost the seller incurs to create it. In this case, market rents are used to estimate the value to the property owner. Thus, for example, if one could rent a similar property for less than the costs, one is losing money on the deal and vice versa. While the idea of imputed rent applies to any capital good, it is most commonly used in reference to home ownership.
Housing tenure refers to the financial arrangements under which someone has the right to live in a house or apartment. The most frequent forms are tenancy, in which rent is paid to a landlord, and owner-occupancy. Mixed forms of tenure are also possible.
A landlord is the owner of a house, apartment, condominium, land or real estate which is rented or leased to an individual or business, who is called a tenant. When a juristic person is in this position, the term landlord is used. Other terms include lessor and owner. The term landlady may be used for female owners, and lessor may be used regardless of gender. The manager of a UK pub, strictly speaking a licensed victualler, is referred to as the landlord/lady.
Negative gearing is a form of financial leverage whereby an investor borrows money to acquire an income-producing investment and the gross income generated by the investment is less than the cost of owning and managing the investment, including depreciation and interest charged on the loan. The investor may enter into a negatively geared investment expecting tax benefits or the capital gain on the investment after it is sold to exceed the accumulated losses of holding the investment. The investor would take into account the tax treatment of negative gearing, which may generate additional benefits to the investor in the form of tax benefits if the loss on a negatively geared investment is tax-deductible against the investor's other taxable income and if the capital gain on the sale is given a favourable tax treatment.
Real estate economics is the application of economic techniques to real estate markets. It tries to describe, explain, and predict patterns of prices, supply, and demand. The closely related field of housing economics is narrower in scope, concentrating on residential real estate markets, while the research of real estate trends focuses on the business and structural changes affecting the industry. Both draw on partial equilibrium analysis, urban economics, spatial economics, basic and extensive research, surveys, and finance.
Affordability of housing in the UK reflects the ability to rent or buy property. Housing tenure in the UK has the following main types: Owner-occupied; Private Rented Sector (PRS); and Social Rented Sector (SRS). The affordability of housing in the UK varies widely on a regional basis – house prices and rents will differ as a result of market factors such as the state of the local economy, transport links and the supply of housing.
Equity sharing is another name for shared ownership or co-ownership. It takes one property, more than one owner, and blends them to maximize profit and tax deductions. Typically, the parties find a home and buy it together as co-owners, but sometimes they join to co-own a property one of them already owns. At the end of an agreed term, they buy one another out or sell the property and split the equity.
A real estate bubble or property bubble is a type of economic bubble that occurs periodically in local or global real estate markets, and typically follow a land boom. A land boom is the rapid increase in the market price of real property such as housing until they reach unsustainable levels and then decline. This period, during the run up to the crash, is also known as froth. The questions of whether real estate bubbles can be identified and prevented, and whether they have broader macroeconomic significance, are answered differently by schools of economic thought, as detailed below.
Buy-to-let is a British phrase referring to the purchase of a property specifically to let out, that is to rent it out. A buy-to-let mortgage is a mortgage loan specifically designed for this purpose. Buy-to-let properties are usually residential but the term also encompasses student property investments and hotel room investments.
The Private Rented Sector (PRS) is a classification of United Kingdom housing tenure as described by the Department for Communities and Local Government, a UK government department that has amongst its remit the monitoring of the UK housing stock.
Affordable housing is housing which is deemed affordable to those with a median household income or below as rated by the national government or a local government by a recognized housing affordability index. Most of the literature on affordable housing refers to mortgages and number of forms that exist along a continuum – from emergency shelters, to transitional housing, to non-market rental, to formal and informal rental, indigenous housing, and ending with affordable home ownership.
Public housing in Australia is provided by departments of state governments. Australian public housing operates within the framework of the Commonwealth-State Housing Agreement, by which funding for public housing is provided by both federal and state governments. According to the 2006 census, Australia's public housing stock consisted of some 304,000 dwellings out of a total housing stock of more than 7.1 million dwellings, or 4.2% of all housing stock
The Australian property market comprises the trade of land and its permanent fixtures located within Australia. The average Australian property price grew 0.5% per year from 1890 to 1990 after inflation, however rose from 1990 to 2017 at a faster rate and may be showing signs of a contracting economic bubble. House prices in Australia receive considerable attention from the media and the Reserve Bank and some commentators have argued that there is an Australian property bubble.
The Australian property bubble is the subject of the Australian property market becoming significantly overpriced and due for a significant downturn. Some commentators, including one Treasury official, claim the Australian property market is in a significant bubble.
Housing in the state of Victoria, Australia is characterised by high rates of private housing ownership, minimal and lack of public housing and high demand for, and largely unaffordable, rental housing. Outside of Melbourne, home to 70% of the state's population, housing and rent is more affordable. In Melbourne, access to public housing is generally better, but housing and rent are less affordable.
Affordability of housing in Canada presents a complex paradox. By 2004, 1.7 million Canadians had housing affordability issues, yet Canada is considered to be among the more affordable places to live, using market-oriented analyses of affordability such as those provided by the Royal Bank of Canada. Canadian government public policies intervene when affordability of housing is stressed to the point home ownership becomes inaccessible even to individuals with full-time employment. The continuum of affordable housing in Canada includes market, non-market, government-subsidized housing. Measuring affordability of housing is complicated by Canada's vast physical and human geography which includes remote northern communities and affluent urban regions. Housing prices and construction costs have risen dramatically in Canada as they have elsewhere in the world. Income levels in the upper quintile have increased exponentially while those in lower quintiles have remained stagnant. The rising inequality gap presents a significant challenge for Canadian households who are "priced out" of rental and ownership housing markets.
Housing in the United Kingdom ranks in the top half of EU countries with regard to rooms per person, amenities, and quality of housing. However, the cost of housing as a proportion of income is higher than average among EU countries, and the increasing cost of housing in the UK may constitute a housing crisis for some, especially for those in low income brackets or in high-cost areas such as London. Most though still find the UK a desirable place to live. London is resident to the highest number of ultra-high-net-worth individuals in the world. Housing represents the largest non-financial asset in the UK with a net value of £5.1 trillion (2014).
Affordable housing is housing which is deemed affordable to those with a median household income as rated by the national government or a local government by a recognized housing affordability index. The challenges of promoting affordable housing varies by location.