Renters pay more for housing than mortgagees

One of the most significant findings in the the latest ABS 2009/10 financial year Housing and Occupancy Costs Survey results is that renters are now paying a larger proportion of their income on housing costs than those with a mortgage.

The average housing costs in 2009-10 were lowest for owners without a mortgage who paid an average of $35/week in housing costs, ranging from $30/week in Tasmania to $44/week in the Australian Capital Territory. Since these owners had paid off their homes, the costs incurred are likely to relate to service-based items such as rates, electricity, and maintenance and local government utility charges. Across the nation, owners without a mortgage were spending just 3% of their gross income on housing costs.

Owners with a current mortgage are paying $408/week in housing costs with $35/week attributable to occupancy costs and $373/week dedicated to paying the mortgage. However, those with a mortgage in Tasmania paid the lowest amount ($279/week) while mortgagees in the Northern Territory paid the greatest amount each week ($486). Across the nation, owners with a mortgage were spending 18% of their gross income on housing costs.

During the 2009/10 period, renters were paying $275/week towards their housing costs.

Occupancy costs for renters are likely to be lower than those for mortgagees or those who fully own their home as rates and utilities are generally paid by the property owners.

State-by-state, the results show that there was a much wider variation in costs ranging from $178/week in Tasmania to $323/week in the Australian Capital Territory. Across the nation, renters were spending 20% of their gross income on housing costs, which is a greater proportion being spent by those with a mortgage.

The survey results also showed that the vast majority of Australian’s were living in a house which they either owned outright (32.6%) or had a mortgage on (36.2%). Although 28.7% of homes were being rented, the figure ranged from 25% in Tasmania (the country’s most affordable housing market) to 39.5% in the Northern Territory.

The results also confirmed that one family households account for the largest proportion of all households at 70.6% across the county. Interestingly, couples with dependent children (26.3%) and couples only (26.2%) account for an almost equivalent proportion of all households.

Lone person households account for almost a quarter of all households (24.5%) while group households (3.3%) and multiple family households (1.7%) account for a small overall proportion.

Detached houses continue to be the most popular dwelling type across the country, accounting for 78.6% of stock with semi-detached properties (10.4%) and units (10.7%) each accounting for around 10% of overall housing stock. Separate houses are least prevalent in New South Wales (73.7%) and most prevalent in Western Australia (86.0%).

Just 5.5% of all households in Australia are spending more than 50% of their gross income on housing costs.

Only 6.9% of owners with a mortgage spend more than 50% of their income on housing costs compared with 9.1% of renters.

Most measures of mortgage stress suggest that if you are spending more than 30% of your take home income on your mortgage you are in mortgage stress – in June of last year 23% of home owners were in a position of mortgage stress.

The most interesting finding in the ABS results is that renters are paying a larger proportion of their income towards their housing costs than those with a mortgage, which is reflective of the fact that mortgagees are typically earning more than those renting.

It also highlights that as mortgage holders pay down their debt they are probably looking to refinance to pay less on their mortgage.

The other particularly important finding which is inter-related was the fact that the vast majority of owners with a mortgage were paying less than 25% of their income on their housing costs (66.4%). On the other hand, only 6.9% of mortgage holders were spending more than 50% of their income on housing costs.