First increase in household size: For the first time since European settlement, there has been an increase in the number of people per home (number of people per occupied private dwelling).
Over one in ten dwellings is unoccupied: The latest data shows that 10.7 per cent of all private dwellings are unoccupied. Almost one million homes are unoccupied.
What does it all mean?
• The first tranche of data from the 2011 Census was released today. Over coming days, weeks and months, businesses and governments will pore over the results. But one interesting finding from the latest results is that there are more people occupying the average home than there was five years ago. In large part these results confirm earlier estimates. However the important point is that this is the first time since European settlement that utilisation of our homes has increased.
• One hundred years ago there were almost five people in the average home (dwelling). In fact there were 4.82 people per occupied dwelling. Today there are just 2.63 people per home. However this represents a small increase from 2.61 people per occupied private dwelling in 2006.
• While we still have to dig through the results, presumably higher rents and mortgage repayments have resulted in more children staying home longer with their parents. At the same time, more seniors are probably also living with their children.
• Clearly there has just been a very minor increase in dwelling use. But it makes sense that Australians, who are living in the largest homes in the world, have sought to better utilise their big dwellings.
• The increase in home use clearly has implications for the home building sector and residential real estate more broadly. If rents and mortgage repayments continue to outpace housing income, then the one-time lift in home usage may become more of a trend.
• Over the past five years the median rent soared by 49.2 per cent and the median mortgage rose by 38.5 per cent but the average household income only rose by 19.5 per cent.
• If Australia returns to the times when a number of generations sought to live in the one home, then clearly it will serve to restrain the demand for homes.
• In terms of home building demand, another key finding is that 10.7 per cent of all private dwellings in Australia are unoccupied, up from 10.4 per cent in the last Census in 2006. If only a small proportion of these homes were used, it would reduce the need for building of new houses or apartments.
• Also of note over the past five years is the fact that more Australians are paying off mortgages than those who own their homes outright. According to the latest data 34.9 per cent of dwellings were owned with a mortgage while 32.1 per cent of dwellings were owned outright and 29.6 per cent of properties were rented. Clearly when the Reserve Bank moves the cash rate it has more pronounced effects on incomes and the broader economy than in the past.
What are the implications for interest rates and investors?
• Businesses and governments need to drill down through the Census data to determine which regions are most affected by the changes in home utilisation. No doubt the regions that are experiencing the biggest lift in rent and mortgage costs in relation to household income are the more vulnerable to an increase on home utilisation.
• People do have a choice. If rents and mortgage costs increase too much, greater co-habitation is always possible – especially given the large homes that Australians occupy. The latest data shows that the number of bedrooms per home has edged up again in the past five years to 3.1 bedrooms. Amazingly 30 per cent of Australian homes have 4 or more bedrooms despite the fact that there are just over 2.6 people per household.
Source: Craig James, Chief Economist, CommSec