Homeownership & Household Formation ON THE RISE in Australia but delayed for sociodemographic reason; Household formation delayed until later in life because MARRIAGE is the key determinant
Tweet Topic Started: 23 Aug 2013, 10:58 AM (6,517 Views)
This is off topic, but how strong is the house sales surge from your perspective.
It looks stronger than I expected. It has picked up over the last 3 or 4 weeks.
Peter, we're seeing what can be described as a groundswell in housing sales across capital cities, dwelling transactions are 18% higher than year ago.
Stronger than that from what I'm seeing, but 18% on a macro level will probably be about right.
I'm heartened by the surge in small business requests, not just home buyers. You may not pick that up in your data, but it's worth looking at. It's a deeper recovery than the 2009 response which was just housing.
Cheers
Any expressed market opinion is my own and is not to be taken as financial advice
Figures indicate home ownership and household formation not in decline but ON THE RISE at the macro level in Australia, yet deferred until later in life for sociodemographic reasons.
Nice work Chris... veritas won't be happy, he'll probably claim you're obfuscating and ask you what adult children are counted as in the home ownership rate.
People are doing lots of things later in life... leaving education, getting married, having kids, buying a home, and finally, dying.
Or people who rent room from owner occupiers.
Any luck finding out how many adults own houses compared to those who don't?
BullHawk
23 Aug 2013, 12:53 PM
peter fraser
23 Aug 2013, 12:20 PM
This is off topic, but how strong is the house sales surge from your perspective.
It looks stronger than I expected. It has picked up over the last 3 or 4 weeks.
Peter, we're seeing what can be described as a groundswell in housing sales across capital cities, dwelling transactions are 18% higher than year ago.
And?
At least 30% of those sales are to people who already own houses.
Not newly married couples or other types of owner occupiers.
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?
The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly. Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
It's a deeper recovery than the 2009 response which was just housing.
Yep, no FHB grants around this time, so this new property growth cycle should be a bit slower slower but also a lot more sustainable.
I reckon this growth cycle is going to keep going until the RBA raises rates significantly, which is another few years away. I wouldn't be surprised if they start the raising process late next year, but they will do it very gradually and it will be a few years before they get rates up to a high enough level to put the lid on house price gains.
Of course, once we get there all the bears will flood out of their caves again proclaiming the start of the 40% crash...
It's a deeper recovery than the 2009 response which was just housing.
Yep, no FHB grants around this time, so this new property growth cycle should be a bit slower slower but also a lot more sustainable.
I reckon this growth cycle is going to keep going until the RBA raises rates significantly, which is another few years away. I wouldn't be surprised if they start the raising process late next year, but they will do it very gradually and it will be a few years before they get rates up to a high enough level to put the lid on house price gains.
Of course, once we get there all the bears will flood out of their caves again proclaiming the start of the 40% crash...
In 2009 there was no demand for business start ups, business expansion, development finance for unit blocks, buying commercial premises etc - it was all housing.
This time it is a broader demand.
Any expressed market opinion is my own and is not to be taken as financial advice
Young Australians still aspire to own a home and are willing to sacrifice their lifestyle to achieve this, a new study has found.
The Co-op Future Leaders Index white paper has found that 94 per cent of Australians aged between 17 and 29 years plan to buy a property within an average of five and a half years.
The report, which is the first of its kind, analysed the opinions of over 2,000 university students aged between 17 and 29 to uncover the needs and aspirations of the nation’s future leaders.
Chief marketing officer of Co-op Greg Smith said the findings indicated that Gen Y’s great Australian dream was well and truly alive.
“Buying a home is high on the list of priorities for them. They are already starting to plan for their futures, with many of them sacrificing spending to start seriously saving,” he said.
However, many were resigned to the fact that outright home ownership may never eventuate, with 80 per cent saying that the high cost of houses meant they may never be mortgage free.
“What this shows us is that Gen Y is both ambitious and realistic,” Mr Smith said. “They are acutely aware of the current state of the Australian economy and what’s going on in the property market. They know it’s not going to be an easy feat, but that doesn’t make the dream of home ownership any less important to them. That’s why we are labelling them Generation Sensible (Gen S).”
Director of RT Edgar Boroondara Glen Coutinho told Real Estate Business he agreed with the findings.
“They are definitely realistic,” he said. “We’re talking educated people who understand the market and generally come from families that also own real estate.
“A lot of them get assistance from their parents, who might put down half and then Gen Y will save the other half.
"It’s very easy to get funding. They can borrow up to 90 per cent, so really all they have to do is find 10 per cent. A majority of them have it because they’re semi-professionals and if they don’t, they have family who can help them. And the reason they’re doing this is that they think the market is going to be strong in the next five years, so if they don’t get in now, they won’t afford to be able to get in."
Director of hockingstuart Yarraville Leo Dardha said young buyers were making more conscious decisions about their purchases.
“I do think they’re savvy and they’re looking for the right deal. People are looking for more value, more bang for buck and that might mean that single front, or that double front, or even that block of land," he said.
He said an influx of buyers in their late 20s to early 30s entering his marketplace in the inner west of Melbourne was increasing the competition for properties.
“When you match affordability and desirability, it creates competition and that’s what the inner west offers,” he said.
The Co-op finding echoes a similar report by Mortgage Choice that found 74.7 per cent of Gen Y Australians were setting themselves up financially to be able to invest in the future.
How do we know if its sociodemographic changes or financial reasons why is delayed?
Well, that's the whole point of the report posted by Bullhawk.
If homes were less affordable to young people then they would be less affordable to everyone equally... it's the same pool of houses. So if it was due to financial reasons - i.e. homes are less affordable in general, then you would expect to see an overall drop in the home ownership rate and household formation rate.
But what we are seeing instead is a deferral until a later stage in life, linked closely to later marriage, and then an acceleration in the household formation rate.
Once they do decide to get married and settle down, they're forming new households at a faster rate than they did in the past, which suggests affordability isn't the issue.
Peter, we're seeing what can be described as a groundswell in housing sales across capital cities, dwelling transactions are 18% higher than year ago.
Do you have any specific data for Perth from the June onwards, I know June was strong. From what I have seen at ground level sales have been strong without being In boom territory. Which is surprising as I thought Perth would have a lull over winter then go strong again in the spring and summer. I have only seen a minor slow down in sales compared to the frantic pace of Feb/March/May & June.
Data I have seen show sales up 34% from 2012 levels but that is for all of 2013 to date. Im curious to know how strong this winter has been so far on a seasonal basis compared to previous years. It is looking like a strong build-up to a very strong Spring & Summer property season over here.
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