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Saturday, October 22, 2011

More Australian home owners switch to renting

AN alarming number of home owners are ditching the white picket fence and opting to rent under financial strain.

One in five home owners dropped out of ownership from 2001to 2009, double the rate for Britain, a new study shows.

While just over half later moved back into the property market, many became reliant on rental assistance or public housing, suggesting that adverse circumstances such as financial pressures, divorce and high housing prices played a part.

The Royal Melbourne Institute of Technology survey was based on the housing histories of thousands of Australians over nine years.
It found that former owners who did not return quickly to the property market were more likely to enter public housing or qualify for Commonwealth rent assistance than long-term renters.

Why the shift?

Household affordability differentials appears to be shaping this new social form.
This year, Australia has taken the unenviable title as the second most unaffordable housing market in the world.

Australia featured eight of the top 20 markets in which housing is ranked as being "severely unaffordable", according to the 7th Annual Demographia International Housing Affordability.

The survey found that Sydney was the world’s second most unaffordable city, Melbourne sixth and Adelaide 18th.

The remaining capitals all feature in the top 50 with median house prices more than six times the average salary compared to the accepted international standard of three times annual income.
Not only is Australia the most unaffordable housing market in the English speaking world, but it has also recorded a shock rise in mortgage defaults this year.

Investment services firm Moody's said the rate of mortgage holders nationwide failing to meet their repayments rose from 1.36 per cent to 1.67 per cent between March and June.

Meanwhile, the number of homeowners facing mortgage stress jumped to 25 per cent last month from 21 per cent in June, mortgage insurance provider Genworth Financial said in its monthly Homebuyer Confidence Index.
Rental vacancies slipped to 1.8 per cent from 1.9 per cent, it reported. 

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