Are you really a homeowner if you're living at your parents' place? It's a question that challenges our understanding of home ownership rates and their impact on housing politics. According to economist Karl Fitzgerald, the traditional home ownership rate is significantly inflated due to a census question that doesn't accurately reflect the reality of many young adults. This discrepancy has profound implications for the way we perceive and address housing issues in Australia.
The Flawed Question
The issue stems from a simple yet misleading question in the national census: 'Is the dwelling you're living in owned or rented?' This question doesn't ask if you own the home, but rather if the dwelling you're living in is owner-occupied. As a result, young adults living with their parents who own their home with a mortgage are counted as homeowners, even though they don't own the property themselves.
This statistical quirk has led to a persistent and artificially high home ownership rate of around 66% in Australia, despite the actual rate being closer to 52%. Fitzgerald argues that this discrepancy has hindered political urgency around housing, as the very statistic that should highlight the problem is actually obscuring it.
The Impact on Politics
The implications of this misunderstanding are far-reaching. By underestimating the number of young adults who are not homeowners, the traditional home ownership rate fails to capture the true extent of housing challenges faced by this demographic. This, in turn, affects political discourse and policy-making.
Fitzgerald suggests that if more voters were aware of the real home ownership rate, they might demand more from politicians. The current situation, where the market appears stable due to the inflated ownership rate, masks the underlying issues. This makes the contest for home ownership a stark battle between those who have and those who do not.
A Broader Perspective
The issue is not unique to Australia. A similar study by the Federal Reserve Bank of Minneapolis in the United States found that the commonly cited home ownership rate of 65% was based on the owner-occupancy rate, not the actual share of adults who own their homes. By adjusting for non-owning adults, the researchers found the US home ownership rate to be around 53%.
A Call for Change
Fitzgerald is calling on the Australian Bureau of Statistics (ABS) to publish an official homeowners-to-population ratio from person-level census data. He argues that the ABS already has the necessary information, and it's a matter of deciding whether to make this data publicly available. This adjustment would provide a more accurate reflection of the housing landscape and potentially shift the political discourse around home ownership.
In conclusion, the way we measure home ownership rates has significant implications for how we understand and address housing issues. By re-evaluating the census question and adopting a more nuanced measure, we can gain a clearer picture of the housing challenges faced by different age groups and make more informed decisions about the future of housing policy in Australia.
