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10 Oct 2017

Home Ownership Around the World

As Aussies and Kiwis find it increasingly difficult owning their own home, it's easy to think that the situation is the same everywhere. While house prices have grown faster than incomes in many countries and the global house price index continues its steady recovery, there is a huge divergence in home ownership rates around the world. House prices, incomes, and culture all have a huge effect on how people live and pay the bills, with increasing house price-to-income ratios in many countries making it hard for many to enter the property market. 

According to the IMF, the Global Real House Price Index has enjoyed a steady recovery since the GFC, with the index almost back to where it was before the financial collapse. Real house prices have increased over the past year in most countries, with Serbia leading the way with almost 20 percent growth, followed by Iceland, Philippines, Hong Kong, and New Zealand. Australia is 22nd on the list, just behind Slovenia and just in front of the Netherlands. On the other side of the spectrum, Brazil suffered a 17 percent decline in house prices over the last year, followed by Ukraine, Russia, Qatar, and Kazakhstan.

According to figures from Trading Economics, Mauritius has the highest rate of home ownership in the world at an amazing 99.1 percent, followed by Romania at 96 percent, Singapore at 90.9 percent, Macedonia at 90.6 percent, and Croatia at 90.1 percent. Australia enjoys a home ownership rate of just 65.5 percent, just in front of New Zealand at 63.2 percent. Millennials are suffering more than most, with young Australians recently ranked second last in home ownership in a survey by international bank HSBC. While up to 70 percent of millennials own a property in places like China and Mexico, Australia was only marginally higher than the UAE at 26 percent. 

Interestingly, there are a number of wealthy European and Asian nations with low levels of home ownership, including Switzerland at 43.4 percent, Hong Kong at 50.4 percent, Germany at 51.9 percent, Austria at 55 percent, and South Korea at 56.8 percent. A healthy supply of good quality accommodation in these locations helps to keep rental prices down, with the rental property share in Berlin an incredible 90 percent of the total residential market. Stringent lending requirements in some European countries can make it hard for people to access housing finance, as does a tax regime that is not particularly favourable for property owners and investors.

House prices continue to grow faster than incomes in many countries, influencing home ownership rates and adding financial pressures. New Zealand has the highest house price-to-income ratio in the world at 140 relative to the 2010 index of 100, followed by Austria at just over 130, Sweden, Luxembourg, Switzerland, Canada, and Australia at just under 120. Home ownership rates have declined in Australia over the last three decades, with numbers in New Zealand the lowest they've been in 66 years. Both countries are experiencing an even greater decline in outright home ownership involving no mortgage debt, with growth in the private rental market reflecting the high costs of home purchase.


Image source:  Ravital/Shutterstock