Australia's home ownership obsession: A brief history of how it came to be – ABC Online

Over time, the Great Australian Dream has meant different things to different people.

But for the better part of a century, any reference to Australian aspirations — great or otherwise — meant buying a house.

A recent ANU poll found more than three quarters of Australians viewed home ownership as part of “the Australian way of life”.

Yet, for housing experts, this fixation on owning a home of your own is curiously specific at best, and harmful at worst.

“Do you need to own?” urban designer Peter John Cantrill asks, with the emphasis on “need”.

For Mr Cantrill, the operative question is: can you be secure where you live?

Countries such as Germany and Sweden have far lower rates of home ownership, he argues, offset by controlled rents or tenancy insurance.

Now, with many Australians facing mortgage stress or rental stress, the great Australian dream has become a nightmare. But is this a crisis of our own making?

For some 60,000 years, Australian land was occupied by Indigenous people. Many were displaced by white settlement.

New South Wales’ first Governor, Arthur Phillip, somewhat naively assumed the British government would own all the land in his newfound colony.

“But what happens very quickly is that people take land without permission,” Graeme Davison, professor of urban studies at Monash University, says.

It wasn’t all anarchy: freed convicts were granted land in the hope they wouldn’t return to England, and retiring officers were gifted land, as were free settlers.

And by the time Governor Ralph Darling arrived in 1825, a more orderly system was implemented.

“From about that point on you begin to get a more systematic freehold land system,” Professor Davison says.

“By the 1830s, owning your own piece of property was an attainable objective.”

One house, one vote

In English cities, land tenure laws and vast church-owned estates precluded many from ever owning their own plot. This was not the case in Sydney and Melbourne.

Melbourne in particular experienced quite rapid subdivision in the 1850s which, combined with the gold rush, lead to the establishment of shanty-towns.

“You get quite high rates of home ownership in relatively poor parts of Melbourne from quite an early age,” Professor Davison says.

Prior to South Australia’s introduction of universal manhood suffrage in 1856, landowning was a way to attain a vote in the political process. It was a line that continued, even after colonies ceased to apply to property qualifications for suffrage.

“Right into the end of the 19th century, you find people promoting home ownership saying, ‘It will make you a citizen in a fuller sense than if you didn’t own your own house.'”

Figures collected early in Professor Davison’s career suggest 44 per cent of Melburnians owned their own home in 1881, with similar rates in Sydney and Adelaide.

These are not figures matched anywhere else in the developed world at the time.

“Most other cities don’t get anywhere near it,” he says.

Grow your own

From the turn of the 20th century, Australian houses did something quite unusual: they fed the families who lived in them.

“The house wasn’t just a place to live [in Australia], but it was a place to grow your food,” Mr Cantrill says.

Other countries, he says, would place their farmland outside of town centres. Citizens would walk to the farmsteads, and vice versa.

But that’s not what happened in Australia.

“We had the agriculture and the house together, and this established … the so-called quarter-acre block,” Mr Cantrill says.

For Mr Cantrill, the effect his had on Australian cities cannot be overstated.

“This gives shape to cities which are extremely low density and occupy vast land,” he says.

These kind of cities were also formed by the availability of motor vehicles, cheap oil, and an expanding economy.

The dominance of the quarter-acre block led to the low density sprawl seen today: with double garages and media rooms taking the place of these early vegetable plots.

Postwar booms

During the Cold War, Australian governments looked to housing as a means of keeping communism at bay. “Citizens committed to mortgages,” ran one wartime advertisement, “tend not to be revolutionaries.”

The Menzies government tinkered with the housing mix.

“There was quite a move away from public housing,” Lionel Frost, an associate professor of economics at Monash Business School, says.

Menzies’ government created incentives for renters to purchase their houses, if they rented from the Public Housing Authority.

“It was a very much hands-off approach by the Commonwealth government at the time,” Associate Professor Frost says.

After World War II, waves of migrants came to Australia from England, Ireland and Europe. Greeks and Italians, in particular were keen to own their own homes.

“They have a very strong preference for having their own home, because it provided an opportunity not available in Britain or Europe,” Associate Professor Frost says.

By the mid 1970s Australian home ownership had reached something of a saturation point: 70 to 75 per cent.

Finance gets involved

The 80s was a time for structural changes around Australian homeowning. The finance industry was deregulated. Dual income households were the norm, making mortgages easier to attain. Rising interest rates were followed by dramatically tumbling interest rates.

“Changes in the availability and the cost of finance had really big implications for the housing market in particular,” Nicole Gurran, a professor of planning at the University of Sydney, says.

Prior to deregulation, the housing system was geared around owner-occupiers, and property investors loaning from the bank would incur a considerable rate penalty on their loans.

But the equalising of interest rates moved the goal posts of home ownership. Homes were increasingly purchased for their exchange value — used as leverage, as a vehicle for wealth accumulation.

“We certainly have seen an increase in people investing in housing, including their own housing, with a view to accumulating wealth,” Professor Gurran says.

“This certainly increased in the 1990s and the 2000s.”

By the early 1990s, Professor Gurran says, property prices rose faster than inflation, while interest rates decreased. With the proportion of public housing at a low, a strong private rental market was needed to do “the heavy lifting”.

“We start to see things like negative gearing,” she notes.

That made investment in the private rental market seem attractive for landlords — thus expanding the rental market, and their portfolios.

For Professor Davison, this was a seismic shift in conceptions of the Australian dream.

“In the 60s and 70s … home ownership was a democratic ideal,” he says.

“[But] increasingly, I think, people came to look at the house not just for its use value but — to use the Marxist jargon — its exchange value.”