home Education Home Ownership, Is it Real?

Home Ownership, Is it Real?

The Great Australian Dream

In Australia and possibly every western country - home ownership is drummed into us as we grow into responsible adults. I remember my elders telling me to go to school, get good grades and then you will be able to get a great paying job and this will enable me to buy my own home which we are told is the greatest investment you will ever make. 

But is it really that great?

I would argue that it is not, especially when you have some basic financial education behind you.

Home ownership in Australia is considered a key cultural icon, and part of the Australian tradition known as the Great Australian Dream of "owning a detached house on a fenced block of land." Home ownership has been seen as creating a responsible citizenry; according to a former Premier of Victoria: "The home owner feels that he has a stake in the country, and that he has something worth working for, living for, fighting for." (Kemeny, Jim. "The Ideology of Home Ownership." Urban Planning in Australia: Critical Readings, ed. J. Brian McLoughlin and Margo Huxley. Melbourne: Longman Cheshire Pty Limited, 1986. p256-7)

Statistics of Home Ownership

In 2016 there were about 9.0 million private dwellings in Australia, each with, on average, 2.6 occupants. About 70% of dwellings were owner-occupied — one of the largest proportions of any country. The remainder were rented dwellings. About half of the owner-occupied dwellings were under mortgage.

Australian governments have encouraged broad-scale home ownership through tax incentives, although mortgage interest is not tax deductible as, for example, in the United States. The owner-occupied residential home is not subject to the capital gains tax on sale and is not counted in the assets test for Centrelink pension purposes. It is also not taxed for land tax or other property tax.

In the past, home ownership has been a sort of equalizing factor; in postwar Australia, immigrant Australians could often buy homes as quickly as native-born Australians. Additionally, Australian suburbs have been more socio-economically mixed than those in America and to a lesser extent Britain. In Melbourne, for instance, one early observer noted that "a poor house stands side by side with a good house."

There are significant regional differences in rates of home-ownership around Australia, reflecting average age differences (eg., older age people tend to own houses more than younger people), as well as socio-economic differences.

In the 2009–10 Survey of Income and Housing, it was found that an estimated 33% of households owned their homes outright (i.e. without a mortgage) and 36% were owners with a mortgage. A further 24% were renting from a private landlord and 4% were renting from a state or territory housing authority. (link to source)

Between June 1996 and June 2010, the proportion of households without a mortgage declined from 43% to 33%, while the proportion with a mortgage rose from 28% to 36%. Since 1995–96, the proportion of households renting from state/territory housing authorities has declined slightly while the proportion renting privately increased from 19% to 24% in 2009–10. While a greater proportion of all renting households are renting from private landlords, there is an increased number of private renters receiving Commonwealth rent assistance through Centrelink.

Home ownership in Australia decreased to 67% in 2011, the lowest level in over 50 years. Tasmania has the highest home-ownership rate at 70%, and the Northern Territory the lowest at 46%.

But Do you Really Own the Home?

Well lets look at the vocabulary we employ from the basic: mine, his, hers, ours, theirs, take, get, own, have, steal, sell, buy, keep, to the esoteric: confiscate, exchange, escrow, lien, tax, duty, capital, loan, debt, interest, stake, liability, asset.

It may be fair to postulate that some of the very first words were actually invented for the purpose of claiming, protecting, and managing property.

In today’s ever connected society, take a moment to consider the things that you might own. Perhaps you have a television, some clothes, some personal possessions that are meaningful to you. You may have a car. But hold on, is that car leased or subject to finance? Well, in that case you don’t really own it, but you still call it “yours,” you still treat it as your own and so does everybody else including the authorities.

Naturally, the same applies to any real estate you own. Most “homeowners” have a mortgage (which we will discuss in detail later). Yet, they still call the house “theirs” and treat it with care, take pride in it and its appearance, and enjoy it with friends and family.

But of course, here we can identify the same issue of true ownership. You don’t really own your house. 9 years ago my ex wife & I purchased our own property, we were entertained by the enthusiasm with which every single person involved in the transaction exclaimed: “Congrats! You guys are almost homeowners!” First it was the agent, then the mortgage broker, then the lender, then the conveyance company…and eventually when we were handed the keys by the selling agent, we again were told - “Congrats! You are now homeowners!”

No, we are not where my thoughts. The bank owns the Home and we must now pay it off. And even if we did pay it off completely we would still not be home owners. Why? Because I still owe taxes every single year, and substantial ones, amounting to roughly 2% of the purchase price. What happens if I don’t pay my taxes? Well at first it wouldn’t be so bad. I would get some calls, some offers to restructure my payment schedule, perhaps. But eventually it would get nasty, and a lien would be placed on my property, an immutable claim on my residence that must be paid off under threat of eviction and complete confiscation.

So I didn't really own my house, and neither do you. Nor do you own your car, since all States in Australia and other western countries require a yearly “registration” or “usage” tax. Again, if you don’t pay your taxes, your property can be taken from you. The only difference with a motor vehicle is that you may keep it parked on your property as long as you do not drive it.

We are left with no true ownership over anything except for the trinkets mentioned earlier: our personal possessions, things that nobody else would really wants to own anyway.

It gets worse. You don’t even own your labour. Any gains you earn from your hard work is also subject to taxation, which may seem harmless if it’s automatically deducted from your paycheck every week. You may even be lulled into feeling like the government actually sends you money every year in July if you are lucky enough to be due a tax refund.

But it’s not harmless. Just try not paying your taxes for example and see what happens to you. Things get very nasty, real quick.

In True Terms

In true terms, all you are really doing is paying for the right to use a piece of land that the Government owns and has control of. Some would argue that you own the actual house, but this is also false, the house is an asset of the Government and or Bank if you are still paying a mortgage.

If you have a closer look at the deeds to your property, you will notice that you the home-owner are listed as a "tenant", and this goes for people who have paid outright their home as well as mortgaged properties.

If you cease paying your council rates (land tax) you will also be subject to many penalties and fines.If you do not maintain the up-keep of the property council may also make you subject to even more fines. If you try to build fixtures and expand the house in anyway you first must get "approval" from your local council or obtain a development permit to be able to perform those things.

So in what way does a person really own their own home?

The simple answer is that they don't and never will, they own the illusion of home ownership.

In a future up coming article we will discuss how the Mortgage Note is built upon fraud and how the Banks and Financial Institution double dip when getting paid.

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