This article discusses some important elements of home ownership particularly from the point of view of women. There is an inherent difficulty in establishing a thorough picture of the situation regarding women and home ownership. Doing so involves gathering data from various sources, all of which are reputable but some of which contradict or at least disagree with each other. In this article, prepared in December 2015, we make our best attempt to examine the ‘state of play’ for women and, in doing so, we identify a particular group – single mothers – who report much lower levels of home ownership than either coupled women or single women without children.
Please note: In describing the situation for women and home ownership, we are aware that there are also many men – for example, single fathers – who face many of the same difficulties as women when it comes to home ownership. Those men would benefit from reading these materials as well.
However, we have prepared these specific materials as part of our commitment to addressing gender inequity in financial planning. For that reason, and that reason only, this article is largely written from the perspective of female clients.
The Good News
80% of women living in a couple but without children own their own home. (In this article, the term homeowner includes someone who is repaying a home loan as well as people who own their home outright). Around 76% percent of women living as a couple with children own their own home. Unsurprisingly, the figures for men are essentially the same. In terms of gender inequality and home ownership, then, the issue is what happens to women who are single.
When it comes to gender equity and home ownership, there is actually some good news to be reported. To begin with, in its most recent data, which dates from 2011-12, the ABS reports that 59.6% of females aged over 15 own their own dwelling (with or without a mortgage). This compares to 55.9% of males.
The data excludes dependant students aged between 15 and 24. It therefore includes younger people who are not studying but do not live independently. Thus, these figures probably under-estimate the actual rate of home ownership for adult men and women.
The figures reflect a broader phenomenon of young women being more likely to live away from their parents than young men. According to research conducted by the University of Melbourne, for example, 24% of men aged 26 to 29 still live with a parent, compared to just 14.7% of women of that age. A similar differential exists in younger age groups, albeit with fewer younger people living out of the family home. That said, the researchers also suggest that the difference in the age at which men and women leave home is attributable to the fact that women tend to take on a partner at a younger age.
Interestingly, the same research also suggests that deferring leaving the family home beyond the age of 24 has a negative impact on wealth creation. The best time to have left home, in terms of achieving wealth by mid-life, was between 21 and 24. This would seem to suggest that staying at home long enough to become vocationally-qualified, but not much longer, is a good idea.
The Not-So-Good News – General Wealth and Income Levels for Women
In terms of gender equality, the good news might end there. The same report also observes that the average single man has 23% more asset wealth than the average single woman. Given that the family home is the single largest asset owned by the average Australian household, accounting for 43% of total household wealth, this lower level of assets for women must reflect lower levels of residential property-based wealth for women.
This is the case with wealth in general. When it comes to income, the situation is just as clear. According to the Workplace Gender Equality Authority, average full time earnings for men are 17.9% less than they are for men. The pay gaps vary from industry to industry, with the largest gap (30.5%) identified in the financial and insurance services industry. This industry is the third-highest paid in Australia, behind only the mining industry and the professional, scientific and technical services. The average difference in the mining industry was 19.6% – slightly above the national average. The difference in the professional, scientific and technical services industries was 24.4%.
So, the three highest-paid industries in Australia have gender salary differences that exceed the national average. There are no industries in which a pay gap is not observed – and remember, this is for full time earnings. At the ‘bottom’ end of the well-paid scale is the food and accommodation industry. This is the lowest paid industry in Australia. The gender gap here is also the lowest, at 7%. The next poorest-paid profession is retail, with a gender gap of 14%.
The Specific Situation for Housing and Women
When it comes to identifying specific issues for women and home ownership, one difficulty is the fact that many people buy homes as couples. It can therefore be difficult to properly gauge the home ownership situation for all women, given that many are living in couple relationships. And, as stated above, the rate of home ownership for women and men living in couples is quite high – over 76% for couples with children and over 80% for couples without children.
And we know that, in general, almost 60% of women own their own home – a higher overall rate than for men. The incidence of same-sex couples is very low, so the data must mean that single women, in general, own property in higher proportions that do men. But when we examine the data more closely, we find significant variations in the rate of home ownership for single women – and these differences are very important for financial advisers who want to address issues of gender inequality. Let’s discuss some of the conclusions that can be drawn from this examination.
Conclusion 1 – kids are expensive and make owning homes more difficult
In 2012, three South Australian researchers (Kupke, Rossini and Yim) examined the issue of home ownership for women. Their research revealed a substantial amount of useful information, including the following:
- 36% of single mothers achieve home ownership;
- 44% of single fathers achieve home ownership;
- 62% of single women without children own their own home;
- Over 80% of couples without children own their own home;
- Over 75% of couples with dependent children own their own home;
- 52% of single men without children own their own home; and
- 5% of sole parent households are led by a woman.
Single parent families (described as ‘single mothers’ and ‘single fathers’ above) are those within which a child spends more than 65% of his or her time with that parent. By contrast, shared care is where the children spend more than 35% of their time with each parent (or no more than 65% of their time with one parent).
Single parent families account for somewhere around 77% of all families in which the parents are separated (we have to say ‘around’ because the AIFS data is now somewhat dated). Given that 88.5% of single parents households include a single mother, this means that around 67% of all separations result in single mother households whereby the mother provides at least 65% of the child care.
The following graph shows the rates of ownership for each type of household.
(Source: Identifying Home Ownership Rates for Female Households in Australia, Kupke, Rossini and Yam, 2012).
Taken altogether, the impact of these data is clear: single parents (male or female) have a harder time owning their own home. Separating after becoming a parent, or not having been a member of a couple in the first place, reduces the rate of home ownership by more than half for a woman (75% down to 36%), and 40% for men (75% down to 44%).
Looked at from another perspective, the likelihood that a single man will have a home drops from 52% to 44% (a drop of 15%) if that man is also a single parent. For a woman, the likelihood drops from 62% to 36% (a 40% drop).
So, being a sole parent significantly limits a person’s ability to own a home. Because single parents are more likely to be women, this limitation impacts women more than it does men.
The ABS also tells us that 15% of all families are single parent families, and that fewer than 30% of single parents with at least one child aged four or under have paid work outside the home. This figure increases as children age, but fewer than 40% of single parents with at least one child aged under 15 are in full-time employment. Graphically, the situation is as follows:
(Source: ABS 6224.0.55.001, June 2012).
So, we can see that single parenthood seriously compromises a woman’s ability to own her own home. A single mum is 40% less likely to own a home than a single woman without children, and less than half as likely to own a home as a woman living as a member of a couple.
The data also tells us why: by the time their youngest child is 15, less than 50% of single parents are employed in full-time work. This leaves single parents with much lower incomes with which to raise their family – and less scope therefore to invest in their own home. And given that women are eight times more likely to be single parents, this effect impacts on women more than it impacts men.
This is consistent with the next conclusion that can be drawn from the data.
Conclusion 2 – there is home ownership… and there is home ownership
The above data looks at rates of home ownership. Kupke et al also looked at the type of housing that different groups own. 38.7% of the housing owned by single mothers, and 35.9% of the housing owned by single fathers, was cheap. This was housing in the first quintile (ie the bottom 20%) in terms of property price.
For the cheapest housing, there is little difference between single mothers and single fathers. However, a further 25% of housing owned by single mothers came from the second quintile, compared to just 6.2% for housing owned by men. This means that 64% of the homes owned by single mothers are in the cheapest 40% of homes. Only 42% of single fathers own homes in this cheapest 40%.
At the other end of the scale, 23.8% of single fathers who own homes own homes in the top quintile in terms of price, compared to just 7.1% of single mothers. When we combine these figures with the general rates of home ownership for single parents, we see that just 2.5% of single mothers own homes in the most expensive quintile (7.1% of 36%), compared to 10.4% of single fathers. A single father is four times more likely to own an expensive home than a single mother.
Conclusion 3 – women actually buy homes more readily than men
Kupke et al also note that, as might be expected, the proportion of male and female headed households who own their own homes are very similar when men and women live in male-female couples, either with or without children. (Unfortunately, the researchers do not reveal how they define a male-female household to be headed by one or the other member). But in terms of gender and the family home, this does not really matter. Women and men who live together have very similar (and high) rates of home ownership.
So, partnered men own homes at the same rate as their partners, but single men own homes at a lower rate. And we know that single mothers have lower home ownership rates than single women generally. This means that it is single women without children who most readily buy homes – and that one of the benefits that men attain when they partner with a woman is an increase in home ownership.
The ABS reports that the family home is the single largest asset owned by the average Australian household. It accounts for 43% of total household wealth. There is an obvious implication here: when men get a partner, they become more likely to buy an asset which will go on to represent almost half of their wealth. Partnership with a woman makes men wealthier.
This finding might well be related to the frequently-observed fact that married men live longer than single men. The reasons for this increased longevity include that coupled men eat more healthily, are more likely to identify and address health complaints and experience less stress. To that we can add that coupled men are wealthier than single men.
As a general proposition, partnering with a woman seems a very good idea for men.
Conclusion 4 – lower incomes make for lower home ownership.
Finally, the data on full-time earnings points to a general situation for women. On an hourly basis, they are paid less than men. In addition, pregnancy and its aftermath typically mean time out of the (paid) workforce, with the ABS reporting that mothers provide just over twice as much child care as fathers. The average is over 8 hours per day – more than a third of all time and around half of all waking hours.
While the data does not show it, presumably the amount of hours spent on child care for single fathers is as high as for single mothers. Looking after kids is time consuming and makes paid work less possible.
What’s more, because single mothers are eight times more common than single fathers, the fact htat single fathers face much the same difficulties as single mothers does not change the fact that women on average do more of the child care.
This leads to a ‘double whammy’ for single mothers: they get paid less per hour on average and they have fewer hours available to work.
Summary of Home Ownership and Women
In summary, we can say the following:
- Women earn less than men;
- Notwithstanding this, women are more likely than men to buy property;
- Couples have high rates of homeownership;
- Upon separation, 2/3rds of women end up as the main carer (the ‘single parent’) for their children;
- Single parents have much lowered rates of home ownership (36% for women, 44% for men); and
- Single mothers who do own homes own cheaper homes.
So, while women generally do well regarding home ownership, single mothers experience substantial inequality when it comes to home ownership (although single fathers do it tough, as well).
The following section contains some financial planning strategies that can be implemented to try to reduce the impact of this disadvantage.
Strategic Financial Planning Responses to Gender Equality and Home Ownership
So, what can a financial adviser who wants to address this inequality do?
All strategies must start from a simple point: women are actually more predisposed to buying their own homes. However, this tendency is hampered by one or more of three common factors. These are:
- the fact that women earn less in general for the average hour worked;
- the fact that mothers have (on average!) fewer hours available for paid work; and
- the fact that the financial burden of raising children, where it is not shared between parents equally, falls more on women than on men. Children are expensive.
These factors are cultural as much as anything. This complicates financial planning because it means that female clients and their advisers must respond to things that are largely outside of their control. Nevertheless, there is much worth considering. The two broad strategies are:
Anything realistic that increases income. We emphasise realism here, particularly because of the demands of child care. Once kids have arrived, it is no longer a simple matter of increasing the hours of paid work, or undertaking time-consuming study to qualify for a better job. These things are made difficult, if not impossible (although, if possible, they should be pursued). Common strategies include:
- Changing jobs;
- Asking for a raise;
- Organising child care that facilitates increased work hours, with the income being dedicated to buying a home;
- Organising time at work such that more hours can be worked in a given period of time (for example, minimising lunch breaks, or extending hours on four days a week and allowing for a day off (from the paid job – the kids will still be there!) on the fifth. This increases income for a given amount of time and travel cost;
- Working from home at least some of the time;
- Buying an investment property that generates net rent (often achievable if some form of property settlement has been reached);
- Taking in a paying housemate (be careful – there are kids in the house);
- Working for yourself (in a manner that suits you and in an industry where the business will succeed).
In reviewing the above, the striking thing is how much easier it is to increase income when trade or professionally-employed. Trade and/or professional work is typically more portable, both in terms of the time of day when it occurs and where it can be done. A retail worker, for example, has to be in the shop when the shop is open. She has no choice over time or place. An accountant, by contrast, may be able to work from home and/or at night.
So, encouraging women of all ages and times of life towards professional work is likely to be good advice – but again, only if it is realistic. The best time to train is before you need the increased income – before the kids arrive. Once the single mother household has come into existence, it might be too late.
Anything realistic that decreases expenses. Again, the emphasis is on realism, because much of the expense of child-rearing is unavoidable. The 2012 NATSEM report on the cost of raising children found that transport and food are the two main expenses across a child’s life – hardly fertile ground for significant cost-cutting.
A Particular Strategy to be Sensitively Suggested to Single Mothers (and Fathers, if applicable)
As stated above, single mothers are 25% less likely to own a home than single dads (who are also less likely to own their own home) and more than 50% less likely to own their own home than coupled mothers. And those single mothers who do buy housing are typically buying cheaper housing.
It is being a single mother that makes home ownership the hardest.
Clearly, having the majority of the responsibility for children makes buying a home more difficult. The reason is simple: women are already paid less per hour than men. Having children in their care then reduces the amount of hours that women can work.
For some clients, this may give rise to a financial planning suggestion that, if handled with appropriate sensitivity, will do more to rectify gender imbalance than just about any other solution.
When a couple separate, the most common presentation is for the mother to become (or probably remain, given the data on child care) the main carer of the children. While the child support rules compensate whichever parent is the children’s main carer post-separation, the payments are just that: compensation. In this way they are limited and, given that they are calculated as a percentage of the other parent’s income, they are outside the control of the recipient. (They also do not include employment-related additional income such as superannuation guarantee contributions. A person who reduces or gives up paid employment and is compensated by child support will not accumulate as much superannuation. This effect – which manifests after the separation – may or may not have been addressed in any property settlement between the couple).
Who should have custody of the children is an extremely sensitive question. For many, if not most, people, the most painful aspect of separation is that they spend less time with their children. Most parents want as much time as possible, and are reluctant to voluntarily reduce the amount of time the children spend in their care.
For women, though, the disproportionate time that the children spend in their care following separation seriously reduces their financial circumstances – and in particular the likelihood that they will be able to own their own home, the type of home they can afford and (eventually) their level of retirement savings.
One thing, then, that all single parents should consider is whether they should choose to have the children spend less time in their care, allowing them to spend more time in paid work. Buying a home, or buying a ‘better’ home, is simply easier when you have less responsibility for the care of children.
This suggestion will not suit everybody. Some single parents must provide the child care, for various reasons. But for single mothers (and fathers) who want to buy a home, moving more towards shared care is well worth considering. It is the most likely way that a woman can overcome the major hurdle to owning her own home.
This is one more area where a strategic financial solution – as against a product-based solution – is what the client really needs.