Don't think of it as spending more on mortgages, think of it as "buying more expensive homes".

Mmmm...

Actually I think the Prime Minister and Treasurer have something of a point, just.

I wrote this for this morning's paper laced with perhaps too much poorly-signalled sarcasism.

Worried that you are spending more and more of your income on mortgage repayments? Don’t be. According to the Treasurer yesterday at the launch of the census it is just that “people are using increased wages to buy more expensive homes”.

It is a line the Prime Minister rehearsed last week. After the release of data suggesting that mortgage payments were eating up more take-home pay than ever before he said people were “buying ever more expensive houses, and they are doing that because interest rates are lower and people can borrow more”.

So it is a sign of prosperity.

Renters might be feeling more prosperous as well. They are taking on more expensive rents...

In the last ten years the typical weekly rent reported on census night jumped from $123 to $190. The typical rent in the ACT, once on a par with the rest of the nation, has soared way above the pack to $260 per week, the highest in the country.

But it is hard to explain the changed behaviour of young Australians in terms of increased prosperity. The census reveals that the number of young people aged 15 to 24 still living with their parents has jumped 9 per cent in the last ten years. It is more likely that they can’t afford the increased rents.

And it is hard to use increased prosperity to explain the dramatic slide in the proportion of Australians who have paid off their homes revealed in the census. Ten years ago 41 per cent of us had paid-off fully owned houses. Today it is only 33 per cent.

Indeed 179,704 houses that were debt-free back in 1996 are now mortgaged. We are actually remortgaging previously unmortgaged homes. Yesterday Mr Costello said that his suspicion was that people were “unlocking equity in homes, particularly amongst those older people who traditionally would have paid off their mortgage in its entirety”.

Two forces are at work. One (unacknowledged by the Treasurer and Prime Minister) is that housing is becoming harder to afford. The other (trumpeted by them) is that even with the recent hikes in interest rates, finance is more easily available.

There is another sign of this in the lower proportion of people renting. In the last ten years that proportion has slipped from 29 per cent to 27 per cent, perhaps because homeownership has come to be seen as more important. People who would have once would have felt happy renting for some years might now be feeling that if they don’t attempt to get into the housing market immediately they will have lost their chance of homeownership forever.