Home ownership rates in Australia have continued to decline as prices soar, with more people living in rentals and many owners and renters in housing stress.

Key points: Home ownership declined from 68.6pc in 1991 to 65.5pc in 2016

Home ownership declined from 68.6pc in 1991 to 65.5pc in 2016 Fewer people own their home outright, with 34.5pc of owners still paying off a mortgage

Fewer people own their home outright, with 34.5pc of owners still paying off a mortgage Renting has risen from 26.9 to 30.9pc of households

Data from the 2016 census, released this morning by the Bureau of Statistics, shows home ownership rates have continued their quarter century long decline, with just 31 per cent of Australians owning their home outright, having paid off their mortgage.

That is down from 32.1 per cent in the 2011 census, and off more than 10 percentage points since 1991, when more than 40 per cent of Australians had paid off their home.

The proportion of Australians who own their home jointly with the bank has remained relatively steady over the past few census, between 34-35 per cent, although only 27.5 per cent of Australians were paying off a mortgage in 1991.

The big shift has been towards renting, with nearly 31 per cent of Australians now paying a landlord, up from 29.6 just five years ago and under 27 per cent in 1991.

Darwin is the rental capital of Australia, with more than 44 per cent of its residents living as tenants, while Sydney and Brisbane also have a relatively high proportion of renters.

Housing tenure by city Location Owned outright % Owned with mortgage % Rented % Sydney 29.1 33.2 34.1 Melbourne 30.4 36 30 Brisbane 26.4 35.7 34.5 Perth 28.1 41.9 26.7 Adelaide 30.7 36.5 28.9 Hobart 32.9 35.2 28.5 ACT 27 38.4 31.8 Darwin 16.7 35.1 44.4 Australia 31 34.5 30.9 Australian Bureau of Statistics, Census 2016

Mortgage stress highest in Perth, Sydney and Melbourne

Not only are an increasing number of households being driven away from ownership by the rising cost of purchasing - on average, capital city home prices jumped 35 per cent in the five years between the 2011 and 2016 census - but many are in housing stress, despite much lower interest rates.

A common yardstick of housing stress is whether households are spending more than 30 per cent of their monthly income on either rent or mortgage repayments.

The census reveals that 22 per cent of Sydney households are in such a situation and, given the proportion of households that have finished paying off their mortgage, it means that almost a third of Sydneysiders who do not already own their home outright are under housing stress.

This is not surprising, given that Sydney home prices jumped almost 60 per cent in the five years between the previous census and 2016, according to the ABS residential property price index.

Nationally, the data reveals that 7.2 per cent of households are paying more than 30 per cent of their income on mortgages, which would equate to around a fifth of households that have a mortgage.

However, this figure has declined markedly since the previous census, when official interest rates were 4.75 per cent, versus 1.5 per cent now.

The Bureau of Statistics said the typical monthly mortgage repayment was highest in Darwin, followed by Sydney and Canberra.

But the data shows Perth, Sydney and Melbourne had the highest proportion of households in mortgage stress, with about one-in-ten Perth households devoting more than a third of their income to repayments.

Victoria 'the Ireland of the south'

The census also offers clues as to the role immigration has played in surging capital city home prices, with 86 per cent of migrants arriving over the past 25 years settling in the capital cities, leading to a population growth rate (10.5 per cent over the past five years) twice as fast as the rest of the country.

Darwin and Perth had the steepest population growth (13.5 and 12.4 per cent), with Melbourne just behind at 12.1 per cent meaning that it remains on track to eventually overtake Sydney as the nation's most populous city.

However, the figures also suggest that housing construction was not too far behind keeping up with population growth over the five years to August 2016, despite this widely being considered as a period when a housing shortage had worsened.

The census data show there were an extra 631,162 homes, while there was an additional 1.9 million people.

That is one extra home per three extra people - given that the typical household contains 2.6 people, those figures suggest that there was a degree of under-building during this five-year period.

However, the census period covers only the very start of a record building boom that is likely to see at least 200,000 new homes completed this year alone.

Further evidence that the 2016 census captured little of the recent high rise building boom was offered by a slight fall in apartments as share of dwellings, although there was a notable rise in town houses and terraces.

LF Economics has used ABS data to maintain a running estimate of what it believes is Australia's housing oversupply.

Lindsay David said his firm's figures are designed to underestimate any oversupply, but still find a huge over-build in Melbourne, despite its relative strong population growth.

LF Economics estimates that Victoria has a large dwelling oversupply, despite its recent population boom. ( Supplied: LF Economics )

"Even when you make all the necessary adjustments to provide a clearer picture of Victoria's real supply/demand balance its pretty clear there is an incredibly large overhang of excess dwellings," he told the ABC via email.

"This is also supported by the fact that real rents have pretty much gone nowhere in the last 20 years in Melbourne.

"Victoria is definitely the Ireland of the south."

BIS Oxford Economics was also projecting an apartment glut in Melbourne.

However, its managing director Robert Mellor told the ABC that revisions to ABS population estimates, based on the census, mean that Melbourne may actually have a housing shortage.

"They've added about 109,000 people to the Victorian population," he said, noting that probably 80 to 90 per cent of them would be in Melbourne.

"Without doing the detailed analysis yet, it's every likelihood that not only does the Melbourne market in aggregate remain in significant undersupply, probably numbers that are not dissimilar to Sydney, which clearly at June '16 we would've said was severely undersupplied, but I'd suspect ... even the apartment market could be undersupplied."

The picture was starkly different for Perth, where the population estimates were dramatically lowered by 57,000.

"If you were worried about WA previously and the Perth market then you're only even more worried by the excess supply," Mr Mellor said.

"On our numbers, the market had moved into significant excess supply, I'd have to say that it would be now regarded as quite severe."

The population estimates for the other states remained more stable and, on those figures, LF Economics continues to defy most expert opinion in arguing Sydney has a modest housing oversupply.

LF Economics estimates that NSW has a modest surplus of dwellings compared to what population growth requires. ( Supplied: LF Economics )

Even if there is not currently a housing oversupply, Citi chief economist Paul Brennan warned that dwelling construction is likely to remain high for at least a couple more years, while population growth is still slowing.

"This would suggest the longer-term prospect for household formation and home building could be moderated by the slowdown in population growth and the demographic shift to an older population," he wrote in a note.

Mr Brennan also pointed out that tighter lending rules and rising mortgage interest rates are likely to dampen speculative property demand even if population growth remains strong.

Nobody home

Furthermore, despite the large rise in home prices in some of the nation's key population centres, an increasing number of homes are being left empty.

The data reveal that 11.2 per cent of dwellings - or about 1.04 million homes - were unoccupied on census night, up from 10.7 per cent in 2011.

While many of these vacant dwellings are holiday houses, under renovation or simply temporarily vacant while their occupants are travelling, the rise in the proportion of empty homes may hint at more investment properties being deliberately left unoccupied.

Mr Mellor said there seems to have been a trend for people to be away from home more often.

"As every census goes by, you're getting a higher proportion of Australians who are either travelling overseas or interstate on census night," he explained.

However, there was a significant variation between vacancy rates across the capital cities, which would appear to support Mr David's assertion that Melbourne is relatively oversupplied for housing, with 9.6 per cent of homes in the city sitting empty on census night versus just 7.7 per cent in Sydney and between 8-9 per cent in most other capitals.