Addressing recurring or protracted episodes in housing affordability stress 2001–11

Abstract

This study utilized the first 11 waves of the Household, Income and Labour Dynamics of Australia (HILDA) Survey to track individuals’ tenure transitions and housing affordability dynamics over the period 2001–11. The study used the widely recognized definition of ‘housing affordability stress’, where an individual’s housing costs exceed 30 per cent of their equivalised income and their income leaves them in the bottom 40 per cent of the household income distribution. This study confirmed previous findings that relatively few Australians slip into housing affordability stress if they at first enter affordable housing, and if they fall into stress, most escape quickly. Over a 10-year period, only around 21 per cent of Australians slip into housing affordability stress (‘stress’) after being in affordable housing, and 73 per cent of Australians experiencing stress escape within a year. However, some Australians have problematic experiences—defined as ‘dynamic affordability stress’. These individuals experience difficulty in rebounding into affordable housing, relapse back into stress even if escape is at first achieved; or experience episodic recurrences of stress. Susceptible groups include migrants from non-English speaking backgrounds, low-income home purchasers or households with dependent children. Falling into housing affordability stress is on average equally due to labour market factors (e.g. reduced income or unemployment) as housing factors (increased housing costs), but exiting stress is more commonly linked to increased income. This suggests that policies to boost employment participation and supplements to income might assist most in helping low-income groups make more permanent exits from stress. Macroeconomic conditions also matter, with vulnerability to dynamic affordability stress higher post-GFC controlling for all other factors, and the odds of a bounce back into affordable housing 44 per cent lower than before the GFC. This suggests that moving out of stress after the GFC has been harder. Both Commonwealth Rent Assistance (CRA) and public housing still play important roles in preventing stress, however, there is evidence to show the effectiveness of CRA has declined and the affordability of public housing might be eroded with recent policy proposals to impose market rents