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Housing Affordability
Housing Affordability
Housing Affordability
Housing Affordability
Housing Affordability
Housing Affordability
Housing Affordability
Housing Affordability
Housing Affordability
Housing Affordability
Housing Affordability
Housing Affordability
Housing Affordability
Housing Affordability
Housing Affordability
Housing Affordability
Housing Affordability
Housing Affordability
Housing Affordability
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Housing Affordability

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  • The importance of measuring housing affordability – help policy makers understand which households have housing affordability issues, whether there is a spatial element and what is the extent of the problem. This presentation will only focus on first home buyers entry into the market and households paying mortgages rather than renters for simplicity sake but the methodology could be applied to the rental market.
  • Conventional wisdom broadly defines housing affordability as the cost of housing in relation to incomeIf a household is spending more than 30% of their income on housing they are in “housing stress”In the early 90s the National housing strategy confined this to bottom 40 percent of income distributionEvolved as a rule of thumb and appears not to be any rigorous rational behind the 30% rule.
  • Given the widespread acceptance and ease of use of the 30% rule why did we think it was a problem? We thought it was a problem because when we applied the ratio measure it suggested that entry into home ownership was increasingly unaffordable for all but the wealthiest households.However home purchase data shows (FHOG and ABS housing finance data)First home buyers still entering marketHome purchasers are only marginally older and wealthier than in previous periodsMortgage default levels remain at very low levels A further weakness of the simple percentage of income ratio approach is that it ignores the different needs of different households of different sizes. A family with several children will have much higher living expenses than a single person household.
  • While this method is not new in academic circles (Stone, 2006, AHURI 2011) it has not been applied widely in Australia by policy makers.  
  • Low cost - requires frugal management of resources but would still allow social and economic participation consistent with community standardsModest but adequate – higher standard of living than low cost – spend more on eating out, going to cinema etcSwinburne social research also calculated the tax and income transfers for the different households – family tax benefit eg A and BVery different from Henderson poverty line DPCD focussed on Modest but adequate
  • Explain axis and linesX axis is gross annual income y axis is how much household can afford to pay in mortgage per weekDotted lines are ratioSolid lines are residualUnder 30% ratio rule a single person household with average full-time adult earnings of 60,000 could only afford $300 per week on mortgage by contrast residual suggests mortage of $600 per weekResults concur with AHURI study by Hulse and Burke into low come home ownership that concludes that single people are increasingly dominating the low income home purchase market at the expense of households with children
  • Whilst under residual measure single households can afford to pay more couples with 2 children on an income of less than 75,000 can afford to pay less under the modest budget standardSo whats the quantum of the difference? Singles with an income of 65,000 can afford to pay around $700 per week in mortgage repayments whereas couples with 2 children on $65,000 can afford only around $300
  • Taylor also used Household Income and labour dynamics longitudinal survey data to look at the quantum of households in Victoria experiencing housing stress using different measures. When we applied the residual and ratio measures we find that the ratio measure gives us a larger overall number of households in mortgage stress than the residual.But it appears that the ratio measure may underestimate the number of low income households who are suffering mortgage stress.87,106 households in housing stress by residual method (4% of total vic households)138,138 households in housing stress by ratio method (7% of total vic households)
  • To further explore these measures we have operationalised the residual and ratio measures using two different indicatorsM1 – Determines max dwelling price for specific household income rangesM2 – Estimates income required to purchase property at the median price
  • This map shows measure 1 applied to Melbourne house prices. It shows the proportion of houses sold in in 2010 that are affordable for a low income household of a couple with two children.Unsurprising given their income of 66,500 there are very few affordable home purchase options for this household.Both residual and ratio measures for couples with 2 children show that in 3rd decile similar distribution of few options available for those on an income of 66,500
  • As we move up the income scale there are more options but even at fourth decile they are limited to growth areas
  • Ratio and residual start to differ and show more options with residual because don’t take into account higher costs of these households
  • Once you get to median income not much difference between ratio and residual
  • Single person 6th decile few options because incomes are so low
  • Animation - Income at the 8thdecile for sinlges which is roughly 65,800 per annum is comparable with 3rddecile for families with 2 children ($66,500) far more options available for lone person households than couples with children on that income.This might appear to be surprising but it’s what our calculations seem to show and this is single person household on a modest budget. The sort of person who does not go on overseas holidays and takes his/her lunch to work.
  • Another way to operationalise the residual measure is using measure 2 . This map shows income a couple with two children would require to purchase a median house in each LGA. It shows they need an income of greater than >80,000 to purchase a median house anywhere in metro melbourne.Noting that this does not mean they couldn’t purchase a house at the the 25th percentile perhaps a suitable apartment or townhouse.
  • Measure 2 looks at what different households would need to be making to afford the average priced house or flat in an area. Shows single person households have more options than couple with children households . Although very low income households are limited to GA’s
  • Single household income data may well be skewed by proportion of people on centre link benefits, those in public housing, and retired (all of whom may not be purchasing)location of the dwelling itself may impact on both the non-housing costs and the potential income of the household. In large urban areas, cheaper housing located on the fringes of the city may be cheaper, but this price advantage may be eroded by higher transportation costs and limited access to higher order, better paid employment. As every household’s specific circumstances will vary, another approach to analysing affordability might include consideration of weighting the data by a distance factor on non-housing costs and household income.LimitationsFuture will
  • Transcript

    1. Better than average(s): Movingbeyond medians and incomeratios to explore housingaffordability in MetropolitanMelbourneSuzanne Slegers, Chris White, Michael Humphris, Richard Watling, Elizabeth Taylor, Kath PhelanKieran PerkinsDept Planning and Community Development, Victoria
    2. Contents• Limits of the ratio income approach• Methodology of the residual income approach• Results of the residual and ratio approach• Conclusion
    3. Ratio measure of affordability• Definition: Broadly defined as cost of housing in relation to income• Most common – simple ratio of income to housing cost >30% or 30/40
    4. Limitations of ratio measure• Ratio measures suggest that home purchase is generally unaffordable for all but the wealthiest households • Does not appear to accord with reality • Ignores different living costs of different household types
    5. Method of the residual approach• Definition: Income left (residual) after accounting for all other necessary household expenditures (budget standard)• Amount varies for different households • Couples with 2 children • Singles • Single parents • Couples with no children
    6. Method of the residual approach• In 2010 DPCD commissioned Swinburne Institute for Social Research to develop a model based on the NSW Social Policy Research Centre budget standards and indexed for inflation 2 budget standards • Low cost • Modest but adequate
    7. Results• Maximum affordable mortgage repayments: Single person households Source: Stone. M, Burke. T, Ralston. T (2011) p 50
    8. ResultsMaximum affordable mortgage repayments: Couple with two childrenhousehold Source: Stone. M, Burke. T, Ralston. T (2011) pg 51
    9. Results
    10. Two indicators• Measure One: Income ladder of supply affordability divides the four different household types into specific household income ranges and determines the maximum dwelling price which each income range can afford to pay, after deducting budget standards• Measure Two: Threshold income estimates the income required to purchase a property at the median price (or a certain percentage of the median price) for any given area.
    11. Residual – 3rd DecileProportion of houses sold in 2010 that are affordable ($180,700) fora couple with two children on an income of $66,500 (3rd decile) WHITTLESEA WHITTLESEA WHITTLESEA WHITTLESEA WHITTLESEA WHITTLESEA HUME HUME HUME HUME HUME HUME NILLUMBIK NILLUMBIK NILLUMBIK NILLUMBIK NILLUMBIK NILLUMBIK MELTON MELTON MELTON MELTON MELTON MELTON YARRA RANGES YARRA RANGES YARRA RANGES YARRA RANGES YARRA RANGES YARRA RANGES BRIMBANK BRIMBANK BRIMBANK MORELAND MORELAND MORELAND MORELAND MORELAND MORELAND BANYULE BANYULE BANYULE BANYULE 25km 25km BRIMBANK BRIMBANK BRIMBANK MANNINGHAM MANNINGHAM MANNINGHAM MANNINGHAM MANNINGHAM MANNINGHAM MELBOURNE MELBOURNE MELBOURNE MELBOURNE MELBOURNE MELBOURNE 10km 10km MAROONDAH MAROONDAH MAROONDAH MAROONDAH MAROONDAH MAROONDAH 5km 5km WHITEHORSE WHITEHORSE WHITEHORSE WHITEHORSE WHITEHORSE WHITEHORSE HOBSONS BAY HOBSONS BAY HOBSONS BAY HOBSONS BAY HOBSONS BAY HOBSONS BAY PORT PHILLIP PORT PHILLIP PORT PHILLIP PORT PHILLIP PORT PHILLIP PORT PHILLIP WYNDHAM WYNDHAM WYNDHAM WYNDHAM WYNDHAM WYNDHAM GLEN EIRA GLEN EIRA GLEN EIRA GLEN EIRA GLEN EIRA GLEN EIRA MONASH MONASH MONASH MONASH MONASH MONASH KNOX KNOX KNOX KNOX KNOX KNOX BAYSIDE BAYSIDE BAYSIDE BAYSIDE BAYSIDE BAYSIDE GREATER DANDENONG GREATER DANDENONG GREATER DANDENONG GREATER DANDENONG GREATER DANDENONG GREATER DANDENONG CARDINIA CARDINIA CARDINIA CARDINIA CARDINIA CARDINIA CASEY CASEY CASEY CASEY CASEY CASEY FRANKSTON FRANKSTON FRANKSTON FRANKSTON FRANKSTON FRANKSTON Affordable Properties 80 to 100% 60 to 79% 40 to 59% 20 to 39% 0 to 19% MORNINGTON PENINSULA MORNINGTON PENINSULA MORNINGTON PENINSULA MORNINGTON PENINSULA MORNINGTON PENINSULA MORNINGTON PENINSULA
    12. Residual – 4th decileProportion of houses sold in 2010 that are affordable ($327, 300)for a couple with two children on an income of $82,900 (4th decile) WHITTLESEA WHITTLESEA WHITTLESEA WHITTLESEA WHITTLESEA WHITTLESEA HUME HUME HUME HUME HUME HUME NILLUMBIK NILLUMBIK NILLUMBIK NILLUMBIK NILLUMBIK NILLUMBIK MELTON MELTON MELTON MELTON MELTON MELTON YARRA RANGES YARRA RANGES YARRA RANGES YARRA RANGES YARRA RANGES YARRA RANGES MORELAND MORELAND MORELAND MORELAND MORELAND MORELAND BANYULE BANYULE BANYULE BANYULE BANYULE BANYULE 25km 25km BRIMBANK BRIMBANK BRIMBANK BRIMBANK BRIMBANK BRIMBANK MANNINGHAM MANNINGHAM MANNINGHAM MANNINGHAM MANNINGHAM MANNINGHAM MELBOURNE MELBOURNE MELBOURNE MELBOURNE MELBOURNE MELBOURNE 10km 10km MAROONDAH MAROONDAH MAROONDAH MAROONDAH 5km 5km WHITEHORSE WHITEHORSE WHITEHORSE WHITEHORSE WHITEHORSE WHITEHORSE HOBSONS BAY HOBSONS BAY HOBSONS BAY HOBSONS BAY HOBSONS BAY HOBSONS BAY PORT PHILLIP PORT PHILLIP PORT PHILLIP PORT PHILLIP PORT PHILLIP PORT PHILLIP WYNDHAM WYNDHAM WYNDHAM WYNDHAM WYNDHAM WYNDHAM GLEN EIRA GLEN EIRA GLEN EIRA GLEN EIRA GLEN EIRA GLEN EIRA MONASH MONASH MONASH MONASH MONASH MONASH KNOX KNOX KNOX KNOX KNOX KNOX BAYSIDE BAYSIDE BAYSIDE BAYSIDE BAYSIDE BAYSIDE GREATER DANDENONG GREATER DANDENONG GREATER DANDENONG GREATER DANDENONG GREATER DANDENONG GREATER DANDENONG CARDINIA CARDINIA CARDINIA CARDINIA CARDINIA CARDINIA CASEY CASEY CASEY CASEY CASEY CASEY FRANKSTON FRANKSTON FRANKSTON FRANKSTON FRANKSTON FRANKSTON Affordable Properties 80 to 100% 60 to 79% 40 to 59% 20 to 39% 0 to 19% MORNINGTON PENINSULA MORNINGTON PENINSULA MORNINGTON PENINSULA MORNINGTON PENINSULA MORNINGTON PENINSULA MORNINGTON PENINSULA
    13. Ratio – 4th decileProportion of houses sold in 2010 that are affordable ($311,000) fora couple with two children on an income of $82,500 (4th decile) WHITTLESEA WHITTLESEA WHITTLESEA WHITTLESEA WHITTLESEA WHITTLESEA HUME HUME HUME HUME HUME HUME NILLUMBIK NILLUMBIK NILLUMBIK NILLUMBIK NILLUMBIK NILLUMBIK MELTON MELTON MELTON MELTON MELTON MELTON YARRA RANGES YARRA RANGES YARRA RANGES YARRA RANGES YARRA RANGES YARRA RANGES MORELAND MORELAND MORELAND MORELAND MORELAND MORELAND BANYULE BANYULE BANYULE BANYULE 25km 25km BRIMBANK BRIMBANK BRIMBANK BRIMBANK BRIMBANK BRIMBANK MANNINGHAM MANNINGHAM MANNINGHAM MANNINGHAM MANNINGHAM MANNINGHAM MELBOURNE MELBOURNE MELBOURNE 10km 10km MAROONDAH MAROONDAH MAROONDAH MAROONDAH MAROONDAH MAROONDAH 5km 5km WHITEHORSE WHITEHORSE WHITEHORSE WHITEHORSE WHITEHORSE WHITEHORSE HOBSONS BAY HOBSONS BAY HOBSONS BAY HOBSONS BAY HOBSONS BAY HOBSONS BAY PORT PHILLIP PORT PHILLIP PORT PHILLIP PORT PHILLIP PORT PHILLIP PORT PHILLIP WYNDHAM WYNDHAM WYNDHAM WYNDHAM WYNDHAM WYNDHAM GLEN EIRA GLEN EIRA GLEN EIRA GLEN EIRA GLEN EIRA GLEN EIRA MONASH MONASH MONASH MONASH MONASH MONASH KNOX KNOX KNOX KNOX KNOX KNOX BAYSIDE BAYSIDE BAYSIDE BAYSIDE BAYSIDE BAYSIDE GREATER DANDENONG GREATER DANDENONG GREATER DANDENONG GREATER DANDENONG GREATER DANDENONG GREATER DANDENONG CARDINIA CARDINIA CARDINIA CARDINIA CARDINIA CARDINIA CASEY CASEY CASEY CASEY CASEY CASEY FRANKSTON FRANKSTON FRANKSTON FRANKSTON FRANKSTON FRANKSTON Affordable Properties 80 to 100% 60 to 79% 40 to 59% 20 to 39% 0 to 19% MORNINGTON PENINSULA MORNINGTON PENINSULA PENINSULA MORNINGTON PENINSULA MORNINGTON PENINSULA PENINSULA
    14. Residual – 5th decileProportion of houses sold in 2010 that are affordable ($503,400)for a couple with two children on an income of $102,600 (5th decile) WHITTLESEA WHITTLESEA WHITTLESEA WHITTLESEA WHITTLESEA WHITTLESEA HUME HUME HUME HUME HUME HUME NILLUMBIK NILLUMBIK NILLUMBIK NILLUMBIK NILLUMBIK NILLUMBIK MELTON MELTON MELTON MELTON MELTON MELTON YARRA RANGES YARRA RANGES YARRA RANGES YARRA RANGES YARRA RANGES YARRA RANGES MORELAND MORELAND MORELAND MORELAND MORELAND MORELAND BANYULE BANYULE BANYULE BANYULE BANYULE BANYULE 25km 25km BRIMBANK BRIMBANK BRIMBANK BRIMBANK BRIMBANK BRIMBANK MANNINGHAM MANNINGHAM MANNINGHAM MANNINGHAM MANNINGHAM MANNINGHAM MELBOURNE MELBOURNE MELBOURNE MELBOURNE MELBOURNE MELBOURNE 10km 10km MAROONDAH MAROONDAH MAROONDAH MAROONDAH 5km 5km WHITEHORSE WHITEHORSE WHITEHORSE WHITEHORSE WHITEHORSE WHITEHORSE HOBSONS BAY HOBSONS BAY HOBSONS BAY HOBSONS BAY HOBSONS BAY HOBSONS BAY PORT PHILLIP PORT PHILLIP PORT PHILLIP PORT PHILLIP PORT PHILLIP PORT PHILLIP WYNDHAM WYNDHAM WYNDHAM WYNDHAM WYNDHAM WYNDHAM GLEN EIRA GLEN EIRA GLEN EIRA GLEN EIRA GLEN EIRA GLEN EIRA MONASH MONASH MONASH MONASH MONASH MONASH KNOX KNOX KNOX KNOX KNOX KNOX BAYSIDE BAYSIDE BAYSIDE BAYSIDE BAYSIDE BAYSIDE GREATER DANDENONG GREATER DANDENONG GREATER DANDENONG GREATER DANDENONG GREATER DANDENONG GREATER DANDENONG CARDINIA CARDINIA CARDINIA CARDINIA CARDINIA CARDINIA CASEY CASEY CASEY CASEY CASEY CASEY FRANKSTON FRANKSTON FRANKSTON FRANKSTON FRANKSTON FRANKSTON Affordable Properties 80 to 100% 60 to 79% 40 to 59% 20 to 39% 0 to 19% MORNINGTON PENINSULA MORNINGTON PENINSULA MORNINGTON PENINSULA MORNINGTON PENINSULA MORNINGTON PENINSULA MORNINGTON PENINSULA
    15. Residual – 6th decileProportion of units sold in 2010 that are affordable ($193,200) for asingle person household on an income of $41,500 (6th decile) WHITTLESEA WHITTLESEA WHITTLESEA HUME HUME HUME HUME NILLUMBIK NILLUMBIK NILLUMBIK NILLUMBIK NILLUMBIK NILLUMBIK MELTON MELTON MELTON MELTON MELTON MELTON YARRA RANGES YARRA RANGES YARRA RANGES YARRA RANGES YARRA RANGES YARRA RANGES MORELAND MORELAND MORELAND MORELAND MORELAND MORELAND BANYULE BANYULE BANYULE BANYULE BANYULE BANYULE 25km 25km BRIMBANK BRIMBANK BRIMBANK BRIMBANK BRIMBANK BRIMBANK MANNINGHAM MANNINGHAM MANNINGHAM MANNINGHAM MANNINGHAM MANNINGHAM MELBOURNE MELBOURNE MELBOURNE MELBOURNE MELBOURNE MELBOURNE 10km 10km MAROONDAH MAROONDAH MAROONDAH MAROONDAH MAROONDAH MAROONDAH 5km 5km WHITEHORSE WHITEHORSE WHITEHORSE WHITEHORSE WHITEHORSE WHITEHORSE HOBSONS BAY HOBSONS BAY HOBSONS BAY HOBSONS BAY HOBSONS BAY HOBSONS BAY PORT PHILLIP PORT PHILLIP PORT PHILLIP PORT PHILLIP PORT PHILLIP PORT PHILLIP WYNDHAM WYNDHAM WYNDHAM WYNDHAM WYNDHAM WYNDHAM GLEN EIRA GLEN EIRA GLEN EIRA GLEN EIRA GLEN EIRA GLEN EIRA MONASH MONASH MONASH MONASH MONASH MONASH KNOX KNOX KNOX KNOX KNOX KNOX BAYSIDE BAYSIDE BAYSIDE BAYSIDE BAYSIDE BAYSIDE GREATER DANDENONG GREATER DANDENONG GREATER DANDENONG GREATER DANDENONG GREATER DANDENONG GREATER DANDENONG CARDINIA CARDINIA CARDINIA CARDINIA CARDINIA CARDINIA CASEY CASEY CASEY CASEY FRANKSTON FRANKSTON FRANKSTON FRANKSTON FRANKSTON FRANKSTON Measure_1_metro by s_met_6_per_U100 0 to 20 (31) Affordable Properties 80 to 100% 60 to 79% 40 to 59% 20 to 39% 0 to 19% MORNINGTON PENINSULA MORNINGTON PENINSULA MORNINGTON PENINSULA MORNINGTON PENINSULA MORNINGTON PENINSULA MORNINGTON PENINSULA
    16. Residual – 8th decileProportion of houses sold in 2010 that are affordable ($417,000) fora single person household on an income of $65,800 (8th decile) WHITTLESEA WHITTLESEA WHITTLESEA WHITTLESEA WHITTLESEA WHITTLESEA WHITTLESEA WHITTLESEA WHITTLESEA HUME HUME HUME HUME HUME HUME HUME HUME HUME HUME NILLUMBIK NILLUMBIK NILLUMBIK NILLUMBIK NILLUMBIK NILLUMBIK NILLUMBIK NILLUMBIK NILLUMBIK MELTON MELTON MELTON MELTON MELTON MELTON MELTON MELTON MELTON YARRA RANGES YARRA RANGES YARRA RANGES YARRA RANGES YARRA RANGES YARRA RANGES YARRA RANGES YARRA RANGES YARRA RANGES YARRA RANGES YARRA RANGES MORELAND MORELAND MORELAND BANYULE BANYULE BANYULE 25km 25km BRIMBANK BRIMBANK BRIMBANK BRIMBANK BRIMBANK BRIMBANK BRIMBANK BRIMBANK BRIMBANK BRIMBANK MORELAND MORELAND MORELAND MORELAND MORELAND MORELAND MORELAND BANYULE BANYULE BANYULE BANYULE BANYULE BANYULE 25km 25km MANNINGHAM MANNINGHAM MANNINGHAM MANNINGHAM MANNINGHAM MANNINGHAM MANNINGHAM MANNINGHAM MANNINGHAM MELBOURNE MELBOURNE MELBOURNE MELBOURNE MELBOURNE MELBOURNE MELBOURNE MELBOURNE MELBOURNE 10km 10km 10km 10km MAROONDAH MAROONDAH MAROONDAH MAROONDAH MAROONDAH MAROONDAH MAROONDAH MAROONDAH MAROONDAH 5km 5km 5km WHITEHORSE WHITEHORSE WHITEHORSE WHITEHORSE WHITEHORSE WHITEHORSE WHITEHORSE WHITEHORSE WHITEHORSE HOBSONS BAY HOBSONS BAY HOBSONS BAY HOBSONS BAY HOBSONS BAY HOBSONS BAY PORT PHILLIP PORT PHILLIP PORT PHILLIP PORT PHILLIP PORT PHILLIP HOBSONS BAY HOBSONS BAY HOBSONS BAY PORT PHILLIP PORT PHILLIP PORT PHILLIP PORT PHILLIP PHILLIP PORT PHILLIP PHILLIP WYNDHAM WYNDHAM WYNDHAM WYNDHAM WYNDHAM WYNDHAM WYNDHAM WYNDHAM WYNDHAM GLEN EIRA GLEN EIRA GLEN EIRA GLEN EIRA GLEN EIRA MONASH MONASH MONASH MONASH MONASH MONASH MONASH MONASH KNOX KNOX KNOX KNOX KNOX KNOX GLEN EIRA GLEN EIRA GLEN EIRA GLEN EIRA MONASH KNOX KNOX KNOX KNOX KNOX KNOX BAYSIDE BAYSIDE BAYSIDE BAYSIDE BAYSIDE BAYSIDE BAYSIDE BAYSIDE BAYSIDE BAYSIDE GREATER DANDENONG GREATER DANDENONG GREATER DANDENONG GREATER DANDENONG GREATER DANDENONG GREATER DANDENONG GREATER DANDENONG GREATER DANDENONG GREATER DANDENONG DANDENONG GREATER DANDENONG DANDENONG CARDINIA CARDINIA CARDINIA CARDINIA CARDINIA CARDINIA CARDINIA CARDINIA CARDINIA CARDINIA CARDINIA CARDINIA CASEY CASEY CASEY CASEY CASEY CASEY CASEY CASEY CASEY CASEY CASEY FRANKSTON FRANKSTON FRANKSTON FRANKSTON FRANKSTON FRANKSTON FRANKSTON FRANKSTON FRANKSTON FRANKSTON FRANKSTON FRANKSTON Affordable Properties Affordable Properties 80 to 100% 80 to 100% 60 to 79% 60 to 79% 40 to 59% 40 to 59% 20 to 39% 20 to 39% 0 to 19% 0 to 19% MORNINGTON PENINSULA MORNINGTON PENINSULA MORNINGTON PENINSULA MORNINGTON PENINSULA MORNINGTON PENINSULA MORNINGTON PENINSULA MORNINGTON PENINSULA MORNINGTON PENINSULA MORNINGTON PENINSULA PENINSULA MORNINGTON PENINSULA PENINSULA
    17. Residual – measure 2Income required to purchase a median priced house for acouple with 2 children household W HITTLESEA W HITTLESEA W HITTLESEA W HITTLESEA W HITTLESEA W HITTLESEA HUME HUME HUME HUME HUME HUME NILLUMBIK NILLUMBIK NILLUMBIK NILLUMBIK NILLUMBIK NILLUMBIK MELTON MELTON MELTON MELTON MELTON MELTON YARRA RANGES YARRA RANGES YARRA RANGES YARRA RANGES YARRA RANGES YARRA RANGES BRIMBANK BRIMBANK BRIMBANK MORELAND MORELAND MORELAND MORELAND MORELAND MORELAND BANYULE BANYULE BANYULE BANYULE BANYULE BANYULE 25km 25km BRIMBANK BRIMBANK BRIMBANK MANNINGHAM MANNINGHAM MANNINGHAM MANNINGHAM MANNINGHAM MANNINGHAM MELBOURNE MELBOURNE MELBOURNE MELBOURNE MELBOURNE MELBOURNE 10km 10km MAROONDAH MAROONDAH MAROONDAH MAROONDAH 5km 5km W HITEHORSE W HITEHORSE W HITEHORSE W HITEHORSE W HITEHORSE W HITEHORSE HOBSONS BAY HOBSONS BAY HOBSONS BAY HOBSONS BAY HOBSONS BAY HOBSONS BAY PORT PHILLIP PORT PHILLIP PHILLIP PORT PHILLIP PORT PHILLIP PHILLIP W YNDHAM W YNDHAM W YNDHAM W YNDHAM W YNDHAM W YNDHAM GLEN EIRA GLEN EIRA MONASH MONASH MONASH KNOX KNOX KNOX GLEN EIRA GLEN EIRA GLEN EIRA GLEN EIRA MONASH MONASH MONASH KNOX KNOX KNOX BAYSIDE BAYSIDE BAYSIDE BAYSIDE BAYSIDE BAYSIDE GREATER DANDENONG GREATER DANDENONG DANDENONG GREATER DANDENONG GREATER DANDENONG DANDENONG CARDINIA CARDINIA CARDINIA CARDINIA CASEY CASEY CASEY CASEY CASEY CASEY FRANKSTON FRANKSTON FRANKSTON FRANKSTON FRANKSTON FRANKSTON Annual gross household income $120,000 to $170,000 (5) $100,000 to $120,000 (3) MORNINGTON PENINSULA MORNINGTON PENINSULA MORNINGTON PENINSULA MORNINGTON PENINSULA MORNINGTON PENINSULA MORNINGTON PENINSULA $80,000 to $100,000 (9) $60,000 to $80,000 (11) $40,000 to $60,000 (3)
    18. Residual – measure 2Income required to purchase a median priced house for asingle person household WHITTLESEA WHITTLESEA WHITTLESEA WHITTLESEA WHITTLESEA WHITTLESEA HUME HUME HUME HUME HUME HUME NILLUMBIK NILLUMBIK NILLUMBIK NILLUMBIK NILLUMBIK NILLUMBIK MELTON MELTON MELTON MELTON MELTON MELTON YARRA RANGES YARRA RANGES YARRA RANGES YARRA RANGES YARRA RANGES YARRA RANGES MORELAND MORELAND MORELAND MORELAND MORELAND MORELAND BANYULE BANYULE BANYULE BANYULE 25km 25km BRIMBANK BRIMBANK BRIMBANK BRIMBANK BRIMBANK BRIMBANK MANNINGHAM MANNINGHAM MANNINGHAM MANNINGHAM MANNINGHAM MANNINGHAM MELBOURNE MELBOURNE MELBOURNE 10km 10km MAROONDAH MAROONDAH MAROONDAH MAROONDAH 5km 5km WHITEHORSE WHITEHORSE WHITEHORSE WHITEHORSE WHITEHORSE WHITEHORSE HOBSONS BAY HOBSONS BAY HOBSONS BAY HOBSONS BAY HOBSONS BAY HOBSONS BAY PORT PHILLIP PORT PHILLIP PORT PHILLIP PORT PHILLIP PORT PHILLIP PORT PHILLIP WYNDHAM WYNDHAM WYNDHAM WYNDHAM WYNDHAM WYNDHAM GLEN EIRA GLEN EIRA GLEN EIRA GLEN EIRA GLEN EIRA GLEN EIRA MONASH MONASH MONASH MONASH MONASH MONASH KNOX KNOX KNOX KNOX KNOX KNOX BAYSIDE BAYSIDE BAYSIDE BAYSIDE BAYSIDE BAYSIDE GREATER DANDENONG GREATER DANDENONG GREATER DANDENONG GREATER DANDENONG GREATER DANDENONG GREATER DANDENONG CARDINIA CARDINIA CARDINIA CARDINIA CARDINIA CARDINIA CASEY CASEY CASEY CASEY CASEY CASEY FRANKSTON FRANKSTON FRANKSTON FRANKSTON FRANKSTON FRANKSTON Annual gross household income $120,000 to $170,000 (5) $100,000 to $120,000 (3) MORNINGTON PENINSULA MORNINGTON PENINSULA MORNINGTON PENINSULA MORNINGTON PENINSULA MORNINGTON PENINSULA MORNINGTON PENINSULA $80,000 to $100,000 (9) $60,000 to $80,000 (11) $40,000 to $60,000 (3)
    19. Conclusion• The strength of the residual method is that it takes into account household type and household income in a way that the ratio method cannot.• The ratio method may obscure the degree to which households with very low incomes, particularly couples with children are experiencing housing affordability issues• Residual method shows unsurprisingly that single households have far more options than couples with children on a similar income• Residual method appears to show that a couple with two children need an income of greater than $80,000 to affordably purchase a house at the median price in Metropolitan Melbourne

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