This work is designed to provide a practical resource for local government to address housing affordability, using census data-based time series analysis, to quantify: - Who is in housing stress? - How many are there? - Where are they? and - What can be done about it?

1. 1
Housing Affordability
informing local government with
some facts and figures

2. 2
About the research
This work is designed to provide a practical resource
for local government to address housing affordability,
using census data-based time series analysis, to
quantify:
– Who is in housing stress?
– How many are there?
– Where are they? and
– What can be done about it?

3. 3
Evidence based decision making
Objective:
To informing housing policy to address
housing affordability at the local level.
How:
Understand it...
Define it...
Quantify it...
Identify the issues (What does it mean?)...
Make it relevant to good decision making...

4. 4
Drivers
Demand for dwellings has grown at a faster rate than
overall population growth
Household types (living arrangements) have become
more diverse.
Demand has changed a lot while supply has changed
only a bit.
Where supply has changed a lot, there are continuing
high prices (for both rental and purchasing).
Indicators
The key indicators for supply not meeting underlying
demand are:
• Increasing house prices (rental and purchasing);
• Increases in mortgage foreclosures;
• Increases in homelessness;
• Delays in the formation of young households (young
people staying in the family home for longer).
Understanding housing stress (macro-level)

5. 5
Mortgage Stress
• High proportion of low income earners
• Insufficient supply of housing
• Insufficient housing stock diversity
• Homebuyers taking too much risk
• Rising housing prices; interest rates
• Job loss; economic downturn
• Static or declining incomes
• Family break-up
Rental Stress
• Rents rise due to insufficient rental stock supply
• Large rental market (private rentals)
• Concentration of family types known to be prone to
rental stress (One parent families; Couple families
with young children; Older lone person households)
• Gentrification and rapid social change
• Insufficient public housing / subsidised housing
supply
Understanding housing stress (local-level)

6. 6
Defining housing stress
• The most extreme form of housing stress is of
homelessness ....
• 30% of household income is considered a good
benchmark of the critical affordability level in the
household budget.
Cumulative % of households by % of income spent on housing (ABS 2006 Census)
)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20% 30% 40% 50% 60% 70%
Households(%)
Income spent on housingcosts (%)
Purchasing Renting
Above 30% the number of
households rapidly declines
Most hhd’s spending >30%
are in 30-40% range

7. 7
• HOWEVER... We also recognise the “middle income”
earners (in the third quintile - 40th to 60th income
percentile). Those in this group who spend more
than 30% of income on housing are also vulnerable
and in many circumstances have only limited housing
choice.
Defining housing stress
HOUSING STRESS
• the NATSEM model is used in this work to define
households in housing stress as those with
equivalised household income in the lowest 40%
(two quintiles) of all household incomes in Australia,
who are spending more than 30% of their gross
household income on either rent or mortgage
repayments.
‘MARGINAL’ HOUSING STRESS

8. 8
Quantifying housing stress
Tenure types
Income levels
% income spent
on housing
All households
7,144,094
Purchasing & Renting
4,366,934
61.1%
Purchasing
2,436,115
55.8%
Renting
1,930,819
44.2%
Low
231,274
42.1%
Middle
143,406
26.1%
High
175,204
31.9%
Middle
95,178
15.3%
High
25,598
4.1%
Fully owned & Rent-free
2,570,443
36.0%
Unknown
421,453
17.3%
≤ 30%
1,464,778
60.1%
> 30%
549,884
22.6%
Not stated
206,717
2.9%
Mortgage
stress
9.5%
Unknown
240,995
12.5%
≤ 30%
1,068,419
55.3%
> 30%
621,405
32.2%
Marginal
Mortgage
stress
5.9%
Housing
Stress
731,903
10.2%
Marginal
Stress
238,584
3.3%
Rental
stress
25.9%
Marginal
Rental
stress
4.9%
Low
500,629
80.6%

9. 9
Quantifying housing stress
State and Territory comparisons
Housing Stress by State/Territory, 2001 and 2006 Census
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
NSW Vic QLD SA WA TAS NT ACT Australia
Households(%)
States and Territories
2001 2006
Levels were remarkably consistent between states, with only a 1.1% variation
between the levels in NSW, VIC, QLD and SA.
Proportions of stress have increased in every state except WA and NT (incomes
keeping pace with price increases).
New South Wales had the highest level of housing stress (11.1%).
Housing Stress by State/Territory, 2001 and 2006 Census

10. 10
Quantifying housing stress – who?
Overall (mortgage & rental) Stress
Overall Housing Stress by Household Type, 2001-2006 (ABS Census)
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Young Maturing Older Young Maturing Older Young Maturing Older Young Maturing Older Other
family
Group
h'holds
Couples with children Single parent families Couples without children Lone person households Other
Households(%)
Household type
2001 2006
Total housing stress tends to decrease with age
as the key tenure type with no housing costs
increases.
Single parent families are significantly stressed
also note young families and lone person
households

11. 11
Quantifying housing stress – who?
Mortgage Stress
Mortgage Stress by Household Type, 2001-2006 (ABS Census)
0%
5%
10%
15%
20%
25%
30%
35%
40%
Young Maturing Older Young Maturing Older Young Maturing Older Young Maturing Older Other
family
Group
h'holds
Couples with children Single parent families Couples without children Lone person households Other
Households(%)
Household type
2001 2006
Note: Single parent families again; BUT also
note older couples without children AND older
lone person households under considerable
mortgage stress

12. 12
Quantifying housing stress – who?
Rental Stress
Rental Stress by Household Type, 2001-2006 (ABS Census)
0%
10%
20%
30%
40%
50%
60%
Young Maturing Older Young Maturing Older Young Maturing Older Young Maturing Older Other
family
Group
h'holds
Couples with children Single parent families Couples without children Lone person households Other
Households(%)
Household type
2001 2006
Note again: single parent households
BUT look at the proportion of older lone
person and older empty nester
households

13. 13
Understanding the role and function of an area is the
key to understanding any policy issues for that area.
Informing Local Government
The extent to which levels of housing stress is a
problem will vary dependent on the role and function
of the local area to those household types.

14. 14
Housing Stress in Frankston City
by Census Collection District,
2006
Frankston North and Frankston Central
recorded the highest levels of housing
stress and the largest increases
between 2001 and 2006, indicating that
the problem is becoming more severe in
these areas.
Frankston Central had an
extremely high level of rental
stress and lower mortgage
stress, while Frankston North
had very high levels of both
rental and mortgage stress.
Frankston Central is
undergoing some
regeneration, with young
singles moving into the area
to access employment and
education. Rental stress is
particularly high among the
vulnerable older lone persons
group here, who may be
forced out by rising rents.
Skye-Sandhurst had slightly
higher levels of marginal
mortgage stress indicating that it
may take two incomes to pay a
mortgage there, and with recent
interest rate rises there could be
issues with affordability in this
new suburb.

15. 15
What residential role and function is played by
suburbs within the LGA?
• Suburb Typology for each suburb
Informing Local Government
Housing Affordability
What is the role and function of the LGA by looking
at?...
• Age structure for LGA and SD, 2006
• Household types LGA and SD, 2006
• Household Types, Change 2001-2006, LGA
• Housing Tenure, LGA and SD, 2006
• Emerging dwelling structure, LGA, 2001-2006
• Household incomes, LGA and SD, 2006
• Change in household income quartiles, LGA, 2001- 2006

16. 16
What types of households are experiencing
housing stress?
Breaks down housing stress by household type to identify
which households are at greater risk.
Certain household types have greater propensity for certain
tenure arrangements, and so mortgage and rental stress are
analysed separately.
Informing Local Government
Housing Affordability
How many households are in housing stress?
Presents the levels of housing stress and marginal housing
stress at the LGA, compared to the Statistical Division level in
2006 and 2001 and examines change over time, and
differences between households.
ALSO presents the data for overall housing stress and
separates mortgage and rental stress data.

17. 17
What can be done?
• Reviewing planning controls
• Encouraging the development of medium and higher density
• Selective land release
• Joint ventures with developers and housing associations
• Providing incentives to developers
• Exploring and advocating for innovative methods
• Initiatives relating to directly assisting households
• Rent to buy schemes
• The National Rental Affordability Scheme
• Providing financial counselling and education services
• Schemes designed to reduce household costs
Informing Local Government
Housing Affordability
Increase supply, diversity and choice!

18. 18
Informing Local Government…
“Sustainable communities are diverse communities”
Young families
Young people either
couple or remain as lone
persons (or in group)
Young couples
Young couple may
have children and
become young families
Young families mature
and parents may
separate/divorce
Mature families
Single parent
families
Young lone
persons and/or
Group households
Young people leave
home to form new
households, leaving
behind ‘empty nesters’
Lone person /
group households
Emerging
empty nesters
Empty
nesters
Old lone
persons

19. 19
Supply and Demand Analysis...
Analyse the LGAs housing consumption patterns both in
relation to residential supply and demand by addressing the
following questions:
• How are households changing?
• How is the dwelling stock changing?
• Who is living in what type of household and dwelling?
• How is age structure changing?
• Who is leaving and why?
Informing Local Government
Housing Opportunity

20. 20
Residential Opportunities Analysis...
Quantify and locate dwelling development opportunities:
• Where is residential development occurring?
• What are the residential opportunities in and around
designated activity centres?
• What are the residential opportunities on redevelopment
sites?
• What are the residential opportunities on underutilised
residential lots?
Informing Local Government
Housing Opportunity

21. 21
Increase overall dwelling supply
Informing Local Government
Housing Opportunity
Increase diversity of dwelling stock
Increase housing choice
Increase housing affordability
Build social sustainability
Build environmental sustainability
Maintain social networks
Maintain the broadest range of services & facilities