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Housing Affordability

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Housing Affordability

  1. 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. 2. Contents• Limits of the ratio income approach• Methodology of the residual income approach• Results of the residual and ratio approach• Conclusion
  3. 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. 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. 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. 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. 7. Results• Maximum affordable mortgage repayments: Single person households Source: Stone. M, Burke. T, Ralston. T (2011) p 50
  8. 8. ResultsMaximum affordable mortgage repayments: Couple with two childrenhousehold Source: Stone. M, Burke. T, Ralston. T (2011) pg 51
  9. 9. Results
  10. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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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