Housing Affordability In Australia Research Articles

A study on social housing and housing affordability in Australia based on zoning regulations

A study on social housing and housing affordability in Australia based on zoning regulations

Risk analysis in social housing delivery: A public–private partnerships approach

AbstractFaced with fiscal pressure and concerns over bureaucratic inefficiency, policymakers at Australia's state government level are evaluating instruments to improve social housing services. A public–private partnerships (PPPs) procurement approach is one such instrument for increasing housing supply to address housing affordability in Australia. To determine the value of pursuing a project through a PPP delivery versus a traditional procurement approach, public administrators need to determine discount rates for comparing different cash flows streams on a consistent basis. Additionally, they must estimate public sector comparator (PSC) to determine public sector's risk exposure in social housing delivery and allocating constrained housing budgets. This research assesses the discount rates and estimates the risk profile of social housing delivery faced by public agencies. Three case studies were utilised to present project estimate probability distributions for gaining insight into risk exposure in social housing delivery and helping housing budget allocation at the state government level. The findings recommend the use of an estimated 30‐year treasury bond rate (3.14%) as the PSC discount rate for social infrastructure. Additionally, the results suggest the use of a PPP discount rate for social housing of 6.01%, given a risk‐free rate of 3.14% and a systematic risk premium of 2.87%.

Understanding Housing Affordability in Australia

AbstractWe evaluate housing affordability in Australia particularly as it relates to the ability of households to purchase a home. An overview of trends in the Australian housing market is provided with a discussion of rising house prices and falling home ownership. We then provide an estimate of the fundamental price of housing at capital‐city level based upon the user cost of housing. We also discuss policies that have been used and policies that could be used to improve housing affordability. We conclude with a brief discussion of the long term barriers to housing affordability.

The differential geography of housing affordability in Sydney: a disaggregated approach

ABSTRACTDespite extensive studies being devoted to housing affordability in Australia, few have investigated housing affordability at a disaggregated level. This is in spite of the fact that there are existing socio-economic and demographic disparities across different regions of a city. This study aims to fill this gap by examining housing affordability in Sydney, a city that is characterised by diverse demographic and socio-economic mix, from a sub-city perspective. Two dimensions of affordability are assessed from 1991 to 2016: entry-level and ongoing housing affordability. The study finds that entry-level housing remains extremely unaffordable in all regions of Greater Sydney, although the level of unaffordability varies across regions. Specifically, the deterioration in housing affordability is more obvious in low-income regions such as Western Sydney. In addition, the ongoing housing affordability of those who have entered the market improves considerably within 5–10 years, although there are significant variations between different regions. Importantly, residents in low-income regions such as Western Sydney take a longer period to improve their ongoing affordability. The findings of differential geography of housing affordability have some profound policy implications. Policymakers should consider the disparities across different regions by formulating a more targeted and regionally balanced housing policy.

Transitional distribution dynamics of housing affordability in Australia, Canada and USA

PurposeThe main purpose of this paper is to explore the transitional dynamics of housing affordability indicators of major cities in three developed countries: the USA, Canada and Australia, in the period after the global financial crisis. As the global housing markets are more interconnected today, it is essential to investigate the demographic movement pattern and their impacts on housing market dynamics.Design/methodology/approachBased on the Markov transition matrix approach and the stochastic kernel technique, a newly established framework named the mobility probability plot (MPP) is adopted to investigate the city-level trends of housing affordability in the three countries during the period 2008-2015.FindingsThe results suggest that the transitional dynamics of the USA’s housing affordability trend saliently differs from those of Canada and Australia: in the USA, MPP results reveal that when the price-to-income (P/I) ratio is higher than 3.5 times, it has a high tendency of moving downward in the next period. In Australia, housing affordability tends to continue deteriorating when the P/I ratios are in the range from 8.0 to 8.6. In Canada, the MPP analysis indicates that the P/I ratios tend to increase further when the ratios are between 5.7 and 7.0, and within the range of 8.3-9.5.Originality/valueThis paper adopts an innovative approach to explore the city-level trends of housing affordability in the three developed countries during the period 2008-2015. The distribution dynamics approach has several virtues: first, this approach does not merely focus on the issue of housing affordability but also includes an analysis of the underlying housing affordability distribution. Second, it can clearly show the mobility of the city-level units in terms of the P/I change. Third, it can predict the proportion of the entities in different P/I ratio bands in a number of years ahead and even in the long run.

Housing affordability in Australia: an empirical study of the impact of infrastructure charges

Developer paid infrastructure charges are a commonly used mechanism for Australian municipalities to shift the funding of new urban infrastructure to private sector property developers. In a climate where housing affordability is a policy objective for many governments, a clear understanding of the impacts these charges have on the price of housing is imperative. This paper empirically examines the effect of infrastructure charges on housing affordability in Brisbane, Australia, applying a hedonic house price model to 4699 new and 25,053 existing house sales in Brisbane from 2005 to 2011. The findings of this research are consistent with international studies that support the proposition that infrastructure charges are over passed to home buyers. This study provides evidence of infrastructure charges being over passed to both new and existing home buyers in the order of around 400 %. These findings suggest that infrastructure charges are thus a significant contributor to increasing house prices and reduced housing affordability in Australia. By testing this flow-on effect to both new and existing homes, this research provides evidence in support of the proposition that not only are infrastructure charges over passed to new home buyers, but also to buyers of existing homes. Thus the price inflationary effect of infrastructure charges are being felt by all home buyers across the community, resulting in increased mortgage repayments of close to $1000 per month in Australia. These results are important as they inform governments on the outcomes of current infrastructure funding policies on housing affordability, providing the first empirical evidence of its kind in Australia.

Bridging the Gap between Housing Stress and Financial Stress: The Case of Australia

In recent decades, housing affordability has been increasingly linked to household financial outcomes where high housing costs relative to income are perceived to negatively affect financial well-being. However, the traditional measure of housing affordability in Australia is housing stress, which is subject to widespread criticism as an inadequate representation of overall financial stress. This methodological paper first determines the extent to which housing stress correlates with experiences of financial stress and, second, demonstrates ways in which the measure can be modified to deliver a more reliable indication of how housing costs affect financial well-being. The study contributes to the international literature by showing how the use of longitudinal data can improve the measure of housing stress providing a more accurate assessment of the relationship between housing costs and financial well-being.

Perpetuating the problem: neoliberalism, commonwealth public policy and housing affordability in Australia

This paper argues that the scale of the contemporary housing affordability crisis in Australia is at least partly attributable to the influence of neoliberal ideas over the past three decades. After providing an overview of the nature and scope of the crisis, the process by which housing as a policy problem has been reconceptualised by policy makers and others since the 1970s is examined. This is followed by analysis of the ways in which a number of commonwealth government policies which are ideationally underpinned by neoliberalism have amplified and perpetuated the problem of housing affordability in Australia and, ipso facto, prevented the issue from being addressed. The paper concludes by suggesting that policies which are ostensibly intended to improve housing affordability will continue to founder until the ideational obstacles which are the focus of this paper are recognised, and housing policy is reconceptualised along lines more conducive to the amelioration of the housing affordability problem. The paper seeks to extend the existing literature on housing affordability by explicitly identifying the linkages between neoliberal ideas, commonwealth public policy, and the extant problem of housing affordability in Australia.

Shortage of Supported Housing for People with Mental Illness: Australia as an Exemplar of an International Problem

Social and economic stability promotes recovery and treatment maintenance in people with mental disorders. Research findings are strong that there is a link between economic and housing stability and relapse. To achieve social and economic stability a whole of government approach is required. Policy is not a linear process but rather is an interactive and iterative process in which administrative discretion comes to bare. Demarcations and tensions in terms of interpretation of policy among departments are international phenomena. In Australia, issues exist in the government interdepartmental interpretation of disability that discriminates against those without intellectual disability in securing supported housing. This issue is a good exemplar of the challenges of a whole of government approach to support those with psychiatric disability. The example is of particular concern in light of housing affordability in Australia. The issue is contemporary as Australia rolls out the National Disability Insurance Scheme (NDIS) and struggles to fulfil a commitment to a whole of government approach to care and support for people with a psychiatric disability. Internationally the issue is timely as more countries embrace the philosophy of a whole of government approach to mental health care.

The link between infrastructure charges and housing affordability in Australia: where is the empirical evidence?

Developer paid charges or contributions are a commonly used infrastructure funding mechanism for local governments. However, developers claim that these costs are merely passed on to home buyers, with adverse effects to housing affordability. Despite a plethora of government reports and industry advocacy, there remains no empirical evidence in Australia to confirm or quantify this passing on effect to home buyers and hence no data for which governments to base policy decision upon. This paper examines the question of who really pays for urban infrastructure and the impact of infrastructure charges on housing affordability. It presents the findings of a number of international empirical studies that provide evidence that infrastructure charges do increase house prices. Based on international findings, and in the absence of any Australian research, then these findings suggest that if the international findings are transferrable, then there is empirical evidence to support the proposition that developer paid infrastructure charges are a significant contributor to increasing house prices.

The quarter century record on housing affordability, affordability drivers, and government policy responses in Australia

PurposeThe purpose of this paper is to analyse the record on housing affordability in Australia over the period 1985 to 2010, conceptually link this with the purported demand and supply drivers given in the literature, and comment on government policy responses. The paper also provides a suggested framework for future research on housing affordability.Design/methodology/approachThe paper employs descriptive analysis of measures of affordability using commercial and other information. In addition, the paper undertakes analysis of the affordability drivers and government responses using recent governmental inquiries and other research into housing affordability.FindingsHousing affordability in Australia has worsened significantly in the past quarter century, including in both urban and regional areas, and is now among the world's most unaffordable. The main contributor at the national level has been the escalation of housing prices because of continuing strong demand arising from strong economic and population growth, the availability of cheaper and more accessible finance, and tax and other incentives for home and investor housing ownership. An additional contributor is unresponsive housing supply resulting from an extensive governmental role in land release and zoning, infrastructure charges, and building and environmental regulation.Research limitations/implicationsAs an analytical paper, the central aim is to summarise the findings and conclusions of other work and provide a suggested framework for future research. Accordingly, no attempt made to model directly the relationship between housing affordability, its demand and supply drivers and government policy responses.Practical implicationsThere is a need to reassess government policy at all levels as it relates to population, economic, urban, and environmental planning and government regulation and taxation and housing affordability. Need for future empirical work to quantify the causes and consequences of housing affordability.Originality/valueThis study provides a complete account of housing affordability and policy and the literature on housing affordability in Australia over the past 25 years.

Factors Shaping the Dynamics of Housing Affordability in Australia 2001–06

This paper investigates factors shaping the dynamics of housing affordability in Australia over the period 2001–06. Panel model findings indicate that those with children and the unwaged are more prone to persistent housing affordability stress. However, residential moves during spells of housing affordability stress alleviate housing cost burdens. Survival in affordable housing has become progressively more difficult over the 2001–06 timeframe, an unsurprising finding given a house price boom over the period of analysis. Residential moves are again influential, but those made by households during a spell in affordable housing are associated with the onset of housing affordability stress.

Housing Affordability: Proper Measurement for Informed Policy Making

The broadly accepted housing affordability indicator is calculated as the housing cost-to-income ratio. But this only takes into consideration two averaged variables: household housing costs and household income, both of which are ambiguous and misleading as an across-the-board average. An alternative system of housing affordability measurement is suggested in this paper based on disposable income left accounting for housing expenses. In contrary to the broadly used conventional indicator, the proposed measurement takes into account different income groups, ages and types of households as well as the level of housing consumption. This indicator, combined with the after housing poverty line allows for the singling out of groups of households most in need of housing help, and therefore develop more informed housing polices. Based on the proposed system of measurement, an extensive empirical work is presented using the series of the ABS Income and Housing Surveys. The results demonstrate, from a new angle, the dynamics of housing affordability in Australia during the recent decade which leads to policy implications different to polices currently in use.

Housing Afforability Dynamics in Australia 2001-06

This paper investigates the dynamics of housing affordability in Australia over the period 2001-06 using waves 1 to 6 of the Household, Income and Labour Dynamics in Australia Survey. We utilise a discrete time hazard model approach to examine whether housing affordability stress has increased over the period 2001-06, and whether spells in housing stress are transient or persistent. The results suggest that while most Australians escape unaffordable housing circumstances, there is a minority for whom unaffordable housing circumstances are a long term experience. Panel models are employed to estimate the impacts of socio-demographic characteristics on the probability of exiting from a spell of (un-) affordable housing given (un-) affordable housing in the previous year. The model findings indicate that those with children and have no employment are more prone to persistent housing affordability stress. However, residential moves during spells of housing affordability stress tend to alleviate housing cost burdens. Survival in affordable housing has become progressively more difficult over the 2001-06 timeframe, particularly for owner purchasers. This finding is unsurprising given a house price boom and rising interest rates over the period of analysis. Residential moves are again influential, but those made by households during a spell living in affordable housing are associated with the onset of housing affordability stress.

The Occupational Dimensions of Local Labour Markets in Australian Cities

It has been argued that declining housing affordability in Australia's major cities has led to the exclusion of some low and moderate income residents from high employment, inner- city regions. If there is an increasing spatial mismatch between housing and employment, moderately paid workers, essential to the efficient functioning of the urban economy, may face problems in accessing and retaining employment. However to date there has been a lack of empirical analysis of the overlap between spatial dimensions of housing and employment (and the commuting such divisions necessitate) broken down by occupation. Using the 2001 Census Journey to Work data, broken down by occupation, we employ a range of analytic techniques to examine local labour markets in Sydney, Melbourne and Brisbane. Firstly we develop formal commuting areas which represent local labour markets. Secondly, we examine self-average commutes and self-containment ratios for occupational groups across the metropolitan local labour markets. Secondly, linear programming techniques are employed to examine the nature of commuting, given the complex locational decisions made by residents. Results reveal some variation in commuting patterns across occupations with little variation in commutes but higher self-containment ratios at the SLA level for some low- skilled occupations. However longer commutes are found amongst low-skill occupations after controlling for the 'excess' or volitional nature of commuting, and suggests the distribution of jobs given the distribution of residents is more unequal for low-skill occupations. High skill- occupations tend to display higher rates of excess commuting reflecting that factors other than job-proximity may be influencing their locational decisions.

Housing Affordability and Planning in Australia: The Challenge of Policy Under Neo-liberalism

Housing affordability has once again appeared on the policy agenda of Australian governments. House prices have risen in response to booming demand and constraints on the supply of dwellings, especially a shortage of land in the capital cities and skill shortages within the housing industry. Many young and low-income households have experienced great difficulty in gaining access to homeownership and in being able to afford private rental housing. This paper briefly considers the characteristics of public debate around housing affordability in Australia. It examines the role of neo-liberalism in shaping policy responses to housing affordability problems and assesses the argument that affordability goals can be achieved through manipulation of the planning system. It contends that neo-liberal philosophies of government direct policy action to the planning system, but such strategies have a limited capacity to improve housing affordability. Australian governments need to adopt more effective housing policies if they are to meet the needs of the 700 000 to 1 million households who live in unaffordable housing.

Low Income Housing Tax Credit Programme Impacts on Housing Affordability in Australia: Microsimulation Model Estimates

Growing concern about a lack of rental housing affordable to low-income Australian households has prompted consideration of possible policy interventions. This paper estimates the potential housing market impacts of a tax credit targeted on rental housing affordable to low-income Australian households. The study finds that existing landlords in low-income rental housing benefit from a one-third or more reduction in their effective tax burdens. If these tax benefits are passed on in the form of lower market rents, it is estimated that the percentage of households paying more than 30 per cent of gross income in rents falls from 26 to 21 per cent. This impact would be larger but for eligible households in receipt of demand-side subsidies in the form of rent assistance. As a consequence, many low-income households receive only part of the low income housing tax credit benefits that are passed on into lower market rents. Moreover, higher income tenants occupy some of the cheaper rental housing targeted by tax credits, and this weakens the policy rationale for such supply-side measures. The paper advocates the adoption of headleasing arrangements to increase the share of benefits received by low-income tenants.