Modelling for PRWG using AHURI-3M

Summary

The project employed the AHURI-3M housing market model to undertake modelling on the National Rental Affordability Scheme (NRAS), a recent initiative to improve the supply of affordable housing. Modelling estimates of a random selection of 50 000 Commonwealth Rent Assistance recipients found 11 512 people, a minority, paying more than 30 per cent of their income on housing costs. A 20 per cent reduction in their rent on allocation to an NRAS property would lift 40 per cent of them out of housing affordability problems. Of the poorest 20 per cent of people eligible for assistance from NRAS, one in four of these will be lifted out of housing affordability stress. The impact will vary in different parts of Australia with more people in regional and remote Australia being assisted by NRAS. A potential saving on CRA of $21 million per year is estimated.

Project Number: 30399
Research Theme: Housing_affordability, Economics_Modelling
Project Leader: Wood, Gavin
Funding Year: 2007
Research Centre: RMIT-NATSEM

Research & Policy Bulletin

Issue 108: What impact will the national rental affordability scheme have upon housing affordability?

Modelling estimates of a random allocation of 50,000 national rental affordability scheme properties to a sample of eligible households finds that of the 11,512 experiencing housing affordability problems, 4,614 (40%) would be moved from above to below the 30 per cent affordability benchmark.

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412 KB PDF Document

Description

This project had a two-fold aim. First, it aimed to estimate internal rates of return for actual landlords. This modelling work replicated the modelling work conducted by Queensland as part of Commitment 4 of the framework for National Action on Affordable Housing. Second, the proposal that the estimation of internal rates of return for landlords to be extended to analysis of the impacts of alternative policy instruments on housing investors and housing consumers was made. AHURI-3M is capable of estimating the impacts of supply-side policy reforms on important policy impact measures, such as housing affordability. These measures of housing affordability took housing assistance such as Commonwealth Rent Assistance into account.

More Information

Research Paper: Modelling of initiatives to improve the supply of affordable housing using the AHURI-3M model
467 KB PDF Document

Research and Policy Bulletin: Issue 108: What impact will the national rental affordability scheme have upon housing affordability?
412 KB PDF Document

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