Analysis of expenditure patterns and levels of household indebtedness of public and private rental households, 1975 to 1999

Summary

The budget standard measure of well-being shows that substantial proportions and absolute numbers of low -income tenants, both public and private, cannot live at an adequate standard even after receiving a rebated rent or rent assistance. The housing affordability benchmark (30% of income of the bottom 40% of the income distribution) is found to be an unreliable indicator of housing affordability when considering the resources required for other basic living expenses. While the bulk of public tenants (79%) and of low-income private tenants (62%) had no formal debt, a sizeable minority did so, and this was at a level which could trigger arrears and perhaps loss of tenancy.

Project Number: 50107
Research Theme: Housing_Affordability, Private_Rental, Public_and_Community_Housing, Economic
Project Leader: Burke, Terry
Funding Year: 2001
Research Centre: Swinburne-Monash

Research & Policy Bulletin

Issue 045: Measuring housing affordability

Commonly used benchmark measures may disguise the extent of housing stress in Australia. Substantial proportions of low-income public and private renters may not have enough money to meet the cost of living after paying rent, and this situation appears to have worsened over time.

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Description

The ABS HESs which cover the period 1975-76 to1999 have not been effectively mined for housing research purposes, in part because they have only recently become available in unit record format. The intention of this study was to provide a cost-effective way of measuring certain benefits to clients of public housing rent rebates and private rent assistance using the current and past HESs. The researchers believed that rich, policy relevant data could be extracted from this secondary data set for a very small budget. In the context of debates around the new CSHA and the most effective way of providing housing assistance, a study which actually attempted to measure the potential benefits of housing assistance from the clients' perspective could be a very useful one.

Specifically, the study was designed to:

Evaluate the consumption trade-off that may be made by low income households as a result of increased housing costs. Do they cut back on education, health care and clothing or, alternatively, is housing expenditure adapted to other consumption demands?
Evaluate different consumption expenditure of public tenants compared to low income private renters over time to determine how public housing assistance changes consumption patterns (if at all) vis-à-vis low income private renters.

By combining certain categories of income type and source, it is also possible to identify rent assistance recipients so as to compare them with public tenants and non-rent assistance recipients in the private rental sector. Do the low rents of public housing, for example, enable more expenditure on education, health and clothing than equivalent low income private renters? Of particular interest here will be how low income families not relying primarily on statutory incomes have fared in the two tenures with the increasing targeting of public housing.

The time series nature of the data enabled identification of the changing relationship between private and public tenants and different household types within these areas in terms of employment and educational achievements. Thus it was possible to identify households with children and make some assessment as to what degree housing costs and any housing assistance are affecting educational spending and therefore possible educational outcomes. While essentially a low cost method to measure the effects of housing assistance over time, it is also a study which enhances our knowledge of the impacts on household decision making over time of the restructuring of the housing system, for example, growth of the private rental sector and increased housing costs. As such it can be a means of problem identification and a basis for researching housing futures.

More Information

Positioning Paper: No. 036: Analysis of expenditure patterns and levels of household indebtedness of public and private rental households, 1975 to 1999
699 KB PDF Document

Research and Policy Bulletin: Issue 045: Measuring housing affordability
95 KB PDF Document

Final Report: No. 034: Analysis of expenditure patterns and levels of household indebtedness of public and private rental households, 1975 to 1999
497 KB PDF Document

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