Modelling a filtering process in expanding affordable rental supply

This project will explore the opportunity of using a filtering process by transferring vacated housing from one income group to the next lower income group (a market driven mechanism) to expand the supply of affordable rental housing that are affordable to low- and moderate-income households.

The filtering model proposes that households move up the property ladder by using a gain in equity of their current homes to trade up for a higher quality home as their equity improves over time. However, the empirical evidence of a filtering process is mixed and dependent on the sample and time period being examined. 

To assess such a filtering process, first home buyers (FHBs) emerge as a compelling case study as they tend to purchase a new dwelling as a springboard for their sequencing purchases (the key element of the filtering process) and data from the first home owners grant is available at the sub-market level.

The research will review the first home intervention policies and their implementation overseas and in Australia. A survey of buyers will assess whether they would filter down their first homes after their moves (either retaining them as rental properties or selling them). Respondents and key stakeholders (e.g. policy makers) will be invited for further interviews. 

The second stage focuses on measuring and modelling the filtering effects of FHBs in enhancing affordable rental properties. Further, the effectiveness of this effect, if any, in reducing the upward pressure of rent and the burden of direct housing subsidies (e.g. CRA) is also examined. The key findings will be presented to key policy makers, advisory group and peak agencies via consultation meetings, with feedback incorporated in the final report. 

Lead Researcher: Associate Professor Chyi Lin Lee, UNSW Sydney

Project Number: 71243