-.abs.gov.au. Australian Bureau of Statistics. Committee Chair Economics References Committee PO Box 6100 Parliament House CANBERRA ACT 2600

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1 Australian Bureau of Statistics -.abs.gov.au ABN: CENTRAL OFFICE ABS House 45 Benjamin Way Belconnen ACT 2617 Committee Chair Economics References Committee PO Box 6100 Parliament House CANBERRA ACT 2600 Locked Bag 1 0 Belconnen ACT 2616 Telephone: (02) Facsimile: (02) Dear Senators, Re: Economics References Committee: 30/07 /14: Affordable Housing 1 Thank you for the opportunity to participate in the Senate Economics References Committee hearing of 30th July As agreed during the appearance of Dr Paul Jelfs and Mr David Zago, we have prepared a data pack on the topics of interest identified by the Senators. 2 This information includes some explanatory commentary and attached tables addressing the topics of: changes over time in housing costs and household characteristics; housing affordability; housing tenure and landlord type; and data on housing demand and supply. Housing Costs and Household Characteristics 3 Housing costs information (mortgage payments, rent payments and property and water rates) can be examined by a wide variety of household characteristics including tenure, family composition, income range, main source of income and dwelling structure. The biennial Survey of Income and Housing (SIH) is a key data source for housing costs and characteristics of households, including changes to home ownership levels and family composition changes. The attached data pack includes 3 time series tables from the Housing Occupancy and Costs (cat. no ) publication, which uses SIH data. 4 Table 1 highlights changes over time in mean housing costs by a variety of household characteristics including tenure, family composition, income range, main source of income and dwelling structure. Note all values are in dollars. Table 2 represents these costs as a proportion of gross household income specific to each characteristic. 5 Changing levels of home ownership are presented in Table 3. Selected characteristics are also provided for those households paying more than 30% and more than 50% of their income in housing costs. 6 Key findings: Household characteristics which have changed between and are : Household size decreased from 2.69 to 2.57 persons per household. (Table 3, Row 61) The proportion of Australian households who own their home (with or without a mortgage) declined from 71% in to 67% in (Table 3, Rows 9 and 10). There was an increase in the proportion of households renting privately from 18% to 25%. (Table 3, Row 14).

2 Households renting from private landlords paid an average of $347 per week (Table 1, Row 13), representing 20% of their average gross income. (Table 2, Row 13). 7 Source tables Table 1: ALL HOUSEHOLDS, Housing costs by selected household characteristics, and dwelling values ~.S.ource: Table 1, Housing Occupancy & Costs (cat. no ), ABS SIH ) Table 2: ALL HOUSEHOLDS, Housing costs as a proportion of gross income by selected household characteristics (Source: Table 2, Housing Occupancy & Costs (cat. no ), ABS SIH ) Table 3: ALL HOUSEHOLDS, Selected household characteristics (Source: Source: Table 3, Housing Occupancy & Costs (cat. no ), ABS SIH ) Rental and Home Purchase Affordability 8 As part of our commitment to providing performance measures under the National Affordable Housing Agreement (NAHA), the ABS calculates measures of rental affordability and home purchase affordability. These measures are based on SIH data and house price data provided from State and Territory Valuer-General agencies. 9 Rental affordability - the first measure presented in Table 4 shows the proportion of low income rental households (those in the bottom 40% of income earners) which are spending more than 30 percent of their gross income on housing costs, by State and Territory and selected household characteristics, Home purchase affordability- this measure is based on the number of homes sold in a year that would have been affordable to low and moderate income households; results are in Table 5. Moderate income earners are defined as those in the bottom 60% of income earners. For this measure an affordable mortgage repayment for low and moderate income households (by state and territory) is calculated and transformed into a house price cut-off deemed to be affordable for low and moderate income households. The table reports numbers of houses sold below the house price cut offs, across a financial year. 11 During the ABS appearance before the Committee, there was mention of the 'Housing Affordability Ratio' referenced by the Master Builders Association. The purpose of this measure is to enable comparison of the relative price of dwellings across different markets. The ABS's preferred measure to inform on home purchase affordability is outlined above with results attached in Table 5. This home affordability measure takes into account changes in the cost of mortgage repayments, changes in mortgage interest rates and enables comparisons of affordability over time. 12 Key findings: Rental affordability - the proportion of low income households in rental stress increased from 35.4% in to 40.7% in , though this varied across jurisdictions; also available in the Productivity Commission Review of Government Services 2014 ( (Table 4, Row 10). Home purchase affordability homes sold were affordable to low income households (per 1000 low income households) and 27.5 homes sold were affordable to low and moderate income households (per 1000 low and moderate income households). (Table 5, Row 18 and Row 33) 13 Source tables Table 4: Proportion of low income rental households spending more than 30 percent of their gross income on housi ng cost s, by State and Territory, se lected household charact eristics, (Source: unpublished, ABS SIH ) Table 5: Number of homes sold or built per 1000 low income households that are affordable by low income households, by State and Territory, by location, (Source: Additional Table, Housing

3 Occupancy & Costs (cat. no ), Valuers-General (unpublished); ABS (unpublished) SIH ) Tenure and Landlord Type by Sex and Age 14 The Survey of Income and Housing is able to provide detailed information on the characteristics of people who either rent or own and occupy their homes, including by age and sex. The data in Table 6 presents the proportion of women by age and by family composition (either living alone or in couple families) by tenure type. This table allows for a comparison of the proportion of women and men in the private rental market or renting from state/territory housing authorities. 15 Key findings: For lone person households aged 65 years and over, significantly more men are renting from a private landlord than women in However, there is no (statistically significant) difference between lone men and women over the age of 65 renting from state and territory housing authorities. (Table 6, Row 71) The proportion of lone women over the age of 65 whose tenure is renting from state and territory landlords has fallen from 12% in to 7% in (Table 6, Row 70) 16 Source tables Table 6: Tenure and Landlord Type and Family Composition by Age and Sex (Source: unpublished, ABS SIH , , ) Housing Demand & Supply 17 The ABS currently releases detailed measures of housing supply in the form of new and established dwelling stock counts, and data used to model housing demand in the form of population and household formation projections. The ABS does not currently produce specific measures of dwelling supply as a factor of demand, often referred to as measures of dwelling oversupply or dwelling under-supply. 18 The Census of Population and Housing (Census) provides the most comprehensive counts of households and dwelling stock every five years. These counts are available for very small geographic areas, and can be examined by dwelling structure type and number of bedrooms alongside a wide range of personal and household characteristics. 19 Data on current and future household demand is available through ABS demography releases. Table 7 provides data on projected household numbers based on Census Note that new household formation projections will be released in March 2015 based on Census 2011 data, in Household and Family Projections, Australia (cat. no ). 20 Regular data on dwelling supply is available monthly through Building Approvals publications and quarterly through Building Activity and Construction results. Table 8 presents Building Approvals data. This includes all new home construction regardless of whether it is built on a 'greenfield' site, a vacant block or to replace a demolished house. The ABS does not currently produce an overall dwelling stock count (net additions) between Census collections. 21 Some information is available regarding home renovations activity through the quarterly release of data on the value of construction work done including alterations and additions. This data is published in Building Activity, Austra lia (cat. no ). 22 Information about changes in dwelling prices is available in the Residential Property Price Index quarterly publication and data for all dwellings is attached from this series in Table 9. The data is available for each of the eight capital cities of Australia and separately for separate dwellings (houses) and attached dwellings (includes semi-detached, row and terrace houses and flats or apartments).

4 23 Key findings: The 2010 release of Household and Family Projections estimated the number of households in Australia to increase by between 3.7 and 4 million from 2006 to (Table 7, Rows 12, 18 and 24) The re were dwelling units approved in trend terms in June (Da ta provided in Table 8 by state and territory (no totals)). Building Approvals have continued to decline over the last six months with the number of dwellings approved falling 1.1 per cent in June 2014, in trend terms. Resid ential property prices rose nationally across most capita l cities in the Ju ne quarter The price index for residential properties for the weighted average of the 8 capital cities rose 1.8% in t he June quarter 2014 (preliminary estimates for the weighted average of the eight capital cities). The price index rose 10.1% through the year to the June quarter (Table 9, row 58 column AB.) 24 Source tables: Table 7: Projected number of households, Household type-2006 to 2031 (Source : Table 1.1, Household and Family Projections (cat. no ). Table 8: Tota l Number of Dwelling Units Approved - States and Territories (Source : Table 7, Building Approvals, Australia (cat. no ) ABS Building Approvals (BAPS)) Table 9: Residential Property Price Index, Index Numbe rs and Percentage Changes (Source: Table 1, Residential Property Price Index, Eight Ca pital Cities, June 2014, Australia (cat. no ), Source State and Territory Land Titles Office or Valuers General Office and mortgage lenders). 25 We trust the data and commentary provided he re offers you insights into the issues you are explo ri ng in relation to ho usi ng affordability in Australia. If you have any queries concerning this information, please contact me Yours sincerely, Dat il Zago Assistant Statistician, Social Conditions Branch Population, Labour and Socia l Statistics Group 12 September 2014

5 Housing Affordability in Australia - Data Pack As requested by Economics References Committee - 30/07/14 - Affordable Housing Contents Household Characteristics and Costs Table 1 Table 1 Housing costs by selected household characteristics, and dwelling values Table 2 Table 3 Table 2 Housing costs as a proportion of gross income by selected household characteristics Table 3 Selected household characteristics Rental and Home Purchase Affordability Table 4 Proportion of low income rental households spending more than 30 percent of their gross income on housing costs, by State and Territory, selected household Table 4 characteristics Table 5 Table 5 Number of homes sold or built per 1000 low income households that are affordable by low income households, by State and Territory and location Tenure and Landlord Type by Sex and Age Table 6 Table 6 Tenure and landlord type and family composition by sex and age Housing Demand & Supply Table 7 Table 8 Table 9 Table 7 Projected number of households, Australia Table 8 Total Number of Dwelling Units Approved - States and Territories Table 9 Residential Property Price Index, Index Numbers and Percentage Changes: Eight Capital Cities, Jun 2014, Australia Key Documents Licence Conditions More information available from the ABS website Inquiries Data provided by Living Conditions, ABS, Locked Bag 10, Belconnen, ACT Contact Officer: Telephone: Ben Faulkner (02) living.conditions@abs.gov.au Commonwealth of Australia 2014