Housing stress: How, Where, Who and Why. Robert Tanton National Centre for Social and Economic Modelling

Transcription

1 Housing stress: How, Where, Who and Why Robert Tanton National Centre for Social and Economic Modelling

2 Housing Stress: How, Where, Who and Why? How to measure housing stress and different variants Where is housing stress Who is most likely to suffer housing stress Why are so many suffering housing stress today Discussion, implications

3 Housing stress: How Traditionally 30% of income spent on housing costs ( 30 rule ) Cut out top 60% of income to cut out middle to high income earners ( 30/40 rule ) Cut out bottom 10% to remove odd incomes ( 30/10-40 rule )

4 Why 30%? Housing stress is a broad measure It is best looked at over time It is only one part of a bigger picture General Social Survey had to borrow Fujitsu Consulting - mortgage arrears stress-o-meter 30% rule was used by banks In the good old days, couldn t get a loan unless could afford to pay 30% of income on mortgage Used by real estate agents Can t get rental property if rent was more than 30% of income

5 Housing stress by type and State, 30% Rule, 30/40 and 30/ only 30/40 30/ Per cent of households Australia NSW Vic Qld WA SA Tas NT/ACT

6 Alternatives to 30% Housing Stress measure Reserve Bank Reserve Bank - % dwellings accessible to persons aged years based on assumptions about bank lending behaviour (30% repayment to gross income ratio, 10% deposit) Affordability worse over last 10 years

7 Alternatives to 30% Housing Stress measure Urban Development Institute of Australia UDIA/Matusik Measure Unnafordable when a household spending 30% of average income for area on repayments could purchase less than 15% of houses in area In NSW, most areas had detached houses affordable in 2001, Unaffordable or Seriously constrained in 2006 State average gone from Affordable to Seriously Constrained For WA, State average gone from Affordable in 2001 to Unaffordable in 2006

8 Alternatives to 30% - Fujitsu stress-o-meter Propensity to default * number of defaults + Forced sales + Average arrears months * Affordability * Reprioritised spending 70,000 households experiencing severe stress, hot spots in Sydney, Melbourne and Perth.

9 Alternatives to 30% Housing Stress measure All but one measure uses 30% of income somewhere in calculation All measures giving similar results increasing over last 10 years, particularly bad in NSW 30% measure is probably easiest for public to understand

10 Housing stress by type and State, 30% Rule, 30/40 and 30/ only 30/40 30/ Per cent of households Australia NSW Vic Qld WA SA Tas NT/ACT

11 Housing stress: How Per cent of households only 30/40 30/ Australia NSW Vic Qld WA SA Tas NT/ACT 30 rule does include very high income earners who have high disposable income and can afford to pay higher housing costs 30 rule gives about 23% across Australia but is susceptible to the type of income (disposable or gross) Other definitions not as susceptible to choice of income

12 Housing Stress: How only 30/40 30/ Per cent of households Australia NSW Vic Qld WA SA Tas NT/ACT 30/40 rule Cuts out top 60% of income earners This is those earning more than $50,000 (Australia) for couple family with 1 child Choice of income (disposable/gross) has little effect

13 Housing Stress: How only 30/40 30/ Per cent of households Australia NSW Vic Qld WA SA Tas NT/ACT Exclude low income earners (30/10-40 rule) Too conservative? Excludes many public and private renters

14 Housing Stress by Tenure type only 30/40 30/ Per cent of households Renter private Purchaser Renter public Ow ner

15 Housing stress: How NATSEM tends towards 30/40 rule if data allows Sometimes the data doesn t allow it

16 Housing stress: Where? Housing stress by State using the 30/40 rule % in housing stress Capital City Rest of State State NSW Vic Qld SA WA Tas ACT/NT Australia State

17 Housing stress: Who? 30/40 rule Labour force status Family Type Age

18 Housing Stress: Who? Housing Stress by labour force status % in housing stress Employed full time Employed part time Unemployed Not in labour force Australia Labour force status

19 Housing stress by family type Housing stress by family type % in housing stress Couple with no children Couple with children Sole parent Single Others Australia Family type

20 Housing stress by Age of household reference person Housing Stress by age of household reference person % in housing stress 0 15 to 20 years 21 to 29 years 30 to 39 years 40 to 49 years 50 to 59 years 60 to 69 years 70+years Australia Age of reference person

21 Housing stress: Who? So far, used 30/40 rule When looking at income, need to use 30 only rule, used in AMP report Also some other interesting splits from AMP report Over time Recent buyers

22 Housing stress (30 only) over time 30 %HH spending more than 30% of income on housing NSW VIC QLD SA WA TAS NT ACT AUS

23 Housing stress (30 only) by income Housing stress by income % in housing stress to 0.5 median (poverty) 0.5 median to median Median to 1.5 median Above 1.5 median (high income households) Income class

24 Housing stress (30 rule) by recent purchasers Housing stress for new home owners and old 70 % in housing stress Bought in the past 3 years as the first home Bought in the past 3 years but not as the first home Bought more than 3 years ago and now fully owned Bought more than 3 years ago and still paying mortgage Type of purchase

25 Housing stress: Why? House prices have increased 5 fold in the last 20 years, where incomes have doubled Averge earning index 600 House price index `

26 What has caused this huge increase in house prices? Lots of complex interactions Supply/Demand, particularly in capital cities Demographics Government fees and charges Interest rates Means isn t one simple solution Land release Banks lending less

27 Discussion/Implications Housing stress is hitting people in Australia disproportionately Low income Unemployed Sole parent families First home buyers Younger Young and first home buyers have a long term potential Others are marginal groups in society also suffering other problems (stress, mental health, physical health)

28 Implications Need to think about longer term Easier ways to pass on housing wealth to younger generations Those who are in housing stress are the marginalised how can we help them? Housing assistance Public housing