Housing Affordability, Housing Stress and Household Wellbeing in Australia
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Housing affordability, housing stress and household wellbeing in Australia authored by Steven Rowley and Rachel Ong for the Australian Housing and Urban Research Institute Western Australia Research Centre September 2012 AHURI Final Report No. 192 ISSN: 1834-7223 ISBN: 978-1-922075-09-3 Authors Rowley, Steven Curtin University Ong, Rachel Curtin University Title Housing affordability, housing stress and household wellbeing in Australia ISBN 978-1-922075-09-3 Format PDF Key words Housing affordability, housing stress, housing need, household wellbeing Editor Anne Badenhorst AHURI National Office Publisher Australian Housing and Urban Research Institute Melbourne, Australia Series AHURI Final Report, no.192 ISSN 1834-7223 Preferred citation Rowley, S. and Ong, R. (2012) Housing affordability, housing stress and household wellbeing in Australia, AHURI Final Report No.192. Melbourne: Australian Housing and Urban Research Institute. i ACKNOWLEDGEMENTS This material was produced with funding from the Australian Government and the Australian states and territory governments. AHURI Limited gratefully acknowledges the financial and other support it has received from these governments, without which this work would not have been possible. AHURI comprises a network of universities clustered into Research Centres across Australia. Research Centre contributions, both financial and in-kind, have made the completion of this report possible. We would like to thank Mike Dockery and Simon Colquhoun for their valuable input into the literature review and the members of the AHURI policy panel for the stimulating policy discussion which informed this Final Report. The members of the panel were; Helen Fletcher, Bruce Headey, Roger Wilkins, David Wilson, Gabrielle Hummel, Marque Raymond and Jay Martin. This report uses unit record data from the Household, Income and Labour Dynamics in Australia (HILDA) survey. The HILDA project was initiated and is funded by the Australian Government Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) and is managed by the Melbourne Institute of Applied Economic and Social Research (MIAESR). The findings and views in this report, however, are those of the authors and should not be attributed to either FaHCSIA or MIAESR. DISCLAIMER AHURI Limited is an independent, non-political body which has supported this project as part of its programme of research into housing and urban development, which it hopes will be of value to policy-makers, researchers, industry and communities. The opinions in this publication reflect the views of the authors and do not necessarily reflect those of AHURI Limited, its Board or its funding organisations. No responsibility is accepted by AHURI Limited or its Board or its funders for the accuracy or omission of any statement, opinion, advice or information in this publication. AHURI FINAL REPORT SERIES AHURI Final Reports is a refereed series presenting the results of original research to a diverse readership of policy-makers, researchers and practitioners. PEER REVIEW STATEMENT An objective assessment of all reports published in the AHURI Final Report Series by carefully selected experts in the field ensures that material of the highest quality is published. The AHURI Final Report Series employs a double-blind peer review of the full Final Report – where anonymity is strictly observed between authors and referees. ii CONTENTS LIST OF TABLES ........................................................................................................ V LIST OF FIGURES .....................................................................................................VII ACRONYMS ..............................................................................................................VIII EXECUTIVE SUMMARY .............................................................................................. 9 Key findings ......................................................................................................... 10 Why is there disconnect between housing stress and household wellbeing? ....... 12 Improving the measurement of housing stress ..................................................... 13 1 INTRODUCTION ............................................................................................... 15 1.1 Policy context ..................................................................................................... 15 1.2 Unpacking housing affordability ......................................................................... 17 1.3 Aims and contributions ....................................................................................... 19 1.4 Report outline .................................................................................................... 20 2 LITERATURE REVIEW ..................................................................................... 21 2.1 What is household wellbeing? ............................................................................ 21 2.2 Defining housing stress and housing affordability ............................................... 23 2.3 Measuring housing affordability .......................................................................... 25 2.4 The relationship between housing stress and financial stress ............................ 26 2.5 The relationship between housing stress and health .......................................... 29 3 DATA AND METHOD ........................................................................................ 32 3.1 Data and unit of analysis .................................................................................... 32 3.2 Variable measurement ....................................................................................... 32 3.2.1 Traditional housing stress measure .......................................................... 32 3.2.2 Wellbeing outcomes .................................................................................. 34 4 RESULTS .......................................................................................................... 38 4.1 Housing stress: key indicators from the HILDA data .......................................... 38 4.1.1 Housing stress by income bands .............................................................. 38 4.1.2 Housing stress by tenure .......................................................................... 39 4.1.3 Housing stress by region ........................................................................... 42 4.1.4 Housing stress across the life cycle .......................................................... 44 4.2 The relationship between housing stress and wellbeing ..................................... 45 4.2.1 Financial wellbeing .................................................................................... 47 4.2.2 Health ....................................................................................................... 52 4.2.3 Neighbourhood quality .............................................................................. 54 4.2.4 Summing up .............................................................................................. 58 4.3 Why is there disconnect between the housing stress measure and household wellbeing? .......................................................................................................... 59 4.3.1 An arbitrary benchmark ............................................................................. 59 4.3.2 Trade-offs ................................................................................................. 62 4.3.3 Access to housing ..................................................................................... 66 4.3.4 Choice versus constraint ........................................................................... 67 iii 5 IMPROVING THE MEASUREMENT OF HOUSING STRESS ........................... 71 5.1 Differentiating between medium-level and high-level housing stress .................. 71 5.2 Duration of housing stress ................................................................................. 74 5.3 Identifying choice versus constraint .................................................................... 75 5.4 Removing households with high net worth ......................................................... 76 6 HOUSING NEED ANALYSIS AS AN ALTERNATIVE TO HOUSING STRESS 78 7 CONCLUSIONS AND POLICY IMPLICATIONS ............................................... 82 7.1 Further Research ............................................................................................... 84 APPENDIX ................................................................................................................. 85 REFERENCES ........................................................................................................... 90 iv LIST OF TABLES Table 1: Wellbeing variables ..................................................................................... 36 Table 2: Average housing cost:income ratio and incidence of housing stress, per cent, 2001–10 ............................................................................................................. 39 Table 3: Percentage of households paying more than 30 per cent of income in housing costs, by income band, 2001–10 .......................................................... 39 Table 4: Average housing cost:income ratios, incidence of housing stress and housing and income indicators by housing tenure, per cent, 2001–10 ............................