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4130.0 - Housing Occupancy and Costs, 2011-12  
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 28/08/2013   
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APPENDIX 1 HOUSING COST MEASURES


INTRODUCTION

Housing costs are often the largest regular expense to be met out of a household's income. Housing cost measures are of key policy and research interest in assessing the affordability of different forms of housing and changes in affordability over time. The amount a household spends on its housing costs directly influences the amount of income it has available to meet its other requirements, for both consumption and saving.

The measures of housing costs included in this publication are outlays made by household members to provide for their own shelter. There are limitations when comparing housing costs across different tenure types, particularly between owner occupier households and renter households. Rent payments represent the consumption of a shelter service. Mortgage repayments, on the other hand, comprise both the consumption of a shelter service (represented by the interest component) and a savings element through the acquisition of an asset over time (represented by the repayment of principal).

The housing cost measure used in this publication includes rent payments, rate payments (general and water) and mortgage or unsecured loan payments (if the initial purpose of the loan was primarily to purchase, build, add to, or alter the dwelling). It does not include body corporate fees, repair and maintenance costs, nor take into account refunds from a business / person outside of the household.


OWNERS

The ABS has taken a number of steps to improve the coverage, quality and usefulness of data for analyses of the housing costs of home owners.

In 2003-04 the ABS commenced collecting extra information in the SIH:

  • loan repayments were split into an interest component and a repayment of principal component
  • where a loan had multiple purposes, details of all purposes were collected, so repayments could be allocated to each purpose, in line with the percentage split of the original loan amount by purpose
  • where a payment was refunded by a business or someone outside the household, the amount of the refund was collected
  • information on body corporate payments was collected.


Proportion of loan used for housing purposes

The housing costs reported in this publication includes mortgage repayments if the main purpose of the loan was to buy, build, add to or alter the occupied dwelling. For example, if a loan was taken out primarily to buy the dwelling, but part of it was used to purchase a car, the entire repayment amount is included in housing costs. Similarly, if a loan is taken out primarily for other purposes, but is partly used for housing purposes, the repayments are not included in housing costs. From the 2003-04 SIH, where a loan had multiple purposes, details of all purposes were collected, so repayments could be allocated to each purpose, in accordance with the percentage split of the original loan amount by purpose.

Data from the 2011-12 SIH indicates that, if mortgage repayments were calculated in accordance with the proportion of the loan used for housing purposes, the housing related mortgage repayments of owners with a mortgage would be 1% lower than if calculated according to the main purpose of the loan.


Refunds from Business / Person Outside the Household

The housing costs reported in this publication are also not adjusted for amounts refunded by a business or someone outside the household. The ABS commenced collecting the amount of these types of refunds in the SIH from 2003-04. This includes refunds on: rent payments, mortgage payments, rates payments, and body corporate payments.

When considering mortgage payments, data from 2011-12 SIH shows that if these refunds were excluded, after pro-rating mortgage payments in accordance with the proportion of the loan used for housing purposes, the housing related mortgage repayments of owners with a mortgage would be a further 1% lower than if calculated according to the main purpose of the loan.

A1 MEAN HOUSING RELATED MORTGAGE REPAYMENTS, 2011-12 ($ per week)

Main purpose
Pro-rata
Pro-rata with refunds deducted

Mortgage repayments to buy/build
376
368
366
Mortgage repayments to add/alter
10
13
13
Repayments on unsecured loans for housing purposes
2
2
2
Total housing related mortgage repayments
387
382
380




Interest and principal components

Since 2003-04 the ABS has collected in the SIH information on the interest and principal components of loan repayments. In 2011-12 interest accounted for 73% of total mortgage repayments for owners with a mortgage (after pro-rating in accordance with the proportion of the loan used for housing purposes and deducting refunds). For first home buyers and recent changeover buyers with a mortgage (households that had purchased their home in the three years prior to interview), interest on the loan accounted for 80% of total mortgage repayments. This is because a greater proportion of the repayment is typically applied to interest at the beginning of a loan amortisation schedule, while a greater proportion is applied to principal at the end.

A2 MEAN INTEREST AND PRINCIPAL ON MORTGAGE REPAYMENTS, 2011-12

First home buyers with a mortgage
Changeover buyers with a mortgage
All owners with a mortgage

Mortgage repayments ($ per week)
Interest (pro-rated with refunds deducted)
365
424
278
Principal (pro-rated with refunds deducted)
93
109
102
Total mortgage repayments (pro-rated with refunds deducted)
458
532
380
Mortgage repayments (%)
Interest (pro-rated with refunds deducted)
80
80
73
Principal (pro-rated with refunds deducted)
20
20
27
Total mortgage repayments (pro-rated with refunds deducted)
100
100
100




Body corporate fees, dwelling insurance, and repairs and maintenance

Measures of housing costs could also include other outlays which are necessary to ensure that the dwelling can continue to provide an appropriate level of housing services. These include expenditure on body corporate fees, dwelling insurance, and repairs and maintenance. These costs tend to be incurred by owner occupier households, but not directly by renting households.

The ABS started collecting data on body corporate fees in the 2003-04 SIH. Repairs and maintenance costs paid to contractors were collected in the 2011-12 SIH. This includes payments for repainting, electrical work, plumbing, re-roofing, etc. Housing insurance costs were also collected in the 2011-12 SIH.

Data from the 2011-12 SIH shows that if these housing costs were included in housing costs measures, the estimates of average housing costs would increase by $48 per week for owners without a mortgage, and $60 per week for owners with a mortgage.

A3 MEAN EXPENDITURE ON OTHER HOUSING COSTS, 2011-12 ($ per week)

Owner without a mortgage
Owner with a mortgage

Body corporate fees (refunds deducted)
4
4
Dwelling insurance
15
19
Repairs and maintenance
29
37
Total
48
60




RENTERS

The ABS has taken a number of steps to improve the coverage, quality and usefulness of data for analyses of the housing costs of renter households.

Housing costs for renter households in this publication comprises rent payments plus any rates payments that were paid by the household (general and water). The measure does not take into account any refunds from a business or person outside of the household, or any Commonwealth Rent Assistance (CRA) payments received.

In 2003-04 the ABS commenced collecting extra information on the housing costs of renters, including payments for water consumption and amounts refunded by a business or someone outside the household.


Commonwealth Rent Assistance (CRA)

Some households renting in the private rental market are reimbursed some or all of their housing costs in the form of CRA. CRA is a non-taxable income supplement paid through Centrelink to qualifying recipients of income support payments and family tax benefit, and is paid in conjunction with these other benefits.

In this publication CRA payments are neither offset from the housing costs nor deducted from income of the principal tenant when comparing tenure types.

In 2007-08, the ABS commenced collecting information on whether persons and income units are currently in receipt of CRA and the amount that they receive. In 2012, the ABS has taken steps to improve the quality of this data through modelling, based on eligibility criteria. If rent assistance receipts were subtracted from gross housing costs, it has been estimated that the housing costs of households receiving rent assistance would be 19% lower on average, and the housing costs of all households renting from landlord other than state/territory authorities would be about 7% lower on average.


TOWARDS A MORE COMPREHENSIVE MEASURE

A more comprehensive measure of housing costs could take into account the issues discussed above. Housing costs could then be more meaningfully compared across all tenure and landlord types.

Table 4 presents an alternative measure of housing costs to that generally included in this publication which takes into account the issues discussed above. While these alternative housing cost measures cannot be comprehensively derived for previous cycles of the SIH due to the availability of all the relevant items, these items are expected to be available for future cycles of the SIH.

The alternative measure shows housing costs after adding body corporate payments, repairs, maintenance and dwelling insurance. It also includes housing related mortgage repayments on a pro-rata basis for interest only. Amounts refunded by a business or someone outside of the household and CRA payments are also excluded. If this alternative measure was used the estimate of average housing costs included in this publication would:
  • increase by $46 to $86 for owners without a mortgage
  • decrease by $50 to $382 for owner with a mortgage
  • decrease by $30 to $317 for private renters
  • remain the same at $136 for public renters
  • decrease by $12 to $253 for all households

A4 AN ALTERNATIVE MEASURE OF MEAN HOUSING COSTS, 2011-12 ($ per week)

Owner without a mortgage
Owner with a mortgage
Private renter
Public renter
All households

Housing cost measure used throughout this publication
Rent payments
-
-
344
132
94
Mortgage payments
1
387
-
-
142
Rates payments (general and water)
39
45
3
4
30
Total mean weekly housing costs
40
432
347
136
265
Alternative housing costs measure
Rent payments with refunds and CRA deducted
-
-
313
131
85
Mortgage payments (interest only, with refunds deducted, pro-rated)
-
278
-
-
102
Rates payments (general and water) with refunds deducted
38
45
3
4
29
Body corporate payments with refunds deducted
4
4
-
-
3
Repairs and maintenance
29
37
1
1
23
Dwelling insurance
15
19
-
-
12
Total mean weekly housing costs using alternative measure
86
382
317
136
253

- nil or rounded to zero (including null cells)


Table 5 shows the estimates of mean housing costs and housing costs as a proportion of gross household income using the alternative housing cost measures.

A5 All Households, Housing costs measures, selected household characteristics

Mean housing costs per week
Housing costs as a proportion of gross income(a)
Measure used in publication(b)
Alternative measure(c)
Measure used in publication(b)
Alternative measure(c)(d)
$
$
%
%

Tenure and landlord type
Owner without a mortgage
40
86
3
6
Owner with a mortgage
432
382
18
16
Renter
State/territory housing authority
136
136
19
19
Private landlord
347
317
20
19
Total renters(e)
312
286
20
19
Total(f)
265
253
14
14
Family composition of household
One family households
Couple family with dependent children
392
350
15
14
One parent family with dependent children
273
244
22
20
Couple only
225
230
12
12
Other one family households
238
237
10
10
Multiple family households
309
299
11
10
Non-family households
Lone person
166
167
19
19
Group households
387
356
19
17
Total
265
253
14
14
Dwelling structure
Separate house
260
248
13
13
Semi detached/row or terrace house/townhouse
284
270
17
16
Flat/unit/apartment
292
282
20
19
Total(g)
265
253
14
14
Equivalised disposable household income(h)
Lowest Quintile
141
142
26
27
Second Quintile
204
193
19
18
Third Quintile
267
251
16
15
Fourth Quintile
329
316
15
14
Highest Quintile
412
388
10
10
Total
265
253
14
14
Second and third deciles
160
152
20
20
Main source of income
Wage and salary
345
320
14
13
Own unincorporated business income
280
262
12
12
Government pensions and allowances
116
118
19
20
Other income
130
166
9
11
Total
265
253
14
14
Number of employed persons
None
98
116
14
17
One
277
255
17
16
Two
375
348
14
13
Three or more
338
320
10
10
Total
265
253
14
14

(a) Excludes households with nil or negative income
(b) See 'housing costs' in glossary
(c) See table A4 of appendix 1 for listed includes and excludes of the alternative housing costs measure.
(d) Excludes households with nil or negative income after CRA is subtracted
(e) Includes other landlord type, which account for about 4% of all renters.
(f) Includes other tenure type, which account for about 2% of all households.
(g) Includes other dwelling types, which account for about 0.2% of all private dwellings.
(h) See paragraphs 47 to 55 of the explanatory notes. For the alternative measure CRA was subtracted from disposable income before equivalising.



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