4160.0 - Measuring Wellbeing: Frameworks for Australian Social Statistics, 2001
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 12/10/2001
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Contents >> Chapter 8: Housing >> Frameworks

Frameworks

Obtaining statistical information which, over time, describes the number and characteristics of the places in which people live, the number and characteristics of the occupants of those places, and the relationship between occupants and their dwellings is fundamental to evaluating many housing related issues described previously. These elements are usefully viewed in terms of a framework that brings together notions of housing demand, housing supply and housing outcomes, as illustrated in the diagram below.

COUNTING UNITS

There are two key counting units used by the ABS that underpin this framework. These are households (the units used to measure housing demand) and dwellings (the units used to measure housing supply).

Households generally refer to the groups of people that occupy dwellings. Conceptually, households are defined to include: a group of two or more related or unrelated people who usually reside in the same dwelling, and who make common provision for food or other essentials for living; or, a person living in a dwelling who makes provision for his or her own food and other essentials for living, without combining with any other person.

Dwellings, on the other hand, refer to the structures in which people live. Dwellings are usually separate structures (houses or flats) built as places of residence, but also include discrete spaces within building structures where a person or a group of people live regardless of whether that space was built as a place of residence. A distinction is also made between private and non-private dwellings according to the purpose for which the dwelling was built and its actual use. Thus private dwellings refer to those dwellings usually occupied by households, as defined above, while non-private dwellings (such as hotels, boarding houses, hostels, hospitals and prisons) refer to premises which provide special-purpose housing services, often for large numbers of individuals. In non-private dwellings the counting units used are usually individual people as opposed to households. However, it should be noted that the distinction between private and non-private dwellings has not been static: some dwellings previously considered as non-private dwellings (for example, self care accommodation in accommodation for elderly people) are now regarded as private dwellings.

In the main there is a close correspondence between counts of households and counts of occupied private dwellings. That is, most dwellings are occupied by just one household. However, there are circumstances in which more than one household occupies a private dwelling, or where a household occupies more than one dwelling. As these circumstances are uncommon separate statistics for such groups are not usually provided.

Of course, not all dwellings are occupied at any given point in time. Some are in the process of being built or refurbished while others might be in the process of being demolished. Yet others may be vacant because their usual occupants may be temporarily away, perhaps on holidays, or because the dwelling may be available to rent or up for sale. These circumstances are all important for measuring demand and supply in local housing markets. A particular measurement issue that arises in this context is whether some or all usual residents are absent from a dwelling at the time of enumeration. Having information that describes the usual living arrangements of the population is clearly preferable to information that only relates to the subset of residents present at the time of a survey.

HOUSING DEMAND

Issues concerned with housing demand tend to focus on numbers of households and especially numbers of households that may have special housing needs. Thus a full description of households is needed - by area, by size and composition, life cycle stage, income, and other characteristics which may be related to disadvantage, such as whether they include people of Indigenous origin, migrants from particular countries, people who are unemployed or people with disabilities.

Changes in housing demand over time can be assessed at aggregate levels and in terms of the changing representation of groups of concern within the population. Population growth is, of course, a key driver of housing demand. Anticipating population growth is itself a complex matter, especially within particular localities where housing development ultimately occurs. However, past trends, even when observed at national levels of aggregation, can offer important insights into likely future possibilities. Changing levels of population growth, monitored through levels of international and internal migration, and trends in fertility and mortality, help to set future expectations. For particular areas, understanding the forces that influence the movement of people, from one area to another, is particularly important to assessing housing demand.

While influenced to a certain extent by population growth, housing demand is more specifically influenced by changes in the number and composition of households. The tendency over recent decades for households to become smaller, shown by the shift in household size towards one and two person households, has generated far greater demand for housing than might be expected from population growth if household sizes had remained the same. The changes have also given rise to demand for different housing options to those in demand when household sizes were typically bigger. These options are associated with the different needs of various household types whose representation in the population has been changing. Changes include the decline in families with relatively large numbers of children and the increase in numbers of elderly couples, and elderly people who live alone. Changes in housing demand can be assessed by comparing the size and composition of the population taken at different points in time. However, they can also be assessed by analysing data concerning the expressed wants and needs of households themselves. The ABS has sought to obtain objective information about household wants and needs (or housing preferences) by recording details of their recent past patterns of housing consumption, whether they have moved or not, and, for movers, the reasons they had moved. While of a more subjective nature, information has also been collected about future housing intentions of households as a basis for assessing changing demand.

HOUSING SUPPLY

As with measurements of demand, a full statistical description of the stock of available housing at any point in time is essential for assessing issues of housing supply and adequacy. This includes information, by area, on the number and type of dwellings (separate houses, flats, etc.) and on the numerous attributes of dwellings that can affect the wellbeing of their occupants. Important among these are their size, the number of rooms, especially bedrooms, their age, the materials used in their construction, whether they have facilities such as baths and toilets, their need for repair and so on. Also of primary importance are details of their costs. Many of these measures can serve to establish housing quality norms and so help to identify whether housing conditions are relatively good or bad.

Like assessments of housing demand, changes in housing supply can be assessed through periodic cross-sectional studies of the stock of housing. However, changes may also be assessed by monitoring on-going data that describes additions and subtractions from a stock. Thus information obtained from building industry surveys on numbers of building approvals, commencements and completions help to provide contemporary information on the stock of dwellings by describing the additions to the stock.

HOUSING OUTCOMES

Household and dwelling characteristics are important in their own right. However, it is the information that describes the relationship between these two that is vital to informing many of key issues in the housing area. Individual and community wellbeing may be conceived of as being enhanced if on-going demands for housing are met by supply and if any mismatches between the two, in terms of housing adequacy, affordability and suitability, are minimised. Wellbeing may thus be assessed through outcome measures that embody these notions. There are a number of concepts and measures that relate households to their dwellings which provide powerful means for identifying disadvantaged groups. Some of these measures are described below.

TENURE TYPE

Housing tenure can be indicative of the extent to which occupants have secure rights over their dwelling. A classification of households by tenure type (separating owners, with and without a mortgage, from renters renting from private or public landlords or other less common arrangements) underpins much of the analysis of housing issues as it reflects the legal connections that households have to their dwellings and on that basis whether households may be disadvantaged. For households who have outright ownership, or who are on the path to outright ownership, the market value of their dwelling provides a key measure of their wealth and, as such, a key measure of the resources they may draw on to sustain their economic wellbeing. Analysing the relative proportions of households with various tenure arrangements reflects changing societal norms and preferences concerning the ideal of home ownership. As government programs are often specific to tenure arrangements (e.g. encouraging home ownership though assistance with start up costs or rent assistance for those in the private rental market) information relating to groups of people according to their type of tenure is vital in determining likely ongoing need for support.

Housing adequacy is a relative concept that refers to the way in which the physical standard of a dwelling compares to societal norms and which allows sub-standard dwellings to be identified. Housing adequacy can encompass a wide range of dwelling attributes. Such attributes typically include the dwelling's age, structural quality, its need for repair, and the presence, or absence, of basic amenities such as heaters, bathrooms, sewerage facilities, clothes washing facilities, etc. Notionally, attributes describing features of the neighbourhood environment and access to community services and facilities could also be usefully included.

ABS housing surveys collect information about such attributes from household members as indicators of housing adequacy. This approach has been adopted instead of one based on a physical inspection of dwellings by qualified building surveyors, which potentially offers a means of obtaining a single summary measure as to whether a dwelling meets community standards. Surveys involving such extra efforts, at times undertaken in other countries including the U.K. and the USA, are extremely expensive to conduct and can be overly intrusive. However, as Australia's housing stock continues to age, the demand for surveys able to more objectively measure the actual physical condition of the stock may increase in the future.

Another approach to obtaining information about housing adequacy has been to ask households about their level of satisfaction with their dwelling. Such information has been sought along with information about their satisfaction with their access to work and various neighbourhood services. Although there is criticism of such satisfaction data as being subjective, the real issue (ie from a housing demand viewpoint) is whether households will take future actions based on current satisfaction levels.

AFFORDABILITY

Affordability relates to the measurement and analysis of housing costs relative to a household's ability to meet those costs. Housing costs can be divided into 'entry costs' (deposits, bonds, etc.) and 'ongoing costs' (loan/mortgage repayments, rental payments, rates, land tax, body corporate payments, and the costs of repairs and maintenance, etc.). While there is no single standard measure of housing affordability, one useful measure is the ratio of ongoing housing costs to income. Using this ratio, criteria can be set to help identify and analyse those experiencing the greatest problems. A commonly used identifier of households with such problems is if the household is among those in the lowest two income quintiles and spends more than 30% of their incomes on housing costs.

SUITABILITY

'Suitability' refers to the match between a household's housing needs and the extent to which their dwelling meets those needs. There are many dimensions to suitability which might be considered, such as whether dwelling access arrangements meet the needs of people who have limited mobility, whether the dwelling has sufficient outdoor space for children to play, or whether there is space for visitors to stay. Other dimensions of suitability include the quality of a dwelling, and its neighbourhood. Suitability is largely defined by community norms which are often only explicitly stated in specific circumstances (such as when a housing authority allocates a dwelling to a family). There are, however, widely held views concerning suitability that apply to the wider population.

A commonly used concept of suitability relates to the utilisation of space. This concept is operationalised by relating the number of occupants of a dwelling to the size of the dwelling, commonly in terms of the number of bedrooms. Mismatches can result in a dwelling being under-utilized or over-crowded. The simplest such measure is the ratio of persons to bedrooms. Households with more (perhaps three, four or more) people than bedrooms can be separately identified from those which have more bedrooms than people or the same number of each. Analysis of the relative size of such groups over time, and according to other household characteristics, such as tenure type, income, affordability and household life cycle stage helps to identify whether problems of suitability are being addressed. The ABS has also used a more complex approach, based on standards developed in Canada, to describe levels of dwelling utilisation and to identify groups of concern. This standard, described below, is sensitive to both household size and composition.

 THE CANADIAN NATIONAL OCCUPANCY STANDARD This measure assesses a household’s bedroom requirements by specifying that: there should be no more than two persons per bedroom; children less than 5 years of age of different sexes may reasonably share a bedroom; children 5 years of age or older of opposite sex should not share a bedroom; children less than 18 years of age and of the same sex may reasonably share a bedroom; and single household members aged 18 years or over should have a separate bedroom, as should parents or couples.

Of course, the usefulness of such measures depends on the validity of the assumptions behind the standard. Increasingly, the norm in Australia is to give all children their own bedroom, regardless of age or sex. Also, in older households, rooms that were once bedrooms (and still contain a bed) are often used for other purposes (e.g. computer rooms, studies), even though they might continue to be reported as bedrooms in censuses or surveys. At a more fundamental level, the standard only addresses suitability in relation to sleeping arrangements. This does not necessarily provide insight into general housing standards, which might also take into account the size of bedrooms, or the number and size of other rooms in a dwelling.

HOUSING TRANSACTIONS

The transaction model, described in Chapter 1, provides a complementary approach to considering the many issues associated with housing the population and thus for determining information needs. The model indicates that there are housing related transactions between individuals and other family and household members and between households and their core community (extended families and friends) that affect wellbeing. Such transactions may involve those concerned with the sharing of housing costs and/or ownership rights and the various ways in which people help each other in providing shelter in times of special need. However, the more common issues of social policy concern involve the transactions that occur between households and the wider community in meeting housing needs.

Indeed, meeting housing demand involves a complex series of interactions between producers, planners and regulators, and end users, facilitated by various information and financial exchange agents. The transaction model below helps to show some of the social and economic aspects of housing, including transactions between households and businesses, government, and community groups.

The social focus

All transactions have the potential to affect the wellbeing of people. Housing related transactions involving a group of particular social concern include those between low income households and government. For this group of households the transactions can include receipts of government income support payments, including rent assistance payments, and direct housing assistance through access to dwellings owned by government housing authorities. Many other ongoing housing related transactions also impact on people's wellbeing. These include the value of rent and mortgage payments and, for those households with investment properties, the receipts gained in rent payments. The purchase of a dwelling is typically among the largest of all financial transactions that people make throughout their lives. Information that describes the nature of the transaction according to purpose (first home, changeover home, or investment property), the costs involved, and the characteristics of purchasers, supports the analysis of how people meet their housing needs and how housing demand may change over time.

The industry focus

The nature and volume of transactions concerned with the provision of housing is also of vital interest in monitoring levels of economic activity at regional and national levels. This interest occurs because there are many businesses involved in the provision of housing and housing related services and because the amounts of money involved are often large. Businesses involved include property developers, real estate agents, builders, building material suppliers, building societies and banks, to name a few. Information about the size and structure of businesses involved, the types of services provided, their levels of activity (measured in terms of inputs and outputs which reflect transactions with other sectors of the economy) and business costs, supports the analysis of industry trends and the contribution that housing makes to overall economic activity.

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