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