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HOUSING COSTS AND AFFORDABILITY
In this publication, housing costs are defined as the sum of: rent payments; rate payments (water and general); and mortgage or unsecured loan payments (if the initial purpose of the loan was primarily to buy, add, or alter the dwelling).
Average weekly housing costs for different tenure and landlord types vary significantly. The complexities in measuring different types of housing costs mean that care should be taken when comparing housing costs and affordability ratios for different tenure types.
Owners with a mortgage paid an average of $453 per week on housing costs. This has not changed significantly from 2011–12 in real terms.
For owners without a mortgage, the average weekly housing costs were $47 a week, representing the costs of rates (water and general) paid by those who own their home outright. This is a rise of $5 in real terms from 2011–12.
Households renting from private landlords paid an average of $376 per week, a rise of $12 from the 2011–12 average in real terms. Households renting from state and territory housing authorities paid an average of $148 per week.
As shown in Graph 1, the average housing costs for renters varied significantly by state and territory. Costs for those in the Northern Territory, New South Wales and Australian Capital Territory were significantly higher than those in South Australia and Tasmania.
Footnote(s): (a) Households in SA1s defined as Very Remote were excluded, accounting for about 23% of the population of NT
Source(s): Graph data SIH
As shown in Graph 2, between 1994–95 and 2013–14, private renters experienced a 62% (or $144) increase in average weekly housing costs, after adjustment for inflation. There has been an overall increase of 42% (or $135) for owners with a mortgage and 45% (or $46) for public renters over the same period.
Annotation(s): Survey not run in 1998–99, 2001–02, 2004–05, 2006–07, 2008–09 or 2010–11. Values have been interpolated for these years.
Footnote(s): (a) In 2013–14 dollars, adjusted using changes in the Consumer Price Index (b) Comparisons between different tenure and landlord types should be made with caution. See Explanatory Notes for more information
Housing affordability is affected by changes in housing costs and household income levels. One measure of housing affordability is housing costs as a proportion of total gross household income, also described as a housing affordability ratio.
For owners with a mortgage, the proportion of household income spent on mortgage costs fell from 18% in 2011–12 to 16% in 2013–14. This decrease in housing costs for mortgage holders is driven by an increase in mean gross household income and a period of low home loan interest rates. Owners without a mortgage spent 3% of average gross weekly income on housing costs, which has not changed since 2007–08.
Private renters spent 20% of gross household income on housing costs in 2013–14, the same rate as 2011–12.
LOWER INCOME HOUSEHOLDS
Lower income households are defined in this publication as those containing the 38% of people with equivalised disposable household income between the 3rd and 40th percentiles. This has been updated from previous issues where lower income was defined as those between the 10th to 40th percentiles. For more information see the ‘Explanatory Notes’ section of this publication.
Although this group reported lower housing costs on average than all households, their housing costs represented a greater proportion of their gross weekly income. Lower income owners with a mortgage paid an average of $326 a week in housing costs, which represented 27% of their gross weekly income.
Similarly, lower income households renting from private landlords paid an average of $313 a week on housing costs, which represented 34% of their gross weekly income.
A common measure of rental stress is to look at the proportion of lower income households paying more than 30% of their income on housing costs. According to this measure, in 2013–14, 50% of lower income renter households were in rental stress, as shown in Graph 3.
Footnote(s): (a) Lower income households are those containing the 38% of people with equivalised disposable household income between the 3rd and 40th percentiles of EDHI. See Explanatory Notes for more information (b) Excludes households with nil or negative total income (c) Estimates presented from 2007–08 onwards are not directly comparable with estimates for previous cycles due to the improvements made to measuring income introduced in the 2007–08 cycle. Estimates for 2003–04 and 2005–06 have been recompiled to reflect the new treatments of income, however not all new components introduced in 2007–08 are available for earlier cycles
Source(s): Graph data SIH
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