Human Settlements Theme Report

Australia State of the Environment Report 2001 (Theme Report)
Lead Author: Professor Peter W. Newton, CSIRO Building, Construction and Engineering, Authors
Published by CSIRO on behalf of the Department of the Environment and Heritage, 2001
ISBN 0 643 06747 7

Liveability: human well-being (continued)

Housing

  • Housing affordability
  • Housing tenure
  • Implications
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    Australians generally are well housed. For most people and households, accessibility to suitable housing and levels of satisfaction with housing remains high. Declining average household size and changing household composition, along with changing lifestyles and housing preferences, are resulting in changes to the nature of the housing stock.

    In the early 1990s, surveys conducted for the National Housing Strategy found that residents were generally satisfied with their housing, but this varied between tenures. Generally, home owners recorded higher levels of satisfaction, while those in private rental were slightly less satisfied. More recently, a 1997 survey of quality of life in the south-east Queensland mega-metro region found that the vast majority of respondents (88%) are highly satisfied with their housing. Moreover, the survey illustrates that respondents were also highly satisfied with their overall residential environment, with over 80% of respondents indicating they are satisfied with their neighbourhood (unpublished data, Department of Geographic Sciences and Planning, University of Queensland; see also Stimson et al. (1998)).

    General satisfaction studies of this kind have to be treated with caution, however, since it has been found that people generally express satisfaction with their housing, especially their housing choices, whatever they may be. Variations in satisfaction level seem to be more a function of location than of housing. The most significant factors influencing differences in satisfaction include location, the availability of good facilities such as shops, recreation and public transport, good walking access to those facilities, and the quality of urban design.

    Housing affordability

    Given this high level of housing satisfaction, barriers continue to exist which affect access to affordable housing for some people, in particular lower-income private renters and especially households with a single female parent. Almost a decade ago, the National Housing Strategy (1992) identified issues of affordability as being among the most important barriers to choice, with affordability of home purchase being an especially important issue. During the 1990s housing affordability improved as interest rates declined, yet in the same period foreclosures were not uncommon, and many families continued to be placed into marginal housing situations because they could not afford to service their loans. Berry et al. (1999) show that the transitions occurring in the economy - which affect earnings, job stability and the real cost of home ownership - have resulted in an increase in the level of mortgage defaults.

    Generally the proportion of income spent on housing declines as income increases. Regardless of tenure, all households in the lowest income quintile spend higher proportions of income on housing than do households in higher income quintiles (Figure 48). Financial stress among low-income households is prominent among both home owners with a mortgage and renters in the private rental market, with large proportions of income being expended on housing, creating significant levels of housing-related poverty. However, preliminary data from the 1999 Australian Housing Survey indicate that cheaper housing is not necessarily a strong motivator for people moving, as the location of such housing may provide fewer employment and education opportunities and poor access to transport and services, and for some it may reduce access to friends and relatives.

    Figure 48: Mean housing cost as a percentage of income, 1999. [HS Indicator 6.2]

     Mean housing cost as a percentage of income, 1999

    Source: ABS (1999h)

    For those suffering housing financial stress, a solution for some is access to public housing. But access to public housing is controlled by strict eligibility requirements, as well as being constrained by the limited available public housing stock. Over 90% of residents in, and applicants for public housing are recipients of some form of social welfare benefit payment (Wulff and Newton 1996b). In most states and territories, the gap between eligible applicants for public housing and the available public housing stock remains high. In 1990, 195 000 households were on public housing waiting lists, but by 1997 this had increased to 221 000 (FACS 1999). Waiting lists are larger in New South Wales, Victoria and South Australia than in other states.

    Not surprisingly, housing costs and the level of affordability of housing vary significantly across Australia's regions as well as within the big cities. Comparing the capital cities, housing affordability is lowest in Sydney and highest in Adelaide and Hobart (Figure 49). Generally, housing is less affordable in metropolitan cities than in the other parts of the states. Such regional differences in affordability constitute a driving force for some of the interstate migration noted earlier, especially out of Sydney (Flood et al. 1991). It is economically attractive for low-income households and those on fixed incomes (such as retirees) to migrate to places offering cheaper housing alternatives.

    Figure 49: Housing affordability index, December quarter. [HS Indicator 6.2]
    AThe CBA-HIA affordability index is derived from the ratio of average household disposable income to the qualifying income required to meet payments on a typical dwelling. Higher index numbers represent higher levels of affordability

     Housing affordability index, December quarter

    Source: CBA-HIA housing report, various years (December quarter)

    Figure 49: Housing affordability index, December quarter. [HS Indicator 6.2]
    AThe CBA-HIA affordability index is derived from the ratio of average household disposable income to the qualifying income required to meet payments on a typical dwelling. Higher index numbers represent higher levels of affordability

     Housing affordability index, December quarter

    Source: CBA-HIA housing report, various years (December quarter)

    House prices vary significantly within metropolitan areas. In most big cities there is a clear although not perfect rent gradient, with house prices decreasing with increasing distance from the city. Cheaper housing is generally available in outer suburbs and in suburbs to the west of the CBD in east coast cities. More expensive housing is located in the inner suburbs, the preferred location for many of the new economy jobs and workers (Gipps et al. 1997).

    This is, however, an oversimplification of what has been occurring within the housing markets of the larger cities. Some suburbs are increasing in property value at a more rapid rate than the metropolitan average, while others are declining in value-sometimes in real terms. In Melbourne between 1986 and 1996, suburbs classed as 'advantaged' on the basis of the socio-economic characteristics of their residents enjoyed increases in average property values of 40%; by comparison, suburbs classed as 'disadvantaged' experienced a 9% decline (Wulff and Reynolds 2000).