Housing stress is only weakly linked with indicators of wellbeing such as health and financial stress. Alternative, narrower measures of housing affordability are needed to better quantify household affordability problems and thus better inform policy formulation in Australia.
- A household is defined as being in housing stress when it pays more than 30 per cent of its gross income in housing costs and its income is amongst the lowest 40 per cent of all households (the 30:40 rule). Housing stress is only weakly linked with measures of financial wellbeing, with 45 per cent of those in housing stress indicating they were ‘reasonably’ or ‘very’ comfortable financially. Moves out of housing stress are also not statistically linked with improvements in financial stress.
- Housing stress is only weakly linked with health outcomes, though it is more strongly associated with chronic housing stress (i.e. where it is experienced three years in a row or longer).
- Housing stress is relatively high among renters, but is becoming increasingly apparent among purchasers. In particular, it may also affect older home-purchasers who have not yet paid off their mortgage debt.
- Housing stress may be precipitated by adverse life events such as a marriage break-up, but it is also linked to favourable events such as a pregnancy or promotion at work. It might also result from households voluntarily seeking higher quality housing and neighbourhoods.
- To ensure the policy relevance of housing stress measures, policy-makers may need to focus on households in the lowest income bands and those who experience chronic housing stress.
- Policy-makers might also consider other approaches—such as market and housing needs assessments—as a basis for setting housing supply targets.