Housing stress measures (using the 30/40 rule) have been criticized in terms of their usefulness for housing policy decision making. One criticism is that some in housing stress do not experience adverse effects on wellbeing. Another is that householders might, by choice, face housing stress in order to access appropriately sized or better quality housing, while others trade-off quality to avoid housing stress.
This study sought to test these criticisms by comparing housing stress outcomes with subjective wellbeing measures (including financial wellbeing & health), as well as taking into account quality aspects of the house (dwelling and neighbourhood conditions). Quantitative methods were used, and both housing stress and wellbeing were measured using the Household Income and Labour Dynamics in Australia (HILDA) survey for years 2001–10.
Households in housing stress are more likely to report that they are ‘just getting along’, ‘poor’ or ‘very poor’ compared to those not in housing stress. Even so, 45 per cent of households in housing stress regard themselves as financially ‘reasonably comfortable’ or ‘very comfortable’. So a significant proportion of low–moderate-income households can sustain housing cost burdens exceeding 30 per cent of their income and still be in a financially sustainable position.
There is a very weak link between housing stress and subjective self-assessed health. However, large reductions in health wellbeing occur when households have been in stress for three years or more. This suggests that policy-makers concerned with health outcomes might be more concerned with persistent housing stress than transitory housing stress.
There is no statistically significant relationship between housing stress status and neighbourhood quality, the exception being a weak link detected between housing stress and people in the community frequently being hostile to one another. However, over the period, a falling proportion of households were highly satisfied with their house and neighbourhood, which could indicate that households are making quality trade-offs to keep housing costs low. Households in housing stress are more likely to be located in areas of lower socio-economic status, lacking economic resources, education and occupation amenities. Households in housing stress are clustered in disadvantaged areas, perhaps forced into areas lacking the quality services and amenities desired by households. In this respect there is a link between housing costs and household wellbeing.
The authors concluded that housing stress is an inadequate measure upon which to base housing policy decisions because it includes many households that are not suffering the negative consequences associated with housing stress, and also excludes certain groups of concern, such as prospective future households. Policy-makers are recommended to move towards housing market and housing needs assessments, which includes modelling the demand for various types of affordable housing. This provides a more reliable evidence base for setting housing supply targets to address the negative outcomes of declining affordability.