Report

Modelling of initiatives to improve the supply of affordable housing using the AHURI-3M model: Research paper

23 Sep 2008
Description

This project employs AHURI's housing market microsimulation model (AHURI-3M) to undertake modelling on initiatives to improve the supply of affordable housing. The project is carried out in two stages. During the first stage, the authors address two key policy questions. First, what are the internal rates of return received by landlords in the current policy environment? Second, what is the budget cost of providing upfront grants that will increase landlords' internal rates of return by one percentage point? The modelling work conducted in Stage 1 replicates the modelling work conducted by Queensland as part of Commitment 4 of the Framework for National Action on Affordable Housing. However, Stage 1 uses data on actual rather than hypothetical properties and investors. In the second stage of the project, the modelling work is extended to analysis of the housing affordability impacts of the Stage 1 proposals. The authors estimate the impacts on housing affordability of an upfront grant that raises the internal rate of return of each landlord by one percentage point. AHURI-3M is capable of estimating the impacts of supply-side policy reforms on housing affordability taking into account important housing assistance programs such as Commonwealth Rent Assistance (CRA).

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2008
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