Understanding Housing Stress in Australia: An In-Depth Look

What is Housing Stress?

Housing stress is a critical issue in Australia, defined as households spending more than 30% of their income on housing costs, including rent or mortgage payments. This is especially relevant for those whose life circumstances make it impossible to avoid participating in the established housing marketplace. For instance, owning multiple luxury properties and facing dilemmas about leisure activities does not constitute housing stress.

The portion of the low income population spending more than 30% on housing otherwise refereed to as “rental stress”.

Who is Affected?

The most recent data focuses on the bottom two quintiles of the Australian population when considering disposable household income. Interestingly, even the middle quintile is not exempt from housing stress, illustrating the widespread nature of this issue across various income levels.

Of the 10 million Australian households if we rank them by disposable household income

The top 20% Australian households (Quintile) by income have an annual average disposable income of $280000

These people probably have choices about their housing outcomes.

Frequency of Data Collection

Housing stress data is measured biennially, providing insights into trends and changes over time.

Housing Stress by Housing Type

Households in stress

Of the 10 million Australian households if we rank them by disposable household income

The lowest 20% Australian households (Quintile) by income have an annual average disposable income of $24000

It is fair to assume these households are experiencing housing stress.

This equates to 2 million Australian households

The private rental marketplace emerges as the most stressful environment. The latest statistics highlight the substantial portion of low-income households experiencing rental stress:

1. Prevalence of Housing Stress

Approximately 52.5% of low-income households renting in the private sector spend more than 30% of their gross income on housing costs, indicating significant rental stress.

Among Commonwealth Rent Assistance (CRA) recipients, 70.6% experience rental stress without CRA, and 42.9% still face rental stress even with this assistance.

2. Income Measurement Methods

Housing stress can be measured using gross income (before tax) or equivalised disposable income (after tax, adjusted for household size and composition). The 30:40 indicator is commonly used to identify housing stress in households within the bottom 40% of the income distribution.

3. Impact on Low-Income Households

The Australian Housing and Urban Research Institute (AHURI) provides detailed insights, noting that using gross income helps identify households in stress if they pay more than 30% of their income on housing. Equivalised disposable income takes household size and needs into account for a more nuanced assessment.

4. Government Reports and Surveys

The Australian Bureau of Statistics (ABS) conducts the Survey of Income and Housing (SIH) every two years, collecting data on rental stress and broader housing costs. The Household, Income and Labour Dynamics in Australia (HILDA) Survey also contributes valuable data on housing affordability, monitoring economic and social welfare trends.

Housing Types by Income Quintiles

Lower Quintiles (1st and 2nd)

Housing Type:

Renters and those in more affordable housing options, including public housing and rental accommodations from private landlords.

Housing Costs:

Lower housing costs compared to higher quintiles but significant financial pressure relative to their income.

Middle Quintile (3rd)

Housing Type:

A mix of renters and homeowners. Homeowners typically have mortgages and live in smaller detached houses, townhouses, or units.

Housing Costs:

Moderate costs, balancing affordability and quality. Less likely to experience extreme housing stress but still face challenges.

Higher Quintiles (4th and 5th)

Housing Type:

Predominantly homeowners, many of whom own their homes outright or have significant property equity. Housing types include larger detached houses, high-end apartments, and properties in more desirable locations.

Housing Costs:

Higher costs but a lower proportion of income spent on housing, making it more affordable. These households also often own investment properties and secondary residences.

Income and Housing Data

Income Distribution:

The highest quintile earns significantly more than the lower quintiles, with the top 20% of households earning over $280,000 annually on average, while the bottom quintile earns just over $24,000 (McCrindle).

Housing Affordability:

In 2019-20, average housing costs vary by state, with the highest costs in the Northern Territory and the Australian Capital Territory and the lowest in Tasmania (Australian Bureau of Statistics).

These insights highlight the ongoing challenge of housing affordability in Australia, particularly for lower-income households. For further detailed information, you can refer to the Australian Bureau of Statistics and other comprehensive reports on the subject (Housing Occupancy and Costs, 2019-20 financial year) (Household Income and Wealth, Australian methodology 2019-20).

For a deeper dive into the topic, explore resources from the [Australian Bureau of Statistics](https://www.abs.gov.au) and [AHURI](https://www.ahuri.edu.au).

Return to People Purpose Place home