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ESTIMATES OF IMPUTED RENT

Table 4.1 presents the experimental estimates of gross and net imputed rent for owner-occupied dwellings and other housing tenures where a rent imputation has been made. The effect of adding net imputed rent to disposable household income is also shown (on an equivalised basis).

4.1 Experimental estimates of gross and net imputed rent, by housing tenure, 2003-04 and 2005-06(a)
				Experimental estimates
		Mean equivalised disposable household income (per week)	Mean reported rent paid (per week)	Mean gross imputed rent (per week)	Mean net imputed rent (per week)	Adjusted mean equivalised disposable household income, incl. imputed rent (per week)	Number of households	Average number of persons in household	Number of households in sample
		$	$	$	$	$	'000	no.	no.
2003-04
Owner without a mortgage		518	-	209	150	610	2 702.9	2.2	3 925
Owner with a mortgage		618	-	213	19	627	2 713.8	3.1	4 085
Renter
	From state/territory housing authorities	290	84	150	67	332	376.4	2.1	608
	Other subsidised renter(b)	516	124	174	54	548	216.8	2.4	329
	Market renter(c)	529	196	-	7	533	1 540.3	2.4	2 135
Occupied rent-free		507	-	176	160	606	152.2	2.2	225
Rent-buy/life tenure scheme		468	**19	181	*83	513	33.5	2.3	54
All households		553	47	164	69	590	7 735.8	2.5	11 361
2005-06
Owner without a mortgage		625	-	236	172	731	2 718.1	2.2	3 452
Owner with a mortgage		716	-	245	5	718	2 772.0	3.1	3 512
Renter
	From state/territory housing authorities(b)	356	100	183	83	404	368.8	2.3	525
	Other subsidised renter(c)	514	150	206	63	552	206.0	2.3	286
	Market renter	603	219	-	7	608	1 686.1	2.3	1 966
Occupied rent-free		545	-	207	195	668	144.2	2.1	176
Rent-buy/life tenure scheme		407	*41	186	93	464	30.9	1.8	44
All households		644	56	185	72	682	7 926.2	2.5	9 961
* estimate has a relative standard error of 25% to 50% and should be used with caution
** estimate has a relative standard error greater than 50% and is considered too unreliable for general use
- nil or rounded to zero (including null cells)
(a) The mean incomes are calculated with respect to the relevant number of persons (i.e. they are person weighted), while the mean rents are calculated with respect to the number of households (household weighted). For more information on person and household weighted measures see Appendix 1 of Household Income and Income Distribution, Australia (cat. no. 6523.0).
(b) Includes households renting from: a parent or other relative not living in the same household; an employer; a housing cooperative or community/church group.
(c) Includes households renting from: a real estate agent; an unrelated person not living in the same household; or an owner/manager of a caravan park.

Appendix 2 includes a comparison of the experimental estimates of the gross imputed rent for owner-occupier households produced at the household level in this study with the sector level estimates published in the Australian System of National Accounts (ASNA).

When housing costs are subtracted from the experimental estimates of gross imputed rent to derive net imputed rent, then, as expected, households who occupied their dwelling rent-free (2% of all private households) had the highest mean net imputed rent. Owners without a mortgage, who account for just over one third of all households, had the next highest mean net imputed rent.

Conversely, owners with a mortgage had the smallest net imputed rent, on average, at only $19 per week in 2003-04 and $5 per week in 2005-06. This reflects positive net rents for about half of the mortgagor households, largely offset by the negative net imputed rents estimated for those households in this group whose housing costs exceeded their estimated gross imputed rent (40% of the mortgagor households in 2003-04 and 45% in 2005-06 had negative net imputed rents).

Table 4.1 also shows the effect of adding net imputed rent to disposable household income. In 2003-04, the addition of net imputed rent to disposable household income contributed an additional 7% to income across all households. The effect in 2005-06 was similar at 6%.

However for some housing tenures the addition of net imputed rent to disposable household income saw a significant increase in their mean equivalised disposable household incomes. The largest effect was seen for households who occupied their dwelling rent-free (20% increase in 2003-04 and 23% increase in 2005-06). The addition of net imputed rent to income also saw significant income increases for owners without a mortgage (18% increase in 2003-04 and 17% in 2005-06) and tenants of state/territory housing authorities (15% increase in 2003-04 and 13% in 2005-06).

The overall effect of the addition of net imputed rent to disposable income is a reduction in the mean income disparities between housing tenures, with a significant decline in the ratio between tenures with the highest and lowest incomes. For example, in 2003-04, the ratio of the mean income of owners with a mortgage to the mean income of tenants of state/territory housing authorities declined from 2.1 to 1.9 when net imputed rent was included.