ASSUMPTIONS AND PROJECTION METHOD

Assumptions

The ABS uses a propensity method to project numbers of households, families and persons in different living arrangements. The method identifies propensities (proportions) from the Census of Population and Housing for people to belong to different living arrangement types (see paragraphs 23 to 50 of the Explanatory Notes). Trends observed in the propensities over the last four Censuses are assumed to continue into the future, and applied to a projected population. Numbers of households and families are then derived from the projected living arrangements of the population.

Three projection series have been produced based on three assumptions about the rate of change in the propensity to belong to different living arrangement types. These assumptions are intended to illustrate a range of possible future outcomes, although there is no certainty that any particular outcome will be realised, or that future outcomes will necessarily fall within these ranges.

2.1 Projection series, Assumptions used
Series I	No change in propensities. Living arrangement propensities for 2006 remain constant to 2031.
Series II	Low rate of change in propensities. The linear trend in propensities from 1991 to 2006 continues at the full rate of change to 2011, half the rate change to 2016, one-quarter the rate of change to 2021, and then remains constant to 2031.
Series III	Continuation of 1991 to 2006 rate of change in propensities. The linear trend in propensities from 1991 to 2006 continues at the full rate of change to 2031.

While the use of different projected populations would also result in different numbers of households and families, in this publication only one population projection series is reported: the Series B projection from Population Projections, Australia, 2006 to 2101 (cat. no. 3222.0) (see paragraphs 18 to 21 of the Explanatory Notes). The choice of one population projection ensures that differences in projected numbers of households, families and living arrangements reflect changes in living arrangements and hence household and family structure, rather than a combination of changes in the size and structure of the future population. The effect of different projected populations on future numbers of households and families is explored in Chapter 5 - What If...?.


Projection method

Each series of household and family projections is based on an assumption about future rates of change in propensities of people to belong to particular living arrangements. These assumptions are based on the trend in propensities over the last four Censuses.

A line of best fit and corresponding rate of change was calculated for each living arrangement type and age group, using the observed 1991, 1996, 2001 and 2006 propensities (see data cube Living arrangement propensities, Australia for observed propensities for Australia).

Before projecting the propensities out to 2031, living arrangement propensities for 2006 were 'reconciled'. This process requires those living arrangements that conceptually define a household (for example, numbers of partners living in couple families with or without children, lone parents, persons living alone) to be adjusted to ensure the number of households derived from these living arrangements are consistent with household estimates for 30 June 2006 derived directly from the 2006 Census. The method of calculating 'reconciled' 2006 propensities is described in paragraphs 35 to 39 of the Explanatory Notes.

Assumed rates of change, as described in Table 2.1, were applied to the reconciled 2006 propensities, by age group and living arrangement type, to give projected propensities for the period 2007 to 2031. The projected propensities were then applied to the Series B population projection to obtain projected numbers of people by living arrangement. Graph 2.2 illustrates this method using hypothetical data.

Propensities were projected independently for Australia, each state and territory and each capital city and balance of state. To ensure consistency in the projected number of people, families and households, factors were applied to person-level data to ensure that the sum of the capital city/balance of state data, and state/territory data, add to Australia (see paragraphs 43 to 45 of the Explanatory Notes).

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