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Imputing Rent for Australian Owner-Occupied Dwellings: A New Methodology

In 2008, ABS released its first experimental estimates of imputed rent for owner-occupied dwellings and subsidised rentals in the ABS household income statistics (ABS cat. no. 6525.0). Imputed rent for owner occupied dwellings is an important component of the international standards for household income statistics. Its availability has filled a significant data gap in the ABS household income measures and has extended the range of analyses that can be undertaken using household income statistics.

In computing the gross imputed rent estimates, the current methodology employs a hedonic modelling procedure, with a Heckman correction and an extrapolation adjustment for the higher end values. The estimates were derived using data from the Household Income and Expenditure Survey (HIES) 2003-04 and the Survey of Income and Housing (SIH) 2005-06. The established methodology was also used to produce imputed rent estimates in respect of SIH 2007-08 and HIES 2009-10 (see ABS cat. no. 6523.0).

In 2012, the Analytical Services Unit (ASU) in collaboration with the Living Conditions section undertook a feasibility study to examine if the current methodology for estimating gross imputed rent can be improved using administrative data. ASU developed a stratification-based estimation procedure as an alternative to the current methodology using linked data from the 2006 Census and the 2005-07 Valuers-General (VGs) data. The stratification is based on the Socio-Economic Indexes for Areas (SEIFA), section of state (SOS), number of beds and average house values at the collection districts (CD) level. The new methodology is a more straightforward way of imputing the rental rate for owner-occupied dwellings during census years.

The results of the application of the new methodology are promising and the Living Conditions Section is currently testing it using the latest data, i.e. 2011-12 SIH, 2011 Census and 2010-12 VGs, at the mesh block level.

Further Information
For more information, please contact Franklin Soriano (02 6252 5933, franklin.soriano@abs.gov.au)

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