HOUSING COSTS


Housing costs are often the largest regular expense for households. These costs directly affect the amount of income available to meet other living costs.

In 2013-14, almost three-quarters (74%) of older low income households owned their home outright compared with less than one-fifth (18%) of younger households. The majority of people in younger low income households were either private renters or owners with a mortgage (65%). In contrast, 8% of older low income households were private renters, and 6% were owners with a mortgage (Graph 1).



These higher home ownership rates for older households contributed to their average weekly housing costs being significantly lower than those of younger households ($106 and $216, respectively). Average housing costs were highest for younger households with a mortgage or renting privately (Graph 2).



The financial benefits a household receives from home ownership or paying subsidised rent can also be analysed by comparing an imputed market rent for their home and the actual housing costs they pay. The difference is called net imputed rent. It is nil for market renters and can be either positive or negative for other tenure types. For the latter, this will depend on whether their housing costs are higher or lower than the market rent that has been imputed for their home.

If net imputed rent is added to disposable household income, more meaningful comparisons of the total economic circumstances of different tenure types can be undertaken. Table 1 shows the impact of defining the low income population using this alternative income measure including net imputed rent. The proportion of the low income population that had a household reference person under 65 years would increase from 69% to 81%.

Table 1. PEOPLE IN LOW INCOME HOUSEHOLDS, Before and after including imputed rent in income, 2013-14 Age of household reference person Equivalised disposable household income Equivalised disposable household income (incl. net imputed rent) PROPORTION OF PERSONS IN HOUSEHOLDS (%) Under 65 years 65 years and over Total low income households 69 31 100 81 19 100

Source: ABS Survey of Income and Housing