This report shows how the proportion of households in housing stress has remained remarkably stable since 2001, although the number of households in stress has risen in line with overall household growth. This should not be taken to mean that there has been no decline in housing affordability but simply there has been no decline in the proportion of households in housing stress; the distinction is important and the focus of this research.

This report argues that traditional indicators of housing affordability do not address the wider outcomes of housing affordability but simply the financial burden of housing costs. The most widely used binary indicator of housing stress is the 30:40 rule, where a household is defined as being in housing stress if its housing costs exceed 30 per cent of income and the household is in the bottom 40 per cent of the income distribution (Yates 2007). The measure splits the population into those in housing stress and those not in housing stress. However, as we demonstrate in this report, there are households that fall within the traditional measure of stress that consider their levels of wellbeing acceptable. Additionally there are households that fall outside the measure that are suffering considerable economic and social hardships (Burke et al. 2007). The problem with measuring housing affordability is the individual nature of the housing consumption choice and the extent of variations in the outcomes as a consequence of that choice. This will include financial and non-financial outcomes. For example, a household may take on a high housing cost burden in order to consume housing in a location which minimises travel to work costs or is within close proximity to that household’s existing community. The consumption choice may place an unreasonable burden on that household’s finances but they are securing other benefits from the decision.