This study was designed to explore the viability of an alternative method of measuring affordability (the residual income method) to that of the ubiquitous 30 per cent benchmark method and to use this alternative method for enriching understanding around a range of affordability and housing market issues. The work has been exploratory but it does reveal both the potential and the limitations of the method. This Final Report was preceded by a Positioning Paper (Stone et al. 2011) which reviews the national and international literature on measuring housing affordability and outlines the methodology and assumptions behind the residual income method. Put simply, the residual income method calculates how much is left over for housing rents or mortgage after relevant expenditure items for different household types have been taken into account. If there is insufficient left for rents and mortgages after meeting this budget standard, a household has an affordability problem. The basis for formulating such a measure for Australia was enabled by the development of indicative budget standards by the Social Policy Research Centre (SPRC) at the University of New South Wales (Saunders et al. 1998). They established a low cost budget standard (LCBS) and a modest cost budget standard (MCBS); the former might be seen as a minimum level of consumption in contemporary Australia, while the latter allows for a comfortable but far from luxurious lifestyle. Both have been used in this study, but with most emphasis on the LCBS, and have been indexed to relevant years by a composite index of the CPI minus housing component and of disposable Income.