Housing Financial Stress in Australia: An

initial analysis of households reporting

payment difficulties

Scott BaumGriffith University

Jung Hoon HanUniversity of New South Wales

Outline

Background to this study

Australian State of Play

Households reporting housing payment difficulties

Background

Part of a broader study Looking at the impacts of the post-GFC economic

and social structure on performance of local communities and households

Study in Employment vulnerability during the GFC One of the impacts we hypothesised was a potential

change or shift in the patterns/ makeup of households suffering housing financial stress

Background

Australian research

General media interest

Australians for affordable housing

Fujitsu consulting ‘stress-o-meter’

Fujitsu consulting ‘stress-o-meter’

Households with low paid blue collar or service sector jobs, living in urban fringe localities, low education and non-Anglo ethic background

Fujitsu consulting ‘stress-o-meter’

New home purchasers on new estates with low value housing

Fujitsu consulting ‘stress-o-meter’

Younger households concentrated in lower ses, higher than average density suburbs employed in vulnerable jobs

Fujitsu consulting ‘stress-o-meter’

Account for 60% of households estimated to be in mortgage stress

Causes of stress

Change in stress

Changes in stress

Geography of stress

Our preliminary work

On the back of this existing data we want to know: What are the patterns of housing financial stress

(esp in the post-GFC world) Are we seeing different / new patterns What are the patterns of people transitioning into

and out of stress

Our preliminary work

Data: Household Income and Labour Dynamics Australia

(HILDA) survey Possible indicators

Housing payments : income ratios Could not meet repayments

Since January 200x did any of the following happen to you because of a shortage of money? b) Could not pay the mortgage or rent on time

Our preliminary work

Treated the data sets as cross sectional Longitudinal (transitions)

Considered Demographic and other patterns Major life changes Undertaken preliminary regressions

Cross section analysis

The 2009 data

Stressed 6.3

Generation y 19.8

Generation x 48.3

Baby Boomers + 31.9

Couples 15.6

Couples with Children 28.2

Single parents 19.8

Mortgage 37.7

Private renter 53.8

Separate house 76.0

Flat/ unit 16.1

Life changes 2009Stressed Not Stressed Total

Worsen finances 20.2 3.8 4.8*

Fired 9.2 3.7 4.1*

Separated 13.2 3.7 4.3*

Got Married 3.7 2.0 2.1

Got back together 2.1 1.2 1.2

Got pregnant 9.5 5.3 5.5*

Gave birth 6.3 3.3 3.5*

Got injured 11.9 9.0 9.2*

Family member injured 22.7 14.5 15.0*

Death of spouse 1.1 0.9 0.9

Went to jail 1.3 0.2 0.3*

Retired 2.4 2.6 2.6

Changed jobs 20.8 10.8 11.5*

Promoted 4.2 5.4 5.4

Improved financial position

3.2 3.0 3.0

Moved house 28.8 16.8 17.5

Proportion households recording payment problems

2001 2002 2003 2004 2005 2006 2007 2008 20090

5

10

15

20

25

OwnersPrivate rentersPublic rentersTotal

Proportion of households reporting payment difficulties who have recorded

life change

2002 2003 2004 2005 2006 2007 2008 20090

5

10

15

20

25

FinanceEmployment Relationship

Financial security/ problems

couldn't raise $3000 in an emergency

I think I am poor or very poor

asked family for financial healp

0

10

20

30

40

50

60

70

stressednot stressed

Financial security/ problems

went without meals pawned or sold something couldn't pay utility bill couldn't heat home0

10

20

30

40

50

60

70

80

stressedSeries2

stressed =1

Worse finance 5.03* 4.75*

Separated 2.64* 1.55*

Lost job 1.64* 1.62*

Pregnancy 1.62 1.58

Birth 1.37 1.09

Injury 1.09 1.17

Family injury 1.53* 1.52*

Changed jobs 1.48* 1.23

Moved 1.49* 0.92

Separate house 1.27 1.28

Private renter 1.94* 1.83*

Mortgage 0.64* 0.65*

Single parent 1.75* 1.61*

Couple with kids 1.03 1.03

Couple 0.87 0.89

Generation y 2.57* 2.49*

Generation x 3.49* 3.38*

Low income 2.39* 2.20*

Transitions

Proportion of households by transition type

2001_02 2002_03 2003_24 2004_05 2005_06 2006_07 2007_08 2008_090

1

2

3

4

5

6

Stressedmove_inmove_out

Percentage of households by number of events

None one two three to five six to nine0

10

20

30

40

50

60

70

80

90

80.1

9.6

4 4.71.6

Life changes by transition 2008-2009Stressed Moved into stress Moved out of stress Total

Worsen finances 19.9 18.3 9.3 4.8*

Fired 7.1 9.2 6.7 4.0*

Separated 12.2 11.8 6.6 4.4*

Got Married 3.5 3.2 1.9 1.8

Got back together 2.8 1.9 1.9 1.1

Got pregnant 6.4 10.3 7.1 4.7*

Gave birth 5.0 6.4 3.9 2.9*

Got injured 13.5 12.2 16.2 7.8

Family member injured

31.2 19.9 18.2 12.7*

Death of spouse 1.4 0.6 0.0 0.8

Went to jail 0.7 0.0 0.6 0.2

Retired 1.4 2.6 2.6 2.3

Changed jobs 19.1 22.4 16.2 9.7*

Promoted 5.0 1.9 8.4 4.5*

Improved financial position

5.7 1.9 0.6 2.5*

Moved house 29.8 25.6 27.9 14.9

Financial security/ problems

couldn't raise $3000 in an emergency

I think I am poor or very poor asked family for financial healp0

10

20

30

40

50

60

70

stressedinto stressout of stress

Financial security/ problems

went without meals pawned or sold something couldn't pay utility bill couldn't heat home0

10

20

30

40

50

60

70

80

90

stressedinto stressout of stress

Stressed t 1 and t 2 =1

Worse finance 3.89* 3.41*

Separated 2.31* 1.08

Lost job 1.14 1.11

Pregnancy 0.92 0.78

Birth 1.55 1.03

Family injury 2.27* 2.31*

Promoted 0.83 0.76

Changed jobs 1.52~ 0.99

Improve finance 1.93~ 2.16~

Separate house 0.83 0.82

Private renter 4.7* 3.92*

Mortgage 1.44 1.16

Single parent 2.1* 2.10*

Couple with kids 1.26 1.39

Couple 0.85 0.86

Generation y 2.75* 3.13*

Generation x 5.45* 5.06*

Low income 2.07* 2.01*

Into stress Stressed t 2 =1

Worse finance 3.79* 3.29*

Separated 2.37* 1.42

Lost job 1.45 1.48

Pregnancy 1.87~ 1.89~

Birth 1.22 1.11

Family injury 1.26 1.22

Promoted 0.30* 0.31*

Changed jobs 1.89* 1.51~

Improve finance 0.67 0.76

Separate house 1.62* 1.73*

Private renter 1.92* 1.69

Mortgage 0.78 0.75

Single parent 1.28 1.28

Couple with kids 0.88 0.79

Couple 1.02 0.99

Generation y 2.21* 2.06*

Generation x 2.88* 2.63*

Low income 2.11* 1.94*

Out of Stress t 2 =1

Worse finance 0.19 0.22

Separated 1.35 0.88

Lost job 1.39 1.38

Pregnancy 1.38 1.14

Birth 0.85 0.72

Family injury 1.21 1.20

Promoted 1.70* 1.60

Changed jobs 1.35 1.00

Improve finance 1.89~ 1.69~

Separate house 1.41 1.40

Private renter 1.35 1.25

Mortgage 0.49* 0.43

Single parent 1.51 1.74*

Couple with kids 1.34 1.46

Couple 1.72* 1.71*

Generation y 1.55 1.98*

Generation x 2.09* 2.43*

Low income 1.83* 1.93*

Some brief conclusions

Some potentially interesting patterns

Still (way) more analysis to do Investigate in more detail transitions Possibly use a pooled data set (pooled across

waves) Introduce some aggregate housing market variables

The end……..