Determinants of Housing Expenditure in Australia

Abstract

Research on the determinants of housing expenditure in Australia is limited by inadequate treatment of the distinction between three types of households: home renters, homeowners in the process of purchase, and homeowners who own outright. In this paper the authors use published and unpublished cross-sectional data from 1966–1968 and 1975–1976 to demonstrate the importance of the various determinants of housing across the three household types and, for the first time, to compare the characteristics at two points in time almost a decade apart. It was found that the influence of sociodemographic variables such as age, employment status, and household size was statistically significant, and that their influence varied considerably across the three household types. Detailed analysis has shown that income elasticity estimates of demand for housing were all found to be invariant over time, to be substantially less than 1.0 and to differ markedly between tenure type, with home renters having the lowest values (0.46–0.49), outright homeowners the highest (0.69), and mortgaged homeowners in between (0.53–0.59).