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What is the difference between Housing stress, Mortgage stress and rental stress?

Glenn explains

Question:

I do understand that the measure of housing stress is – low income households (bottom 40%) paying over 30% of income on housing costs – mortgage and rental.

So in 2016, Brimbank LGA had:

  • Housing Stress - 13.6%
  • Mortgage Stress - 17.5%
  • Rental Stress - 31.6%

Are you able to tell me how the Housing Stress figure is worked out? Is it combing the Mortgage Stress and Rental Stress figures, and then doing something clever with the data to get an overall Housing Stress figure?

Answer

It’s not that clever, but it is doing something with the figures.

Mortgage stress means 17.5% of households with a mortgage are low income paying 30% or more on their mortgage.

Rental stress means 31.6% of households who are renting are low income paying 30% or more on rent.

Housing stress means 13.6% OF ALL HOUSEHOLDS have a mortgage or rent and are low income paying 30% or more on housing costs.

There is a component of all households who fully own, which aren’t included in the first two but are included in the third. Because they can’t be in housing stress, as full home owners, they’re only in the denominator, and this reduces the percentage of overall housing stress compared to the other two measures.