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The Residual Income Method: A New Lens On Housing Affordability And Market Behaviour, Michael E. Stone, Terry Burke, Liss Ralston

Community Studies Faculty Publication Series

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. 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 …