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The Residual Income Method: A New Lens On Housing Affordability And Market Behaviour, Michael E. Stone, Terry Burke, Liss Ralston
The Residual Income Method: A New Lens On Housing Affordability And Market Behaviour, Michael E. Stone, Terry Burke, Liss Ralston
Michael E. Stone
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 …
The Residual Income Approach To Housing Affordability: The Theory And The Practice, Michael E. Stone, Terry Burke, Liss Ralston
The Residual Income Approach To Housing Affordability: The Theory And The Practice, Michael E. Stone, Terry Burke, Liss Ralston
Michael E. Stone
The residual income approach to housing affordability is one that looks at what different household types can afford to spend on housing after taking into account the other necessary expenditures of living. It is an alternative to benchmark measures of affordability as used in social housing rent setting in Australia (the 25% rule) or assessing the overall affordability in the wider housing market (the 30/40 rule) as commonly used by a range of housing affordability researchers in Australia.
This Positioning Paper does two things. Part A provides an overview, using existing literature, of the various semantic, substantive and definitional issues …