Indicative Price Benchmarks

This page describes the price benchmarks for rents

General indicative price benchmarks

Using the nationally-accepted definition of affordable housing, indicative price benchmarks for affordable housing prices and rents can be determined. Price points can be a useful indicator for use by local government, planners and industry. Indicative price points are sensitive to income, location differences and interest rates, so they change over time.

The table below provides an indication of house price and rental affordability for a range of gross household incomes. As median household incomes vary across jurisdictions, differing price points are relevant. A summary table by jurisdiction follow. In general, low and moderate-income household incomes vary from $35–60,000 nationally.

Household incomes and indicative affordable house prices & rents (August 2007) (Table 1 in PDF)

Summary of indicative price points by jurisdiction (Table 5 in PDF)

The description of affordable housing and indicative price benchmarks provides a basis for national consistency in defining affordable housing need. However, there may be situations where a jurisdiction believes that additional information in relation to price points is necessary. In particular, jurisdictions may wish to provide price points that account for variations in location and household size. This should be done consistent with national guidelines described below.

Location

Median household incomes are also available by local government area from the ABS Census and should be indexed by CPI. Changes in CPI indexes are available from the ABS website, publication 6401.0 (see www.abs.gov.au/ausstats/abs@.nsf/mf/6401.0).

Household size

Within these broad income bands, indicative price benchmarks for households with the same income may have to be adjusted to reflect the differing housing costs which arise from the size of their household.

Median household income levels by income band (2006) (Table 2 in PDF)

Household income bands adjusted by household size (Sydney 2006) (Table 3 in PDF)

Household income bands adjusted by household size (rest of NSW 2006) (Table 4 in PDF)

Adjustments to median household incomes to account for household sizes, if relevant for jurisdictions, should be done by adopting the following standard in. For example, if a median household income was $40,000 per annum in an area, an equivalent ratio for a single household would be 70 per cent or $28,000. This would effectively reduce the indicative purchase price or range identified as accessible by this household.

Specifications

The following specifications have been agreed by the national housing ministers and the Australian Local Government Association (ALGA) for setting the indicative price points for affordable housing:

Tenure specific—Rental and home purchase are treated separately as the approach for defining affordability is different.

Referenced to median household income—Median household incomes are more easily understood than household quintiles (often used in housing policy) (Roughly, 80–120 per cent of median income equates to 40–60 per cent of household incomes.)

ABS household income—The Australian Bureau of Statistics’ Census is the most accessible household income data. CPI (consumer price index) indexation is used to adjust to current year, as this is most relevant to the growth of lower income households’ incomes. (Using individual wage increases is often less applicable as household income is often affected more by household composition than wage growth.)

Annually adjusted—Household incomes will be adjusted annually in line with CPI (or with the release of new census) and price points adjusted with interest rates to account for changes in household purchasing power.

Loan calculation—Assumes standard bank loan rate as published by Reserve Bank of Australia. Based on 30-year loan term, a five per cent deposit, and excludes stamp duty and establishment costs. Interest rate is the current Reserve Bank of Australia standard bank rate (averaged over year).

Top of page