Measuring housing affordability

This brief paper looks at the problems of measuring and conceptualising housing affordability and the uses to which such measures are put. I do not want to repeat the work of King (1994), Bray (1995) and Landt and Bray (1995) who focused largely on the technical problems in the major measure used in Australia, i.e. the 25 or 30 per cent housing cost to income benchmark. This paper takes a different perspective, including a new method of measuring affordability not discussed in the earlier work: the budget standard method. It also raises concerns that we have become trapped by the current measures and need to move on to new ways of thinking if we are to put affordable houses on the ground, rather than debating about how big the problem is and what are its causes.