The impact of location on housing affordability

Abstract

Choice of residential location and the transport options which flow from that choice may have significant impacts on housing affordability when the bundled costs are compared for different locations. This paper reports on research which seeks to redefine the notion of affordability by taking location associated transport costs into account. It seeks to respond to the question does location within a metropolitan area make a difference to housing affordability as a result of differing transport access, A model of family expenditure based on income, the recurrent cost of housing and total family transport costs was developed and tested for a range of locations in Adelaide and Melbourne. The methodology is largely derived from work carried out by the US Centre for Housing Policy, . Using census data as its principal data set this work identified that for families on low incomes total expenditure on housing and transport amounted to an average of, of family expenditure in, US cities. Using a similar methodology for Australian urban locations the analysis demonstrates that a revised threshold of, of total household income to cover both housing and transport costs is a useful measure of affordability and that the availability of public transport and choice of private vehicle types has a significant impact on overall affordability assessment. The analysis has important implications both for consumer choice and for policy dealing with transport infrastructure investment and housing design and density.