Examining building age, rental housing and price filtering for affordability in Melbourne, Australia

Abstract

Governments worldwide have responded to housing affordability challenges with supply-side solutions. Proponents of these approaches often draw on the notion of ‘filtering effects’ to argue that new supply naturally trickles down to lower-income households over time, improving affordability. This study examines the characteristics of Naturally Occurring Affordable Housing in Melbourne, Australia, analysing how dwelling age impacts rental cost. We specify a non-linear relationship between building age and rents through hedonic rent modelling, reflecting a premium for historic properties in inner Melbourne. We also conduct a cluster analysis of rental listings and measure affordability by cluster. Our results problematise the notion of filtering, finding that most contemporary affordable housing was initially built in the 1960s and 1970s as social housing or targeted at low-income households. We argue that filtering in this instance is not natural but is instead a reflection of historic government expenditure and past construction choices, or ‘filter up’.

Why Do Consumers Buy Green Smart Buildings without Engaging in Energy-Saving Behaviors in the Workplace? The Perspective of Materialistic Value

“…For example, the construction industry uses 40% of the world's available energy, 16% of the world's available water, and 40% of the world's available raw materials [4]. However, to date, there has been limited research exploring how to facilitate consumer purchases of green smart buildings, as consumers still prefer to purchase low-cost older buildings that lack energy-efficient designs [5]. In addition, the number of green smart buildings in Taiwan will increase by 400% from 2013 to 2022, and it is expected to continue to grow in the future [6].…”

Filtering as a source of low-income housing in Australia: conceptualisation and testing

“…Social interactions in low-rent areas, including areas with public housing and lower income private rental, may then induce downward filtering, and vice-versa in higher income areas. A recent Melbourne study similarly finds evidence of once-affordable rental properties filtering up, rather than down (Palm, Raynor and Warren-Myers 2020).…”

“…Occupancy characteristics and the age of housing: theMelbourne analysis, 2006-16 This outcome differs from some of the US literature (such asRosenthal 2008), but is consistent with other research undertaken in Australia and the US. This research demonstrates that the direction of filtering often is conditioned by neighbourhood characteristics, resulting in increased polarisation(Somerville and Holmes 2001;Yates and Wood 2005;Skaburski 2006;Kim, Chung et al 2016;Palm, Raynor and Warren-Myers 2020).…”

“…Housing supply policies aim to alleviate housing shortages and thus pressure on property prices and the affordability of housing. One dynamic of market-based supply of housing affordable to low-income households (hereafter low-income housing) that has received attention in Australia, and elsewhere, is 'filtering' (Daley, Coates and Wiltshire 2018;Palm, Raynor and Warren-Myers 2020).…”

Association between Hometown Landholdings and Housing Quality of Rural Migrants in Urban Areas: Evidence from China

“…The second measurement is affordability of housing, which is often thought to be intrinsically linked to the usefulness of housing. Affordability of housing could be calculated by two categories of index, of which one is absolute index (housing expenditure) (e.g., [57,58]) and another is relativity index (e.g., the ratio of housing expenditure to income) (e.g., [59]). Since low-income households are more inclined to rent houses in the inflows, the rent-to-income ratio is often used as a measure of the housing affordability for this group at their destination [60].…”