Housing stress

The 30% rule and the 30/40 rule

The simplest measure of housing stress is the 30% rule: housing costs above 30% of gross household income. It's easy to calculate, but it also flags comfortable households that choose to spend more on a home.

The 30/40 rule narrows this to households in the bottom 40% of incomes that pay more than 30% on housing. It's the definition behind published figures such as those from the Public Health Information Development Unit (PHIDU). Those households have the least room to absorb rising costs, so it's a closer measure of real pressure.

Banks and research firms often use their own definitions of mortgage stress, so published figures don't always agree.

What the Census shows

The Census asks every household about its rent or mortgage repayments as well as its income, so the ABS can count renters and mortgage holders paying more than 30%. At the 2021 Census:

• 32.2% of renting households paid more than 30% of their income in rent, down from 36.0% in 2016.
• 14.5% of households with a mortgage paid more than 30% of their income in repayments, down from 19.3% in 2016.

Those figures were taken in August 2021, when interest rates were at record lows. Rates rose sharply from 2022, so mortgage pressure since then is likely to be well above what the Census showed.

Reading the figures with care

• They can overstate stress. The Census collects income in ranges, so household income has to be estimated, and the ABS warns this may significantly overstate the share paying more than 30%.
• Not every case is stress. A high-income household choosing a bigger mortgage isn't in hardship, which is why the 30/40 rule exists.
• Some households can't be counted. Where income or housing costs weren't fully stated, the ABS can't tell. In 2021 that applied to about 9% of renters and 12% of mortgage holders.

Using it for location decisions

Housing costs are one of the biggest drains on discretionary spending. Two suburbs with the same household income can behave very differently at the checkout if one has much higher rents or repayments. For retail and services, a high share of stretched households points to price sensitivity and value formats. For property, it's a sign of where affordability is running out.

Housing stress in Censible

Censible has five housing stress figures for 2011, 2016 and 2021, built from ABS TableBuilder's household income by rent and by mortgage repayment tables: renters and mortgage holders paying 30% or more of gross household income, the same two under the 30/40 rule, and the two 30/40 figures together. They're available for any suburb, council, postcode or statistical area and for catchments you draw, compared with Australia, a state or another place.

Across Australia in 2021, 30.5% of renting households and 8.3% of households with a mortgage were in the bottom 40% of incomes (under $1,361 a week) and paid 30% or more of their income on housing, which is 18.8% of renting and mortgaged households together.

Census income is gross and not equivalised, so a large household counts the same as a single person on the same income, unlike the equivalised disposable income behind the usual 30/40 measure. Income and housing costs also come in bands, and a band that straddles 30% is split as if households spread evenly across it, which is one reason Censible's 35.4% of renters at 30% or more sits above the ABS's 32.2%, counted as more than 30% from the amounts each household gave. SA1s and drawn areas are modelled from their SA2's rates, and the projections for 2026 and 2031 hold the 2021 share.

The figures sit beside median weekly rent, median monthly mortgage repayments and median household income, at the top of Explore's Housing section.

Sources: ABS, 2021 Census QuickStats, Australia; ABS, Census Dictionary 2021, Rent affordability indicator.