The cost of living pressures are pretty universal, but when it comes to housing specifically, research from the UNSW Canberra suggests that it’s particularly hard for adults under 25, whose rate of housing stress is three times greater than those over 65.

The researchers created a predictive model for housing stress based on life events and resources, using HILDA survey data from 2005-2018 on over 17,000 Australians. Age and employment status are strong predictors of housing stress, with those under 25 being 214% more likely to struggle than those over 65.

Unemployment and lack of a university degree also increase the risk. Housing stress is defined as spending over 30% of before-tax income on housing costs and being in the bottom 40% of the income distribution, potentially leaving insufficient funds for necessities.

Life stages

“Different critical life events occur at different ages, which can have an impact on household income and push people into housing stress,” the researchers explain. “Using a risk-pathway model, we can detect based on certain factors which demographics might be likely to enter into housing stress following certain life events but are not yet eligible for support, and if they’re likely to recover from it without intervention.”

The study revealed that renters have a 125% higher chance of experiencing housing stress compared to owners and are less likely to overcome it. In the initial year of entering housing stress, renters have a 39.4% chance of recovering, while homeowners have a 48.9% chance of recovering.

“Renting is much more insecure than homeownership. It’s a particularly insecure tenure in Australia, more so than in many other countries, because of our limited protections for renters, including allowing no grounds terminations and unlimited rent increases,” the researchers continue.

Housing stress

Individuals aged 18-44, unemployed individuals, and those living in rental housing are the most susceptible to housing stress. Conversely, those aged 65 and above who own their homes, have a postgraduate degree, and are employed full-time are the most resistant to housing stress.

“Life events that impact housing stress can occur more rapidly for younger people who have not had a chance to build up the safety net to fall back on, such as savings from their career or support systems,” the authors continue. “But the impact of housing stress can be extreme, no matter the age.”

On the positive side, while younger people were more likely to experience housing stress, they were also more likely to be able to come out the other side. The study found that older adults were much less likely to exit it once they encounter it.

“For older people, if they use up all their resources, they may not be able to easily pivot in the job market or have certain obligations which make it less likely they will recover if they fall into housing stress following a critical life event,” the authors explain.

Birth or adoption of a child, separation, marriage, caring for a family member, and job loss or redundancy are significant life events that heighten the risk of experiencing housing stress. The researchers suggest that comprehending the role of these events in causing housing stress can facilitate the development of proactive policy interventions.

“A significant shortcoming of housing assistance is that it’s provided only once someone is in urgent need,” the authors conclude. “Rather than stepping in once someone is already struggling, we can use modeling to shape early intervention policies, which may reduce the need for long-term assistance.”