March 23, 2016
Comparative Research Examines How International Housing Indicators Could be Applied to Canada
CMHC examined international housing indicators used in Australia, England, the European Union, France, New Zealand, Scotland and the United States, and estimated two indicators using existing Canadian data.
One of the indicators selected for estimation was the Australian 30/40 Rule for housing affordability. The Australian 30/40 Rule indicates that households encountering affordability problems are spending 30% or more of their incomes on shelter costs, while earning in the bottom 40% of the income range. By contrast, the Canadian affordability standard stipulates that households paying 30% or more of their before-tax household incomes towards shelter costs are below the standard.
The 30/40 Rule places the focus on low-income households instead of on all households below the affordability standard. Its emphasis on housing affordability for low-income households may be of interest to policy-makers and program administrators, although in omitting households in higher income brackets (the top three quintiles of the household income distribution) we found it excludes some 18% of the households below our affordability standard.
Figure 1: Not all households below the affordability standard are below the 30/40 Rule
Households below the affordability standard and either below or above the 30/40 Rules
|Households below affordability stands and the 30/40 Rule
||Households below affordability standard but above the 30/40 Rule
For more information on this research:
Read a summary of the International Housing Indicators report
Download the full International Housing Indicators report (PDF)