australian institute of family studies · i i i \1 i , i i , i i -, i i' 'i i , i i'...
TRANSCRIPT
HOME OWNERSHIP FOR LOW INCOME FAMILIES
SECOND EVALUATION REPORT ON THE VICTORIAN MINISTRY OF HOUSING AND CONSTRUCTION
CAPITAL INDEXED LOAN (CAPIL) SCHEME
AUSTRALIAN INSTITUTE OF FAMILY STUDIES
JUNE 1988
300 Queen Street Melbourne, 3000 Victoria
Australia
I I I \1 I I , I , I I -, I I' 'I I , I I' I-
LIST OF CONTRIBUTORS
Within the Australian Institute of Family Studies, the following members of
the staff were involved in this project:
Andrew Burbidge (Research Fellow)
Don Edgar (Director)
Frank Maas(Senior Research Fellow)
Peter McDonald (Deputy Director, Research)
Maryann Wulff(Fellow)
Capil Project Team:
Paul Napper (Project Officer)
Terese Barton (Data Analyst)
Anthony Monteleone (Fieldwork Surpervisor)
Coding
Judith Foster
Gillian Hamerston
Diane Miller
Data Analysis Support
Terese Barton
Rosangela Merlo
Renae Low (Chapters 5,6, and 7)
Graphics
Rosangela Merlo
Word Processing
Allyson Trainor
The Computer Services Section provided support and assistance.
I,
I I I I ,-~
1I , " Ir I I '1\
I I -I' t I I I I
~
ACKNOWLEDGEMENTS
The steering Committee include the following members from the Victorian
Ministry of Housing :
Robert Carter
Tony Cahir
Stasia Zika
and as an external member:
Judith Yates from the University of Sydney
Subsequent to the compilation of this report, the Ministry of Housing has
undergone a change of name to the Ministry of Housing and Construction.
I \1:
'I' ~
·1' I1 1\ I
" ,t t, a ,I, I I I' I'
TABLE OF CONTENTS
INTRODUCTION and SUMMARY OF OUTCOMES - P.Napper, F. Maas and T. Barton
Introduction
The Capi 1 Loan .................................................... .
Capi1 Loan Sample (Second Evaluation Report) •••••••••••••••••••••••
Exits (families who sold their Capi1 home and 'exited' from the
scheme) •••••••••••••••••••••••••••••••••••••••••.••.••.••••••••••
Control Group Sample (Second Evaluation Report) ••••••••••••••••••••
Issues for the Second Report ...................................... .
HOME OWNERSHIP FOR LOW INCOME FAMILIES •••••••••••••••••••••••••.•••••••
Summary of Outcomes ••••.....•••....••••••••••••••••.•••••..........
Change in Family Composition, Employment and Income ••••••••••••••••
Housing Repayments and Costs ...................................... .
Coping Financially as a Capi1 Pilot Family •••••••••••••••••••••••••
Determinants of Housing Satisfaction Among Capi1 Families ••••••••••
Repairs, Renovations and Home Improvements among Capi1 Respondents •
Respondents' Perceptions of the Capi1 Loan Scheme ••••••••••••••••••
Assessments of Advantages and Disadvantages of Home OWnership ••••••
. FAMILY STATUS, EMPLOYMENT AND INCOMES - A. Burbidge, F. Maas and
P. McDonald ..•••••.•• ~ •••••.....••••..••••.•••..•••.••..••.•....•....
Introduction .......................... ~ ........................... .
Family Status at the Second Wave
Changes in Family Status Between Waves 1 and 2 ••••••..••..•.•••••••
Other Changes in Family Composition ••••••••••••••••••••••••••••••••
Employment .......................•.....•.......•...................
Employment Preferences ............................................ .
Incomes
Changes in 'Real' Income ........................................... .
Income Changes in Relation to Average Weekly Earnings (AWE) ••••••••
i
1
1
1
2
3
4
5
7
7
7
8
9
11
12
13
13
15
15
15
16
19
20
24
29
29
30
I,
"
'I I I I I' III I, 11
I t I, ,I I' I 'I I I' a
Income Changes According to Birthplace •••••••••••••••••••••••••••••
Income Changes and Family Type •...••••.•••..••..•....•••.•..•......
Income Change, Employment Status and Family Type •••••••••• ~ ••••••••
Summary •..•.••••..........•....••••...•••.•••.....•.......•........
EXAMINING HOUSING REPAYMENTS & COSTS UNDER THE CAPIL SCHEME - T. Barton
Introduction ...................................................... .
Mortgage Repayments •••••••••••••••••••••••••••••••••••••••••••••.••
Average Weekly Family Income Levels •••••••••••••••••••••••••••••••
Changes in Family Incomes and Impact on Mortgage Repayments ••••••••
Comparison of Housing Costs: Capil and Renter Groups ••••••••••••.••
Disposable Income After Housing Costs ••••••••••••••••••••••••••••••
Surnrnary and Conclusions •••••••••••••••••••••••••••••••••••••••••.•.
COPING FINANCIALLY AS A CAPIL FAMILY - F. Maas ••••••••••••••••••••••.••
Experience of Financial Difficulties
Financial Difficulties and Change in Income ....................... .
Families with Arrears Agreements •••••••••••••••••••••••••••••••••••
coping With Mortgage Repayments
Families Financial Situation at Time of Wave 2 Interview ••••••••.••
Financial Situation According to Place of Birth ••••••••••••••••••••
Better Or Worse Off Than A Year Ago? ............................... .
Perceived change in Financial Position and Changed •••••••••••••••••
Perceived Change in Financial Position and Change in Income ••••••••
Perceived Change in Financial Position and Proportion of Income
Devoted to Mortgage .••.•.•..•••••..••.•.•••.......••.••.••.•.....
Better Or Worse Off In The Year To Come? •••••••••••••••••••••••••••
Summary •.••••.•••••.....••••....•••....••.•••..••.••...............
DETERMINANTS OF HOUSING SATISFACTION AMONG CAPIL RESPONDENTS - M. Wulff
Introduction: ..................................................... .
Housing Satisfaction at Wave 2: Comparing the Capil Loan Group with
it
31
33
37
38
42
42
42
47
53
SS
60
64
67
68
72
74
75
76
79
80
83
84
85
86
87
89
89
I I 'I' I1 'I I I' \- '
I' I1 I: I, t ,I I, ,I' I 'I , I' I
Private and Public Renters ....................................... 92
The Impact of Ethnicity on Housing Satisfaction •••••••••••••••••••• 94
Average Declines in Satisfaction Levels, Wave 1 to Wave 2 •••••••••• 100
Determinants of Housing Satisfaction ••••••••••••••••••••••••••••••• 102
Explaining Housing Satisfaction •••••••••••••••••••••••••••••••••••• 103
Explaining Satisfaction with Housing !=osts ••••••••••••••••••••••••• 105
Summary and Conclusions ............................................ 106
REPAIRS, RENOVATIONS & HOME IMPROVEMENTS AMONG CAPIL FAMILIES- M. Wulff 111
Home Repairers and Improvers ••••••••••••••••••••••••••••••••••••••• 112
Types of Repairs and Improvements •••••••••••••••••••••••••••••••••• 115
Level of Expenditure on Repairs •••••••••••••••••••••••••••••••••••• 117
Sources of Finance for Repairs and Improvements •••••••••••••••••••• 124
Looking Back: Home Repairers and Improvers Since Entry into Capil
Home ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 134
Summary and Conclusions .......................................... ~. 139
RESPONDENTS' PERCEPTIONS OF THE CAPIL LOAN SCHEME - M. Wulff ••••••••••• 140
Implications of Lack of Understanding of the Capil Scheme •••••••••• 142
What the capii families say about the scheme ••••••••••••••••••••••• 145
Do families see Capil as a worthwhile investment? •••••••••••••••••• 151
Mortgage Repayments and Perceiving Capil as Worthwhile Investment •• 152
Location and Capil as a Worthwhile Investment •••••••••••••••••••••• 153
Summary and Conclusions 157
CAPIL HOME OWNERSHIP - P. Napper ••••••••••••••••••••••••••••••••••••••• 158
General Satisfaction With Capil Itself ••••••••••••••••••••••••••••• 158
Capil and disadvantages of home ownership •••••••••••••••••••••••••• 163
CONCLUDING COMMENTS - F. Maas •••••••••••••••••••••••••••••••••••••••••• 167
Hi
I I I I I I I t I I I I J I I I I I I I
LIST OF TABLES
Table 1.1: Sample loss (Loan Group) Wave 1 to Wave 2*
Table 1.2: Sample loss (Control group) Wave 1 to Wave 2*
Table 2.1: Family type of capil families, according to place of birth
(per cent)
Table 2.2: Family composition of Capil and renter families at Wave 2,
showing changes from Wave 1
Table 2.3: Employment of Capil and renter families at Wave 1 and Wave 2
(per cent)
Table 2.4: Employment status of Capil families according to family type
and place of birth.
Table 2.5: Changes in employment and family status of capil group, Wave
1 to Wave 2, (frequency distributions)
Table 2.6: Current job status and preferred job status of Capil group,
percentage distributions
Table 2.7: Employment status by age of youngest child: Capil group, Wave
2
Table 2.8: Stated reasons for not working and not seeking work, Capil
group, Wave 2
Table 2.9: Most important reason for not working and not seeking work,
Capil group, Wave 2
Table 2.10: Net weekly family income, Waves 1 and 2, Capil and renter
groups (per cent)
Table 2.11: Family income as a proportion of AWE for Capil and renter
families at Waves 1 and 2 (per cent)
Table 2.12: Net weekly family income of Capil families, Waves 1 and 2,
according to place of birth (per cent)
Table 2.13: Change in income Wave 1 to Wave 2 for capil families,
according to place of birth (per cent)
Table 2.14: Net weekly family income of Capil and renter families, Waves
1 and 2, according to family type (per cent)
Table 2.15: Change in income Wave 1 to Wave 2 for capil and renter
iv
1' I I' t t ,I,
I I ·1,
I I t I I I I 'I ·1 I I
families, according to family type (per cent)
Table 2.16: Change in income Wave 1 to Wave 2 for Capil families,
according to principal source of income at Wave 2 and family
type (per cent)
Table 2.17: Net weekly income of Capil families at Wave 2, according to
employment status and family type (per cent)
Table 3.1: Mortgage as percentage of family income; Capil group Wave 2
Table 3.2: Family income by percentage of income spent on mortgage
repayments
Table 3.3: Change in real family income since Wave 1, according to
percentage of income spent on mortgage repayments
Table 3.4: Weekly Housing Costs: Capil and Renters by tenancy.
Table 3.5: Weekly housing costs as a percentage of income at Wave
Capil and Renters
Table 3.6: Rent as a proportion of family income, renter group by
tenancy and family type
2:
Table 3.7: Disposable income after housing costs, Wave 2: Capil and
Renter groups by family type
Table 3.8: Disposable income after housing costs, Wave 2: Capil and
Renter groups, by tenancy
Table 3.9: Disposable income after housing costs, according to family
type: Capil and Renters
Table 4.1: Financial difficulties experienced since Wave 1 by loan and
renter groups, per cent of each group responding
'frequently' or 'occasionally'
Table 4.2: Financial difficulties experienced by Capilgroup families
since Wave 1 according to place of birth, per cent who have
Table 4.3: Financial difficulties experienced since Wave 1 interview by
change in real family income - Wave 1 to Wave 2 for Capil
group
Table 4.4: Families with MOH arrears agreements, according to family
type and level of change in income
v
I I I' I I ,I
I I, I I' I 'I ,I,
I: I I I' I I I
Table 4.5: Difficulty currently experienced in meeting mortgage
payments, according to family type
Table 4.6: Difficulty of currently meeting mortgage payments, according
to percentage of income spent on repayments
Table 4.7: Financial difficulties experienced by loan group families,
according to financial situation at Wave 2, per cent of each
group who responded 'frequently' or 'occasionally'
Table 4.8: Financial situation of Capil and renter group families at
Wave 1 and Wave 2, according to family type
Table 4.9: Financial situation of Capil group families at Waves 1 and 2,
according to place of. birth
Table 4.10: Change in financial position over previous year, loan and
renter groups according to family type
Table 4.11: Perceived change in financial position over previous year,
renter group according to nature of tenancy and family type
Table 4.12: Change in financial position over previous year, Capil group
according to place of birth
Table 4.13: Perceived change in financial position over previous year,
Capil group according to change in employment and family
type
Table 4.14: Perceived change in financial position over previous year,
Capil and renter groups according to change in income
Table 4.15: Change in financial.position over previous year, Capil group
families according to proportion of income committed to
mortgage payments
Table 4.16: Predicted change in financial position over coming year,
Capil and renter groups according to family type
Table 5.1: Satisfaction with housing items by tenure status, , satisfied
or very satisfied
Table 6.1: Level of expenditure on repairs and home improvements by
birthplace of Wave 2 repairers
Table 6.2: Source of finance for repairs and improvements by family
vi
I' I :1 I 11
I I I, I I I I I, I: I I I I I I
status of Wave 2 repairers.
Table 6.3: Source of finance for repairs and improvements by birthplace
of Wave 2 repairers
Table 6.4: Source of finance for repairs and improvements by net weekly
family income of repairers
Table 6.5: Typology of repairers by percentage of income spent on
mortgage repayments
Table 7.1: Perceptions of Capil as worthwhile investment by proportion
of family income spent on mortgage repayments
Table 7.2: Perception of Capil as worthwhile investment by ability to
meet mortgage payments
Table 7.3: Perception of Capil as a worthwhile investment by original
purchase price
Table 8.1: Satisfaction with Capil by family status
Table 8.2: Satisfaction with Capil by ethnicity
Table 8.3: Satisfaction with Capil by income change
Table 8.4: Satisfaction with Capil by Income
Table 8.5: Satisfaction with Capil by workforce participation
Table 8.6: Satisfaction with Capil by level of education
Table 8.7: Satisfaction with Capil by financial situation
Table 8.8: Major advantages of home ownership by family status
Table 8.9: Major advantages of home ownership by ethnicity
Table 8.10: Major disadvantages of home ownership by family status
Table 8.11: Major disadvantages of home ownership by ethnicity
vii
I I· I LIST OF MODELS
Model 1: Regression Model Explaining Satisfaction with Housing
I Model 2: Regression Model Explaining Satisfaction with Housing Costs
I I I I I,
I I :'J
I "
I· I I· I I viii
I I
I I I I I I I I I I I I I I I I I I I I
LIST OF FIGURES
Figure 2.1 Composition of Loan and Renter Families by Family Status: Wave
Two
Figure
2.2 Composition of Loan and Renter Families by Age of Youngest Child
3.1
3.2
3.3
3.4
3.5
3.6
3.7
Mortgage as a Percentage of Income by Family St~tus: Loan Group
Mortgage as a Percentage of Income by Ethnicity: Loan Group
Average Weekly Income Levels of Selected Capil Groups
Mortgage as a Proportion of Income: Who is Paying 15 per cent or
less?
Mortgage as a Proportion of Income: Who is Making the High
Repayments (30% plus)?
Housing/Rental Costs as a Percentage of Income by Tenancy: Loan
and Control Groups
After Housing Disposable Income by Ethnicity: Wave Two, Loan
Group
Figure 5.1 Overall Satisfaction with Dwelling, Location and Costs: Capil
Loan Group and Public and Private Renters
5.2 Comparison of Capil Loan Group and Public and Private Renters on
Elements of Residential Satisfaction by Family Status
5.3 Changing Levels of Satisfaction by Ethnicity: Dwelling
5.4 Changing Levels of Satisfaction by Ethnicity: Housing Costs
(Mortgage, Rates, Fuel Bills)
5.5 Changing Levels of Satisfaction by Ethnicity: Location
5.6 Decline in Overall Residential Satisfaction by Selected
Characteristics of capil Loan Group
Figure 6.1 Characteristics of Repairers and Home Improvers: % Who Undertook
Repairs and Home Improvements Between Wave 1 & Wave 2
ix
I I I ,I
I I I I I I I I I I I I I I I I
6.2
6.3
6.4
6.5
Characteristics of Dwellings Repairerd and Improved:
and Improved Between Wave 1 and Wave 2
Types of Repairs and Improvements
Level of Expenditure on Repairs and Home Improvements
Level of Expenditure on Repairs and Home Improvements
Type of Wave Two Repairers
, Repaired
by Family
6.6 Level of Expenditure on Repairs and Home Improvements by Net
Weekly Family Income of Wave Two Repairers
6.7 Level of Expenditure on Repairs and Home Improvements by Age of
Dwelling of Wave Two Repairers
6.8 Level of Expenditure on Repairs and Home Improvements by
Location of Wave Two Repairers
6.9 Sources of Finance for Repairs and Home Improvements: Wave Two
Repairers
6.10 Impact of Financial Source on Difficulty in Raising Repair Money
& Satisfaction With Repair Costs
6.11 Use of Family Funds and Savings to Meet Repair Costs by Level of
Expenditure on Repairs
6.12 Responsibility for Carrying out Repairs & Improvements
6.13 Responsibility for Carrying Out Repairs & Improvements by Family
Status of Wave Two Repairers
6.14 Responsibility for Carrying Out Repairs & Improvements by
Birthplace of Wave Two Repairers
6.15 Use of Professional Help by Nature of Repair: , Who Used
Professional Help
6.16 , of Owners who Carried Out Repairs Themselves or with Friends
by Family Income of Wave Two Repairers
6.17 Typology of Capil Home Repairers and Improvers: Wave One and
Wave Two
Figure 7.1 Capil Families Understanding of Loan Balance
7.2 Capil Families Understanding of Loan Balance by Ethnicity
x
I I I I I I I I I I I I I I, I I I I I I
7.3 Who Has Difficulty Understanding capil Loan Balance? Selected
Characteristics
7.4 Satisfaction With Housing Costs by Understanding of the Loan
Balance
7.5 Dissatisfaction with Capil Loan Scheme by Understanding of the
Loan Balance
7.6 Whether Homeownership Under Capil is Worthwhile by Understanding
of the Loan Balance
7.7 Open-ended Responses to "How well do you think this loan scheme
is working for you?"
7.8 Percentage Who Think Capil is a Worthwhile Investment by Region
7.9 'Perceive Capil as Worthwhile Investment by Purchase Price and
Location
xi
I I I I I I I I I I I I I I I I I I I I
CHAPTER 1
INTRODUCTION and SUMMARY OF OUTCOMES - P.Napper, F. Maas and T. Barton
Introduction
In November 1984 the Victorian Ministry of Housing initiated the Capital
Indexed Loans Scheme. The Capil scheme tests the effectiveness of extending
home ownership opportunities to very low income families through the use of
a capital indexed loan instrument. The Australian Institute of Family
Studies was contracted for the task of evaluating the Capil scheme and a
longitudinal study commenced in April 1985. In order to assess the
viability of the Capil instrument, and the affordability of home ownership
for low income families, the Victorian Ministry of Housing commenced a
program of lending to families with incomes under $200 per week at November
1984.
The Capil Loan
The Capil loan seeks to change the predominant form of home lending in
Australia - the credit foncier style lending arrangement. Instead of
repayments over the course of the loan staying at the same amount in dollar
terms (leaving aside fluctuations in nominal interest rates), a Capil loan
seeks to maintain repayments in real (inflation-adjusted) terms. As
repayments are based on income, initial repayments on a loan can be much
lower than for credit foncier loans. Capil assumes that repayments are
adjusted periodically by the borrower to 25% of current income. Repayments
are indexed to the CPI over the course of the loan by the Ministry of
Housing and Construction.
The Capil loan changes the experience of home ownership in two fundamental
ways:
I I I I I I I I I I I I I I I I I I I I
- 2 -
1. Households who are normally excluded (in a semi-deregulated
financial market) are provided with the opportunity for home
ownership, but must adjust their expectations to account for housing
costs rising with inflation, like other consumer commodities.
2. Under a Capil loan, with flexible loan terms the emphasis is on
increasing real equity in a house, rather than the expectation of
outright ownership over a time period set at the beginning of the
loan.
The Australian Institute of Family Studies presented the First Evaluation
Report to the Ministry of Housing in June 1987. It was based on interviews
with 481 families who had moved into a ca~il purchased or built home. A
control group of 275 families, renting both in the private and public rental
sectors were also interviewed. Ministry of Housing tenants accounted for
63% of this group while 37% were renting in the private rental market.
Capil Loan Sample (Second Evaluation Report)
Both the Capil and renter families were interviewed for a second time in
October-November 1987.
Interviews were conducted with 425 families in the Loan group and are
referred to in this report as 'Wave 2' interviews. The Institute was unable
to conduct interviews with 56 families from the Wave 1 Capil sample for
several reasons:
a. 26 families had sold the Capil home and were therefore ineligible for interview.
b. 4 Capil families refused to be interviewed.
c. 7 families had rented out. their Capil property and were unavailable for interview.
d. 19 families were not able to be contacted.
Table 1.1 shows number of characteristics of the Capil sample at Wave 1,
Wave 2 and the Capil sample loss.
I I I I I I I I I I I I I I I I I I I I
- 3 -
Table 1.1: Sample loss (Loan Group) Wave 1 to Wave 2*
Wave 1 Loan sample Wave 2 sample 10ss** sample***
Characteristics n=(481) N=(56) n=(406)
Mean age (median) 35.4 34.5 35.5 , Males 33.5 32.1 34.0 , Females 66.5 67.9 66.0 , Post-Sec/Tertiary educated 18.7 28.6 . 17.5 , Australians 52.9 52.7 52.2 , Europeans 30.6 38.2 30.0 , Asians 16.5 9.1 17.7 , Couple families 47.8 37.5 49.5 , Sole parent families 52.2 62.5 50.5 , Youngest child less than 5 years 4.1.0 28.6 43.4 Median family income $204.00 $203.00 $204.00 , Families mainly on Govt. benefits 76.9 76.0 77 .4 , Families able to save 20.6 21.4 20.2 , Residence non-metropolitan 42.4 35.2 43.6
* These figures are derived from data obtained at Wave 1 ** Sample loss specifically refers to the 56 families not interviewed at
Wave 2 *** The figure 406 is a result of sample loss (56 cases) plus a further 19
families interviewed at Wave 2, but dropped from the Wave 2 sample due to insufficient MoHC data.
Despite the loss of the 75 families, the Wave 2 sample of 406 families is
remarkably similar to the sample at Wave 1. Where differences do occur they
are very small. Proportionately, by Wave 2, the sample contained slightly
more couples and slightly fewer sole-parent families; slightly less families
from the metropolitan region and - within the three ethnic groups - more
European families were lost than Australian and Asian. Median family income
remained the same.
Exits (families who sold their Capil home and 'exited' from the scheme)
As previously indicated, 26 families had sold their Capil purchased home by
the time of the second interview. Limited analysis of data obtained at Wave
1 reveals:
a. 38.5 per cent have post secondary education compared with 18 per cent the Wave 1 sample
)
I I I I I I I I I I I I I I I I I I I I
- 4 -
b. 50 per cent were Australian families, 42 per cent were European born families and only 7.7 per cent Asian born families (7.7%)
c. 65 per cent were sole-parents compared with 52 per cent of the Wave 1 sample
d. On the whole, a lower median family income ($190.00) than the Wave 1 sample ($204)
e. 27 per cent were country residents compared with 42 percent of the Wave 1 sample
It is intend~d to follow up these families to obtain data on their reasons
for selling; their financial situation at the time of house sale; details of
the sale itself etc. To date, however, the Institute has experienced
difficulty in contacting these families.
control Group Sample (Second Evaluation Report)
The original Control group sample of 275 families has undergone considerable
reduction. In all, a total of 167 families were re-interviewed, consisting
of 71.3 per cent Ministry of Housing tenants and 28.7 per cent private
renters, resulting in a sample loss of 108 families. Of the 108 families
lost from the original Control sample:
a. 32 families had moved into homeownership through capil
b. 8 families had moved into homeownership through other loans
c. 19 families refused to be interviewed
d. 49 families were not able to be contacted
Using data obtained from Wave 1 interviews, Table 1.2 compares a number of
characteristics of the Control Wave 1 sample, Wave 2 sample and sample loss.
I I I I I I I I I I I I I I I I I I I I
- 5 -
Table 1.2: Sample loss (Control group) Wave 1 to Wave 2*
Characteristics
Mean age (median) , Males , Females , post-see/Tertiary educated , Australians , Europeans , Asians , Couple families , Sole parent families , Youngest child less than 5 years Median family income , Families mainly on Govt. benefits , Families able to save , MOH tenants , Private tenants , Said 'saving to buy a home' , Residence non-metropolitan
Wave 1 sample n=(275)
37.3 37.1 62.9 15.6 64.4 28.0 7.6
48.7 51.3 2.9.4
$215.00 70.5 11.7 63.3 36.7 32.0 44.7
Control sample Wave 2 loss sample
N=(108) n=(167)
36.4 42.6 57.4 15.7 58.3 30.6 11.1 52.8 47.2 37.0
$217.50 63.9 15.0 50.7 49.1 42.6 32.4
37.8 33.5 66.5 15.6 68.3 26.3 5.4
46.1 53.9 23.4
$213.00 74.8 9.6
71.3 28.7 25.1 50.9
* These figures are derived from data obtained at Wave 1
Proportionately, the Wave 2 Control sample retained more Australian families
and less European and Asian born families; slightly more sole-parent than
couple families and fewer families with children school age and over.
compared to Wave 1, the Wave 2 sample also had a higher proportion of
families reliant mainly on government benefits for their source of income
and a higher proportion of Ministry of Housing tenants than private renters.
Issues for the Second Report
The initial wave of the Capil evaluation provided a basic profile of the
loan and control groups with some data on the initial impacts of home
ownership. The findings for Wave 1 are detailed in the First Evaluation
Report of the Victorian Ministry of Housing's Capital Indexed Loan Pilot
Scheme, July, 1987.
I I I I I I I I I I I I I I I I I I I I
- 6 -
The Wave 2 interviews were conducted at a stage where most Capil families
had occupied their homes for 2 to 2.5 years. Consequently it was a stage of
consolidation, of coming to terms with the experience of being an
owner/occupier and for many, a time of considerable input regarding repairs
and improvements. As such, Capil families have perhaps moved beyond a
honeymoon phase and into a consolidation period.
This second stage evaluation focuses on the following issues:
change in family circumstances. Changes in family composition,
employment characteristics, income and cost patterns are all
analysed. An important assumption ~nderlying the Capil scheme is
that low income families, in a large proportion of cases, will
experience gains in income over a medium to long term period and
Capil will allow them to enter home ownership and then to
consolidate and accumulate equity;
management of the costs of home ownership. The Capil proposals are
evaluated as to the impact on families of coping with a mortgage as
well as the extra costs of home ownership, costs such as rates,
insurance and repairs and maintenance.
level of satisfaction with home ownership and the Capil instrument.
I I I I I I I I I I I I I I I I I I I I
- 7 -
HOME OWNERSHIP FOR LOW INCOME FAMILIES
Summary of Outcomes
Change in Family Composition, Employment and Income
Change in family composition
Approximately 10 per cent of families in the Capil group changed
their family status in the 18-24 month period between Waves 1 and 2.
About 15 per cent of sole parents had partnered and 3.5 per cent of
couples had split up. In the renter group, only 7 per cent of one
parent families had become couple families by Wave 2 and 10 per cent
of couple families had split up.
Changes in family composition (such as birth of a child) increased
household size in almost 20 per cent of Capil families. Amongst the
renter group, changes in family composition affected about 10 per
cent of families.
Change in employment
The period between Wave 1 and Wave 2 was notable for a marked
increase in employment, particularly among Capil group families.
Both couples and sole parent Capil families show large flows into
and out of employment, with an overall net increase in employment
activity. Renter group families also experienced a net increase in
employment, although to a lesser extent than Capil families.
Respondents' employment preferences indicate that the majority of
Capil families desire to further increase their employment and
income levels. Sole parents indicated a preference for incremental
increases in work activity. One third of those working part-time
would have preferred to work full-time, while one third of those not
working would have preferred to work part-time. Amongst couples,
I I I I I I I I I I I I I I I I I I I I
- 8 -
male respondents expressed a strong preference for full-time work
while female respondents indicated low preferences for either
increasing their workforce involvement or for full-time work.
Families not working or not seeking work identified several barriers
to employment. Female respondents, in particular, identified the
needs of their children as an important barrier to employment.
Health problems were frequently identified by men in couples, while
availability of child care was also seen as a problem.
Change in income
Examination of the incomes of families shows that many are still
very much part of a low income group. Almost half of the Capil
group had an income, at Wave 2, of less that $250 per week and more
than 80 per cent had income less than $400 per week.
In real terms (allowing for inflation), 58 per cent of the Capil
group were found to have had a real increase in weekly income.
Forty-two per cent of the group experienced no real gains in income
or their income fell in real terms. The Capil group have fared
better than the renter group where 56 per cent of families had no
change or a fall in real income.
On average, Capil families continued to increase their incomes
relative to Average Weekly Earnings. The average income of Capil
families at Wave 2 increased from 50 per cent of AWE to 60 per cent
of AWE.
Overall, Australian and European born families were more likely to
have lower disposable incomes. The larger proportions of Asian born
families with higher levels of disposable income reflects the higher
levels of family income of this group.
Housing Repayments and Costs
On average, Capil families are repaying 24 per cent of their weekly
family income on repayments.
I I I I I I I I I I I I I I I I I I I I
- 9 -
Fourteen percent of families are spending less than 15 per cent of
their income on repayments, while 16 per cent are spending over 30
per cent.
In general, families who experienced an increase in income between
Wave 1 and Wave 2 were paying less than the requisite proportion of
their income to the Ministry in repayments, while families with a
decrease in income were paying relatively more, suggesting a lack of
adjustment of mortgage payment when family income falls or rises.
The associated expense of rates and insurance add approximately 5
per cent to the overall housing costs of Capil families.
On the whole, average housing costs (taking into account repayments,
rates and insurance) are on a par or slightly higher than for
renters in the private sector, while Ministry tenants had the lowest
housing costs of all three groups.
After housing 'costs have been taken into consideration, the majority
of both the Capil and rent er group families have disposable incomes
of $200 per week or less. Overall, renter group families average
lower disposable incomes after housing costs and for both the Capil
and renter groups, one parent families are almost twice as likely to
have disposable incomes of $200 or less.
Coping Financially as a Capil Family
.-
Since Wave 1, one parent families were more likely to have
experienced difficulties in paying, for example, for bills or
purchasing food or clothing. Overall, couples in both Capil and
renter groups reported a similar incidence of financial difficulty
experienced, whereas one parent families in the capil group
experienced a lower incidence of difficulty in most areas of
financial coping than similar families in the renter group.
The higher degree of financial difficulty experienced by one-parent
families is clearly related to their having lower incomes than
couples and to experiencing less improvement in levels of income.
I I I I I I I I I I I I I I I I I I I I
- 10 -
For Capil families, at least a third reported either 'occasional' or
'frequent' difficulties in meeting their mortgage repayment costs.
No less than a third and up to half of families have not had enough
money for food at some time. No less than half and up to 75 per
cent of families have not been able to buy clothes and up to 85 per
cent have been unable to spend money on leisure or entertainment
activities.
Families experiencing decreases in incomes of $50 or more per week
also reported the highest incidence of financial difficulty on all
items. On the other hand, a significant proportion of both couples
and sole parents who had entered into mortgage arrears agreements or
who were having difficulty meeting mortgage payments, had
experienced real increases in income. The proportion of income
being paid in mortgage repayments was not closely related to ease or
difficulty with meeting these payments, except for those paying less
than 15 per cent of their income where nearly 60 per cent reported
that making mortgage payments is 'easy'.
Characteristics of financial situation
Loan group families characterised their financial situation into two
predominant categories. Either they had 'no money left' (35%) or
'money left .goes on bills' (42%). Only about 13 per cent were able
to save while 11 per cent were spending more than they received, or
'dissaving' •
When Capil group families' financial situation is compared at Wave 1
and Wave 2, it is clear that proportionately fewer couple families
are saving each week, a substantially increased group have no money
left at the end of the week, and there are slightly more dissavers.
One parent families report a slightly reduced savers group and a
substantially increased proportion of dissavers. Both family types
now have similar proportions of those able to save.
In the renter group, couple families able to save increased as a
proportion, while the number of dissavers was substantially reduced.
One parent families in the renter group still have the highest
proportion of dissavers and the lowest proportion of savers.
I I I I I I I I I I I I I I I I I I I I
- 11 -
Perception of changes in financial position
Overall, Capil participants regarq themselves as better off
financially than a year ago. Those most satisfied in this respect
were those with the largest increases in income and the smallest
proportions devoted to repayments. One-parent families and families
of Asian background reported generally higher proportions as being
better off. Renter group families, by comparison, are less
satisfied. with their financial situation now than a year ago.
Predicted future financial position
When asked to predict the state of their financial position over the
coming year Capil participants are more likely to be optimistic than
the renters. Both couple and one-parent families who had
experienced increased levels of employment were more likely to be
optimistic about the immediate future.
Determinants of Housing Satisfaction Among Capil Families
Two thirds or more of Capilfamilies report that they are satisfied
with nearly all aspects of their housing environment: features
including space, privacy, natural light, the condition of the house,
as well as the general location and accessibility of their home. The
notable exception to this pattern is found with the associated costs
of owning a home, such as rates, fuel bills and repair costs.
Between two-fifths and one-half of the families were satisfied with
these items.
Capil families were relatively more satisfied with their dwellings
per se than were public or private renters.
About 80 percent of Ministry of Housing tenants were satisfied with
their rent payments - a level of satisfaction with housing costs
higher than expressed by either Capil families or private renters.
Private renters reported lower levels of satisfaction on all aspects
of housing than Capil families or public renters.
I I I I I I I I I I I I I I I I I I I I
- 12 -
For Capil families, the level of housing satisfaction reported
varies primarily with ethnicity (Australian and European born
families relatively more satisfied· than Asian born families); family
status (sole parents relatively more satisfied than couples) and
family income (families on lower incomes relatively more satisfied
than those with better incomes).
The older the dwelling, the lower the reported satisfaction of the
respondent: very likely a result of higher repair costs and
maintenance.
The level of housing satisfaction is clearly related as well to
overall subjective well-being. Those respondents who in general
ranked their sense of purpose in life high and were satisfied with
their standard of living tended to be satisfied with their dwelling
and their housing costs.
Repairs, Renovations and Home Improvements among Capil Respondents
Over two-thirds of families had undertaken repairs between Wave 1
and Wave 2. Indeed, nearly half the families had been steadily
undertaking repairs since they first purchased a Capil home.
About twenty per cent of Capil families expended over $2000 on
repairs and improvements between Wave 1 and Wave 2, including a
minority of families (4.5%) who spent over $5000.
General home renovations and outside improvements were the most
popular type of repairs with over sixty per cent of repairers
carrying out a home renovation and over half an outside improvement
such as garden sheds, fences, and other works.
Of the stock of housing purchased under Capi1, older dwellings,
particularly pre World War II, and timber dwellings received most
repairs.
seventy per cent of repairers used their own savings for family funds
to finance the repairs and improvements.
I I I I I I I ,I I I I I I I I I I I I I
- 13 -
OWners were personally involved (either in conjunction with a
professional, on their own, or with the help of friends) in carrying
out the repairs and improvements in seventy per cent of cases,
suggesting a high level of "sweat equity" in Capil homes.
Professional assistance was called in in just over half of all
repairs.
There is some indication that the costs of repairs and improvements
are related to repaying relatively lower amounts to the Ministry.
Respondents' Perceptions of the Capil Loan Scheme
One quarter of the Capil respondents reported "great difficulty" and
an additional 28 per cent reported "some difficulty" in
understanding how the Capil loan scheme works.
A lack of understanding of the Capil scheme results in lowered
satisfaction with housing costs, dissatisfaction with the Capil
scheme in general, and a greater tendency to question the
worthwhileness of Capil as an investment.
Families tend to judge the value of Capil as an investment on the
criteria of their immediate capacity to repay the loan, rather than
longer-term criteria such as location or equity growth.
Assessments of Advantages and Disadvantages of Home OWnership
In identifying the advantages of home ownership, two main themes
emerge from families' responses. Firstly, the independence and
security of ownership, and secondly, the economic advantages of home
ownership - home ownership as an investment, and freedom from high
rental. The qualitative advantages of home ownership, (especially
in the form of detached dwellings) such as privacy and space were
mentioned by a minority of families.
I I I I I I I I I I I I I I ~
I I I I I I
- 14 -
Over a third of loan group families could not identify a major
disadvantage of home ownership. Of those who could, three-quarters
cited the financial cost of ownership.
Overall, two thirds of the Capil group indicated that they were
generally satisfied with Capil. Just over 20 per cent indicated
they were dissatisfied with Capil with a further 13 per cent
undecided.
The Wave 2 data indicates that sole parents tended to be slightly
more satisfied with Capil than couples; Australian born families
were more likely to be satisfied with Capil than overseas born
families.
Families' perceptions of their financial situation were related to
their general satisfaction with Capil. Families who said they were
'able to save' were more likely to be satisfied with Capil.
I I I I I I
I I I I I I t I I I I I I
- 15 -
CHAPTER 2
FAMILY STATUS, EMPLOYMENT AND INCOMES - A. Burbidge, F. Maas
and P. McDona1d
Introduction
An underlying assumption of the Capil scheme is that, for many families with
children, low income is a temporary problem. Indeed, it can be argued that
housing assistance to low income families may provide these families with a
basic level of security from which they can begin to establish themselves
financially. The capil study was therefore designed to measure changes in
family status, employment and income over time. Changes in these
characteristics between the first and second interviews are described in
this chapter. The assumption that circumstances often change is borne out by
the finding that almost half (45 percent) of the Capil families had changed
either their family status or their employment status between the first and
second interviews.
Family Status at the Second Wave
The Capil families interviewed in Spring 1987 included 181 one-parent
families and 225 couples with children. (A small number of these had no
dependent children living with them at the time of the interview). On
average, there were 2.6 children in the two parent families and 2.0 children
in one-parent families.
In term~ of birthplace, 52 per cent of the Capil respondents were born in
Australia, 30 per cent in Eur9pe and 17 per cent in Asia. As set out in
Table 2.1, family composition differed markedly among the ethnic groups.
Nearly all the Asian families were couples with children, compared with
around half or less of the Australian and European families. Fifty-seven
per cent of the Australian loan families were one-parent families as were 43
per cent of the European Capil families.
I I I I I I I
" .
I v
I I i I f I , I t I I I·
- 16 -
Table 2.1: Family type of Capil families, according to place of birth (per cent)
Couple families
One-parent families
TOTAL per cent N=
Place of Birth
Australia
42.9
57.1
100.0 212
Europe
57.4
42.6
100.0 122
Asia
88.9
11.1
100.0 72
The composition of renter families at Wave 2 differed a little from the
capil group in that it continued to have a slight preponderance of sole
parents: 55 per cent of renters were sole parents, for example, compared
with 45 per cent of the Capil group (See Figure 2.1).
In both Capil and renter groups, the married couple families had markedly
younger children than the sole parents, with more than half of the Capil
couples having their youngest child under 5 compared with 20 per cent of
sole parents. Furthermore, Capil families, both two and one-parent, were
much more likely to have a child aged less than 5 than the renter families.
(See Figure 2.2).
Changes in Family Status Between Waves 1 and 2
Nine per cent of families in the Capil group changed their family status in
the 18-24 month period between Waves 1 and 2. Seven couple families had
become sole parent families and 31 one-parent families had become couple
families in the time between the two interviews. Thus about 15 per cent of
the sole parents had partnered and 3.5 per cent of the couples had split up
(Table 2.2).
- 17 -
I FIGURE 2.1
I S
il _I tn II
::;, .. ca 081 , .. UJ ~
~
-, .-E If ,t ~ <oJ 'I , tn Q) .- I I, -.-E ca o
t LL ... Q)
I .. c Q)
rs a:
I' 'C C
rs
I ca c ca
t .9 'to- It 1\ 0
.C 0 , .-.. . -tni
I" 8.F-E~
I 8~ 1\
I
~~.~.~.~~~~~-~-~~~-~-
Composition of Loan and Renter Families By Age of Youngest Child
Loan Group ,..408
aoI.~4----------------------'
DOl
a
301
2101
m
Old '" »»3 I ') »'),1 0qIea SGIe PIrW'III
fImIly S1atua
Renter Group N-187
aoI1~---------------------'
aoI
a
301
201·
m
OIJ } b'" b~""3
FMdIy Status D Under 5 years
&SJ 5 to 11 years
~11+yen
"'Tl (j) C JJ m ~ I\J
...... co
I ,I' 11'
I' .' " " f I I' a II 11\
IJ ,1\
i 'I' t
- 19 -
Table 2.2: Family composition of Capil and renter families at Wave 2, showing changes from Wave 1
Number at Wave 1 Out In Number at Wave 2
Number at Wave 1 Out In Number at Wave 2
Couples
201 7
31 225
Couples
77 8 6
75
CAPIL GROUP Sole parents
RENTERS Sole
205 31
7 181
parents
90 6 8
92
Out refers to 'left that marital status between Wave 1 and Wave 2' In refers to 'joined that marital status between Wave 1 and Wave 2'
The pattern of change was very different for renters. Among renters, only 7
per cent of one-parent families (6 out of 90 families) had become couple
families by Wave 2 and 10 per cent (8 out of 77 families) of couple families
had split up. The slightly smaller overall proportion (8 per cent or 14 of
the 167 families) of the renters who had changed their family status between
the two interviews can be attributed to the shorter gap (about 6 months on
average) between interviews for th~ renters as compared to the Capil group.
Firm conclusions cannot yet be made on the factors which have caused the
higher rates of partnering among the home buyer group. Moreover the
observed patterns of change in family status do not appear to have been
caused by losses from 'the samples.
Other Changes in Family Composition
There were also substantial changes in household composition associated with
births, and children moving into or out of home. There were 51 Capil
families (13 per cent) where a child was born between Wave 1 and Wave 2; a
substantially higher rate than among renter families (4 per cent). In 19
I I I I f I f I t
" I I I , I I I , t I
- 20 -
Capil families children moved in, and in 7 cases another relative moved in.
These changes in family composition increased household size in almost 20
per cent of Capil families.
Among renters there was a total of 17 instances of births, child returns and
other relatives moving in, affecting about 10 per cent of the 165 renter
families. These factors increasing household size were partially offset in
approximately one in ten of both Capil and renter families by one or more
children moving out. In five capil families and one renter family the child
had since returned to live with the respondent.
Changes in family composition can affect levels of economic well~being
.directly through an impact on household income, as well as indirectly
through increasing or decreasing the number of people dependent on family
income. The impact on family finances of children moving away from home or
moving back is difficult to assess however, as they mayor may not be
contributing to family income. Around 40 per cent of the children who left
home, however, were employed full or part-time, so reductions in family size
may, on balance, tend to reduce a household's repayment capacity.
Employm~nt
The period between the first and second interviews appears to be notable
also for a marked increase in employment, particularly among Capil group
families. Both married couples and sole parent Capil families show large
flows into and out of employment, with an overall net increase in employment
activity. Renter families also experienced a net increase in employment,
although to a lesser extent than Capil families.
Among couple families, the percentage with neither partner employed dropped
between Waves 1 and 2 from 65 per cent to 40 per cent for Capil families and
from 64 per cent to 54 percent for renter families (Table 2.3).
I I I' ., If I,
" I
" , I ,I t t 1\ \~ ;1' ,I' il' I
- 21 -
Table 2.3: Employment of Capil and renter families at Wave 1 and Wave 2 (per cent)
Capil Group Renter group W1 W2 W1 W2 , , , ,
Couples Both partners employed 5 25 13 19 Male employed 24 31 16 22 Female employed 6 4 7 5 Neither employed 65 40 64 54
TOTAL , 100 100 100 100 N 198 222 76 74
, Sole parents Employed full-time 7 19 2 9 Employed part-time 18 25 17 27 Not employed 75 56 81 64
TOTAL , 100 100 100 100 N 202 178 88 91
At the same time, the percentage of couples with both partners employed rose
from 5 to 25 per cent for Capil families and from 13 to 19 per cent for
renters. Similar increases in employment were evident between Waves 1 and 2
for sole parents, but the extent of change was about the same for Capil
families as for renters particularly considering the longer time interval
applying to Capil families.
This aggregate picture also applies for families who changed family status
between the two Waves. A change of family status was associated with
increased employment irrespective of the type of family change. For example,
among the 31 Capil sole parents at Wave 1 who had partnered by Wave 2, 24
had no work force participation at Wave 1 compared to only 6 at Wave 2.
Table 2.4 shows that Australian born Capil families were somewhat more
likely to be employed than those from Europe or Asia, while for one-parent
families proportions employed were similar.
I I, I I f' •• f'
'.,
I' ." t, t ,t
I t, I' t I1 I t .; I'
- 22 -
Table 2.4: Employment status of Capil families according to family type and. place of birth.
Place of Birth
Australian European Asian N , N , N ,
Couple families Adults both work 21 23.1 19 27.1 16 25.0 One adult only works 42 46.2 20 28.6 18 28.1 No adult works 28 30.8 31 44.3 30 46.9
Total 91 100.0 70 100.0 64 100.0
One-parent families Parent works full-time 23 19.2 10 19.6 2 25.0
Parent works part-time 29 24.2 14 27.5 1 12.5
Parent not working 68 56.7 27 52.9 5 62.5
Total 120 100.0 51 100.0 8 100.0
Considerable flows into and out of employment underpin the observed rises in
aggregate employment activity. Table 2.5 gives an indication of the extent
of turnover in employment activity and marital status between Wave 1 and
Wave 2. For example, of the 48 couples where the husband alone worked at
Wave 1, more than half had changed employment or marital status by Wave 2
(in 14 both parents were employed, in 2 the wife was employed instead of the
husband, in 6 neither was employed, and 3 had separated.)
I ,I, I: ,t f ·1 f I' II f I, 'I I .,' t' t 11'
I I
"
- 23 -
Table 2.5: Changes in employment and family status of Capil group, Wave 1 to Wave 2, (frequency distributions)
Couples
Wave 2 BE ME FE
Couples Both employed 5 14 3 Male employed 5 23 1 Female employed 2 4 Neither employed 6 3 Total 10 45 11
Sole parents Employed full-time 1 Employed part-time 1 Not employed 1 Total 3
?
Overall total 10 48 11
WAVE 1
NE Total FT
18 40 1 31 60
2 8 1 74 83
125 191 2
1 2 10 2 3 2 1 2 1 4 7 13
129 198 15
Sole parent
PT NE Total
3 11 15 2 6 8
1 2 6 6
5 24 31
7 15 32 15 24 41
9 88 98 31 127 171
36 151 202
Grand Total
55 68 10 89
222
34 44
100 178
400
Note: Couples - BE = both employed; ME = male employed; FE = female employed; NE = neither employed;
Sole-parents - FT = full-time; PT = part-time; NE = not employed
Similarly, of the 151 sole parents who were not employed at Wave 1, 26 per
cent were still single but had obtained employment while 16 per cent had
married, with half of these also taking up employment. On the other hand,
almost a quarter of the sole parents who worked at Wave 1 (10 of the 44 who
did not remarry) were not employed at Wave 2.
The picture is thus one of a sizeable turnover with the net result of
significant increased employment activity.
I I f t I
y
I t I i I ~
I f I , I t t a , ,
- 24 -
The increased employment activity of Capil families which occurred between
Wave 1 and 2 appears to be a continuation of a trend identified in the First
Evaluation Report, which noted changes in employment and income between time
of application for a loan and the Wave 1 interview.
'The number of Loan group couples in the workforce grew from 7 per cent
to 30 per cent with a corresponding reduction in the numbers of couples
in receipt of unemployment benefits. The proportion of sole parents in
the workforce grew from 4 to 16 per cent.'
(p 4, First Evaluation Report.)
Employment Preferences
This section examines the employment preferences of Capil group families.
Stated employment preferences are of assistance in assessing whether the
marked increases in employment which occurred between Wave 1 and Wave 2
indicate that most families have achieved their desired levels of labour
market involvement, or whether Capil group families desire to further'
increase their employment and incomes.
As the respondent's own preferences are more likely to be an accurate guide
to behaviour than the respondent's statement on the preferences of their
partner, only the views of respondents are analysed.
All three categories of respondents shown in Table 2.6 expressed a
preference to greatly increase their current involvement in paid employment.
Only 26 per cent of female sole parents preferred not to be working, a
substantially lower figure than the 56 per cent not working at the time of
the Wave 2 interview. Sole parents indicated a preference for incremental
increases in work activity. One third of those working part-time would have
preferred to work full-time, while one third of those not working would have
preferred to work part-time.
I ,I, t I' t a, t' I' ,1, t, I, t
I
- 25 -
Table 2.6: Current job status and preferred job status of Capil group, percentage distributions
Part- Not in Family and Full- time/ labour Total job status time Casual force N ,
Female sole parents Current 15 29 56 173 100 Preferred 31 43 26 173 100
Males in couple families Current 43 6 51 141 100 Preferred 73 6 21 141 100
Females in couple families Current 7 26 67 81 100 Preferred 16 41 43 81 100
Among the Capil couples, the husband was the survey respondent in 64 per
cent of cases and the wife in 36 percent. The male respondents expressed a
strong preference for full-time work; 73 per cent would have preferred to
work full-time compared to the current level of 43 per cent. Few men wished
to work part-time. The female respondents from couple families indicated the
lowest preference for additional work. Two-thirds preferred to continue
their present level of work force involvement and only 16 per cent expressed
a preference to work full-time.
It is interesting to note that there were substantial numbers who would like
a job but were not actively seeking work when interviewed. To the extent
that it is lack of labour market opportunities that discourage them from
seeking employment, these people could be expected to seek work if jobs
become available.
The employment preferences of couples where neither worked were examined in
more detail to see whether either or both parents wanted employment.
Information on 87 such couples shows that 55 of the men and 25 of the women
wanted employment. The preference of only 25 women (29 per cent) to be
employed is low compared with sole parents and other married women in the
Capil group. It is consistent, however, with other research findings
suggesting that a proportion of wives withdraw from the labour force if
their husbands become unemployed. In 30 families (35 per cent) where
I I t I "
a t, I "
t, I, I I , t , 'I
• I
"
U
- 26 -
neither parent was employed, the preference of both parents was to stay out
of the labour force. As discussed in the next section health problems were
frequently mentioned as the principal obstacle to employment by these
couples.
In the Wave 2 interview, respondents who were not working and not looking
for work were asked about perceived barriers to employment. This helps to
inform judgement about whether they are likely to be able to change their
employment in the way they want and may indicate what kinds of labour market
related programs will affect the employment levels of these families.
The presence of young children is a potential barrier to employment,
primarily for women. Among the Capil families, 70 per cent of wives were not
employed compared to 56 per cent of women who were sole parents (Table 2.7).
Table 2.7: Employment status by age of youngest child: Capil group, Wave 2
Employment status
Couples
Both employed
Male employed
Female employed
Neither employed
TOTAL ,
N
Sole parents
Employed full-time
Employed part-time
Not employed
TOTAL ,
N
Age of Youngest Child
Under 5 5-11 11+ , , ,
19
41
4
36
100
120
12
29
59
100
34
33
24
7
36
100
72
15
27
58
100
74
30
10
o
60
100
30
25
23 .
52
100
60
Total ,
25
31
5
39
100
222
18
26
56
100
168
I I I I , ·1· ,. t
" I I, t
" t "
., I I I I
- 27 -
Surprisingly, the employment status of women in both couple and sole parent
families was not affected by the age of their youngest child. If anything,
those with children under the age of 5 were slightly more likely to be
working. Among working sole parents, however, those whose youngest child was
aged eleven or more were more likely to be working full-time. Age of
youngest child may therefore mainly affect the extent to which sole parents
work full or part-time and to have relatively little impact on whether or
not sole parents are employed.
Capil families who said they were not employed or seeking work were asked
whether each of the factors in Table 2.8 was very important, somewhat
important or not important at all as reasons for not working or looking for
work. The same questions were asked in respect of spouses who were not
working or looking for work. Respondents were also asked what was the most
important reason that they were not working and their spouse was not
working. These data are analysed in Tables 2.8 and 2.9 according to the sex
of the person to which the information applies. This means the reports are
not always self reports but reports of the spouse. Table 2.8 shows the
proportion of men and women for whom each separate factor was a very
important or somewhat important reason for not working. It shows that the
needs of children were the factor most often mentioned by all three groups
of women, with about 90 per cent mentioning this reason.
Table 2.8: Stated reasons for not working and not seeking work, Capil group, Wave 2
COUPLES
Women Women, SOLE with partner PARENTS
working not Stated reason Ken partners working for not working n = 40 n = 60 n = 80 n = 77
Needs of children 25 93 86 88 Child care problems 13 55 56 59 Health problems 85 33 57 45 Loss of social security 45 12 41 70 Lack of work 50 52 52 66 Lack of training 38 42 54 67 Other reason 18 12 11 9
I ,I I' t , ,I I' I a I
I "
'I I I j
I' I
- 28 -
Health problems were the most often stated barrier to employment by men in
couples. other frequently mentioned barriers - particularly among sole
parents - were loss of social security pensions, lack of jobs and lack of
training. Availability of child care was seen as a problem by more than 50
per cent of women in all three groups.
, Table 2.9: Most important reason for not working and not seeking work, Capil group, Wave 2
Most important reason for not working
Needs of children Child care problems Health problems Loss of social security Lack of work Lack of training Other reason
TOTAL % N
Men
8 0
70 0 8 2
12
100 40
COUPLES
Women with
working partners
75 2 8 0 5 3 7
100 60
Women, SOLE partner PARENTS
not working Women
53 51 0 4
27 18 4 9 4 4 7 10 5 4
100 100 80 77
When Capil families were asked to specify the most important of these
barriers the needs of children and health problems became much more
predominant. Among women, those with a working partner were more likely than
other women not working to cite the needs of children while sole parents and
women whose partners were not working were more likely to cite health
reasons. Among men not working, the overwhelmingly most important reason
given was health problems. Lack of training or jobs and child care problems
were not often given as the main barrier to employment, although, as noted
earlier (Table 2.9) they are frequently contributing problems. Loss of
social security payments were the main barrier for only 9 per cent of the
sole parents.
This discussion indicates that the concerns of parents about their
children's needs and health problems among those not seeking work may
I ,', I I, t I, I' t I, I ,I I' I I 'I I I I I I
- 29 -
prevent further major increases in employment among the Capil group unless
their concerns are addressed. These concerns are no doubt linked with
problems associated with child care, lack of job opportunities and lack of
training, but, as they are expressed as concerns over and above these
'traditional' barriers, a more far reaching approach may be required.
Incomes
Changes in 'Real' Income
To assess changes in real income, Capil and .renter families net incomes at
the time of the Wave 1 interview have been adjusted according to CPI
movements. Table 2.10 summarises the comparison between incomes at Waves 1
and 2.
,Table 2.10: Net weekly family income, Waves 1 and 2, Capil and renter groups (per cent)
Net weekly family income Capil Group Renter group $p.w. W1 W2 W1 W2
Less than 200 24.7 25.6 38.6 39.5
201-300 60.5 42.2 48.2 38.9
301-400 11.4 16.6 9.0 15.0
400+ 3.5 15.6 4.2 6.6
TOTAL , 100.0 100.0 100.0 100.0 N 405 398 166 167
Mean 242.31 284.62 229.87 246.61 Median 235.0 253.5 228.6 224.0
* Note 1: Wave 1 incomes adjusted, according to CPI movements, to price levels at Wave 2.
2: Family income is the income of husband and wife but not the income of any other person in the household
I I I I 'I I
I I I' I I I I I I I' I
- 30 -
As shown for Capil families the mean income at Wave 2 was $285 per week, a
17.5 per cent increase since Wave 1. For renter families average income was
$247 per week, an increase of 7.3 per cent, which is partly the result of
the shorter gap between interview dates as discussed previously. Where the
Capil group does show it has gained to a greater degree than the renter
group is in the distribution of net weekly income. The Capil group had
about 26 per cent of families receiving less than $200 per week compared
with nearly 40 per cent of renter families. Similarly about 16 per cent of
Capil families received more than $400 per week compared with only 7 per
cent in the renter group.
It should be emphasised that both groups of families are still predominantly
a low income group. Nevertheless both groups have experienced gains in
income in real terms, the Capil group to a greater extent.
Income Changes in Relation to Average Weekly Earnings (AWE)
Comparing Capil and renter families' incomes to movements in average weekly
earnings (AWE) indicates the extent to which such families are 'keeping
pace' with earnings generally. Table 2.11 shows that both groups of
families improved their overall position relative to AWE since Wave 1.
Table 2.11: Family income as a proportion of AWE for Capil and renter families at Waves 1 and 2 (per cent)
Per cent Capil of AWE W1
0-25 1.7
26-50 60.2
51-75 33.1
76-100 3.7
101-150 1.2
150+
TOTAL % 100.0 N 405
Mean 50.0% Median 48.0%
Group W2
3.0
43.0
33.9
13.1
6.3
0.8
100.0 398
60.0% 54.0%
Renter W1
1.3
60.6
31.6
5.8
0.6
100.0 155
50.0% 48.0%
group W2
1.2
56.3
29.9
9.0
3.6
100.0 167
52.0% 48.0%
I I I I I I I I I I , I I I I I I I I I
- 31 -
The mean income of Capil families increased from 50 per cent to 60 per cent
of AWE, while renter families have experienced an increase from 50 per cent
to 52 per cent on average. In dollar terms, AWE was $471.60 for the last
quarter of 1987 and the average Wave 2 family income of Capil families was
$285 per week.
There has been some polarisation of Capi1 families as a slightly higher
proportion (3 per cent) now receive incomes at less than 25 per cent of AWE
and greater proportions receive incomes at 51-75 per cent, 76-100 per cent
and at more than 100 per cent of AWE. Capil families have experienced gains
in income greater than renter families with 54 per cent receiving more than
50 per cent of AWE compared with only 43 per cent of renter families.
Further indicators of relative incomes come from a national survey conducted
by the ABS in 1986. It found that around 64 per cent of couples with
children and 10 per cent of one-parent families had family incomes above
AWE. As set out in table 2.11, 7 per cent of Capil families and under 4 per
cent of renter families had Wave 2 family incomes above AWE.
Income Changes According to Birthplace
Analysed according to birthplace, the changes in income experienced by Capil
families show some differences. Table 2.12 shows that all family groups
experienced real gains by Wave 2 with the Asian group exhibiting the highest
mean level of income at $332. All groups showed a slight increase in the
proportion of families on the lowest incomes, at less than $200 per week and
all showed large increases in the proportions receiving more than $400 per
week.
I I I I 'I I I I ,I I , I I I I I I J I I
- 32 -
Table 2.12: Net weekly family income of Capil families, Waves 1 and 2, according to place of birth (per cent)
Australian . European Asian Net weekly income $p.w. W1 W2 W1 W2 W1 W2
Less than 200 29.4 30.3 27.0 28.0 6.9 8.3
201-300 57.8 41.9 53.3 40.6 80.6 44.4
301-400 9.5 15.4 15.6 13.5 9.7 25.0
400+ 3.3 12.0 4.1 17.8 2.8 22.2
TOTAL , 100.0 100.0 100.0 100.0 100.0 100.0 N 212 122 72
Mean 236.72 270.52 239.93 280.42 262.76 332.21 Median 226.0 233.5 229.8 249.0 261.6 290.0
At Wave 2 both the Australian and European group contained about 30 per cent
of families receiving less than $200 per week compared with only 8 per cent
of the Asian born group. Over 22 per cent of Asian born families received
more than $400 per week compared with 18 per cent of European born and 12
per cent of Australian born.
Examination of Table 2.13 shows that there were far greater proportions of
decreased incomes for European and Australian born families than for Asian
born, and only a slightly greater proportion of increased incomes for Asian
families. The greater size of flows in both d,irections for Australian and
European born families and the very small proportion of large decreases for
Asian born families explains the results summarised in Table 2.12.
I I I I I I I I I I I I I I I I I I I I
- 33 -
Table 2.13: Change in income Wave 1 to Wave 2 for Capil families, according to place of birth (per cent)
Change in income
Decrease greater than $50 per week
Decrease up to $50 per week
Increase up to $50 per week
Increase greater than $50 per week
TOTAL , N
Australian European Asian
13.0 17.8 4.2
30.0 24.6 33.3
22.7 24.6 23.6
34.3 33.1 38.9
100.0 100.0 100.0 212 122 72
As shown in Table 2.13, 57 per cent of Australia families experienced
increased incomes and 13 per cent had incomes that dropped by more than $50
per week; the European group comprised 58 per cent who experienced increases
and 18 per cent who lost more than $50 per week; while the Asian born group
comprised nearly 63 per cent with increased income and only 4 per cent who
lost more than $50 per week. The reasons for those outcomes lies largely in
the family composition of each grouping as described earlier. The following
analyses will demonstrate how family type and employment status are the main
determinants of such income movements.
Income Changes and Family Type
While the Capil group of families in particular, experienced gains in income
those gains have not been evenly distributed across the group. Table 2.14
shows the distribution of net income for both Capil and renter families,
according to family type .•
I I I I I I I I I I I I I I I I I I I I
- 34 -
Table 2.14: Net weekly family income of Capil and renter families, Waves 1 and 2, according to family type (per cent)
Capil Group Renter Group Net weekly Couple One-parent Couple One-parent income families families families families $p.w. W1 W2 W1 W2 W1 W2 W1 W2
< 200 4.0 5.0 44.9 50.8 14.5 14.7 58.9 59.8
201-300 73.6 46.2 47.8 48.4 63.2 44.0 35.6 34.8
302-400 16.0 22.0 6.8 10.0 13.2 29.3 5.6 3.3
400+ 6.5 26.9 0.5 1.7 9.2 -12.0 2.2
TOTAL , 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 N 224 219 181 179 74 75 92 92
Mean 274.95 340.94 210.47 215.70 262.10 301.19 202.67 202.11 Median 258.5 300 206.8 200 250.3 279 187.8 188
As shown, couple families in both Capil and renter groups had increases in
real incomes, on average. Mean income for Capil couples rose to $341 per
week and to $301 per week for renters, respective increases of 24 per cent
and 15 per cent. However, for one-parent families there was virtually no
increase in average real income. Mean income for Capil one-parent families
increased by only 2.5 per cent and the proportion of families receiving less
than $200 per week increased from 45 per cent to 51 per cent. The median
income, or the amount which divides the whole group into halves, actually
declined between Wave 1 and Wave 2, reflecting an increase in the numbers on
the lowest levels of income.
At the same time, the proportion of one-parent families in the Capil group
that received higher incomes increased slightly while in the renter group it
stayed at about the same level (5.5 per cent) although some families moved
into the $400+ per week bracket. In contrast, couple families in both
sectors showed greatly increased proportions on higher incomes with Capil
families receiving more than $400 per week growing from 6.5 per cent to 27
per cent.
'Table 2.15 demonstrates the extent of increased and decreased incomes for
each family type.
I I I I I I I I I I I I I I I I I I I I
- 35 -
Table 2.15: Change in income Wave 1 to Wave 2 for Capil and renter families, according to family type (per cent)
Change in income
Decrease greater than $50 per week
Decrease up to $50 per week
Increase up to $50 per week
Increase greater than $50 per week
TOTAL , N
CAPIL GROUP Couple
families
7.3
25.2
22.9
44.5
100.0 218
One-parent families
19.6
33.5
24.0
22.9
100.0 179
RENTER GROUP Couple
families
6.8
32.4
31.1
29.7
100.0 74
One-parent families
17.4
50.0
20.7
12.0
100.0 92
As shown, around two-thirds of couple families experienced increases in real
net income, with 67 per cent of the Capil group and 61 per cent of renter
couples showing gains. Forty-five per cent of couples in the Capil scheme
increased their income by more than $50 per week. A small part of this gain
is due to respondents (sole-parents at Wave 1), who by Wave 2 had married an
employed person.
By contrast, 53 per cent of one-parent families in the Capil group, and 67
per cent of those renting experienced declines in income, with nearly 20 per
cent of the Capil one-parent families losing more than $50 per week The
Capil group shows the greatest variation as, at the other end of the scale,
23 per cent experienced gains of more than $50 per week compared with only
12 per cent in the rental group.
Additional analysis of the losses in real income of one-parent families is
contained in Appendix A. It shows that decline in the value of social
security payments is part of the explanation of small losses of income with
larger losses being attributable to reduced employment, cessation of
maintenance income, changing from a two-parent to one-parent family and loss
of eligibility for sole parents pension.
I I I I I I I I I I I I I I I I I I I I
- 36 -
Table 2.16: Change in income Wave 1 to Wave 2 for Capil families, according to principal source of income at Wave 2 and family type (per cent)
Couple families One-parent families Principal source Net Net Net Net of income increase decrease Total increase decrease Total
Wages & salaries 83.2 16.8 100.0 78.7 21.3 100.0
Unemployment benefit 45.5 54.5 100.0 36.4 63.7 100.0
Supporting parent benefit n.a. n.a. n.a. 36.6 63.5 100.0
Widows pension n.a. n.a. n.a. 35.5 64.5 100.0
Invalid/sickness benefit 43.4 56.5 100.0 20.0 80.0 100.0
Table 2.16 looks at the principal source of income at Wave 2 of families who
had experienced gains or losses. As shown, those whose principle source of
income was wages and salaries gained in 83 per cent of cases for couples and
79 per cent for one-parent families.
In all cases where families were on social security payments at Wave 2 a
majority experienced reduced income. Fifty-five per cent of the couples on
unemployment benefit had a lower real income than at Wave 1 •. Around two
thirds of one-parent families had less income in real terms than at Wave 1.
These figures, of course, reflect both changes in the real incomes of
families on social security at both Wave 1 and Wave 2, and the change in
income which occurs when a family moves from employment to unemployment
benefits or supporting parents pension i.e. from wages at Wave 1 to social
security at Wave 2.
I I I I I I I I I I I I I I I I I I I I
- 37 -
Income Change, Employment Status and Family Type
As discussed earlier Capil families experienced substantial increases in
employment between Waves 1 and 2. For couples in the Capil scheme, 60 per
cent had one or both adults working at Wave 2, while for one-parent families
only 19 per cent worked full-time and 56 per cent still had no employment,
although these figures represent increased labour market involvement
compared with the situation at Wave 1.
The income characteristics resulting from the interaction of family type and
employment status for Capil families are summarised in Table 2.19.
Table 2.17: Net weekly income of Capil families at Wave 2, according to employment status and family type (per cent)
Net weekly income ($ per week) Less
Family than 201- 301- Mean employment status N 200 300 400 400+ ($p.w. )
Couple families Both work 56 9.0 10.7 80.4 429 Male only works 70 1.5 32.4 46.1 20.0 341 Female only works 10 55.5 33.3 11.1 331 Neither works 89 11.2 78.6 10.1 247
One-parent families Full-time work 35 2.9 42.9 45.7 8.6 314 Part-time work 44 45.5 50.0 4.5 220 -Not working 100 70.7 29.3 179
Average income ranges from $429 per week for couples where both adults are
working to $179 per week for one-parent families with the parent not
working. As the largest group of one-parent families, 56 per cent, are of
this type and over 70 per cent of these receive less than $200 per week, it
is not surprising that Table 2.14 shows so little improvement in the incomes
of this group overall. By contrast, nearly 25 per cent of couple families
have both parents working and over 80 per cent of these receive incomes
greater than $400 per week, thereby contributing to the considerable gains
for this group shown in the same table.
I I I I· I I I I I I I I I I I I I I I I
- 38 -
Summary
In summary two factors contributed to a substantial increase in the incomes
of many Capil families. Most importantly, there was a marked increase in
employment. The percentage of couples with both partners employed, for
example, rose from 5 to 25 per cent of married couples •.
Secondly, among Capil borrowers the incidence of sole parents repartnering
far exceeded the incidence of couples separating. Fifteen per cent of sole
parents repartnered while 3.5 per cent of couples separated. Repartnering
generally resulted in a rise in family income through increased labour force
participation and the income of the partner.
Both factors were more evident among Capil families than among renters.
The average income of Capil families thus increased both in real terms and
relative to Average Weekly Earnings. Changes in income and capacity to
repay were not uniform between groups, however, and some 13 per cent of
families - particularly sole parents - experienced a decline in real income
of more than $50 per week.
I I I I I I I I I I I I I I I I I I I I
- 39 -
Appendix A: Income Losses of Sole Parents
The circumstances of the 94 sole parents whose real incomes declined between
Wave 1 and Wave 2 were examined more closely to try to identify the reasons
for the change.
A major reason for a small decline in the incomes of all of the families
dependent on social security pensions relates to the timing of the first and
second waves of interviews. The second round of interviews with loan group
families took place in October, November and December 1987, thereby missing
the six monthly increase in indexed pensions and benefits which has been
paid each fortnight since December 25th. First round interviews, on the
other hand, were mostly undertaken in the first quarter of 1986, just after
an indexation increase.
The indexed increase in December 1987 was $3.95 per week for one-parent
families and $6.50 for couples. In comparison, the loss of real income
between February 1986 and November 1987 was $1.97 for sole parents with one
child and $2.77 for couples with one child. A sole parent with two children
would be recorded as losing 44.47 per week over the same period.
More significantly for sole parents, the second wave of interviews was also
largely completed just prior to the largest increase in payments for
pensioner children (a non-indexed payment) since they were introduced. In
December 1987, the 'family package' raised the weekly rate for children in
pensioner, beneficiary and low income working families from $17 to $22 for
each child under 13, and to 428 for those aged 13 to 15.
Decline in the value of social security payments thus accounts for some of
the declines in real income between Wave 1 and Wave 2, but not among those
whose real income declined by more than $50 per week. For this group,
causes of income change were broadly groups into those associated with a
change in family composition, reductions or cessation of income from
employment or maintenance, and reduction in social security payments due to
a change in eligibility rules. Estimates of the precise number affected by
these factors are difficult to make, however, as the level of income from
each source was not collected at Wave 1.
I I I I I I I I I I I I I I I I I I
o
I I
- 40 -
There were 35 sole parents at Wave 2 whose income, adjusted for price
change, was more than $50 below that at Wave 1 (see Appendix Table 1).
Change in marital status was associated with a drop in income for 4 sole
parents who were married at Wave 1 and therefore eligible for a higher rate
of pensions or had an employed spouse. A further 7 families had fewer
children at Wave 2 than Wave 1, while a number of others had children who
changed status from full-time student to employed or unemployed. Such
changes can result in a reduced income for the parent as payments may cease
(e.g. maintenance) or are paid directly to the young person (e.g. Austudy,
or Unemployment Benefit).
Income from employment fell for more than a .third of the sole parents (with
a large fall in real income) as 9 ceased employment and others reduced their
hours or took jobs with lower hourly rates. Maintenance from an ex-spouse
was recorded as a source of income of 8 sole parents at Wave 1: 4 at Wave 2.
As mentioned, in some instances reduction or cessation of maintenance may
have been in accord with an agreement about children leaving school, turning
18 etc.
A further reason for a substantial fall in the incomes of sole parents was a
change in the definition of eligibility for sole parent pension and Class A
widows pension. After September 1986 full-time students aged 16 and over no
longer enabled a parent to claim a sole parent or widows pension, so that,
apart form those groups protected by 'phasing in' provisions, some sole
parents lost $12 mothers/guardians allowance, $17 per child and $7.40 from
the rate difference between pensions and unemployment benefit. The harsher
income test for unemployment benefits can result in additional losses for
sole parents with income from maintenance or employment.
Seven of the loan group sole parents with an income decline of $50 or more
had a youngest child aged 16 or over and may thus have been affected by the
new eligibility rules, although estimates of the amounts they lost are
complicated by such factors as cessation of maintenance or employment (3),
and being on other payments at Wave 1 (Unemployment Benefit and Invalid
Pension).
I I I I I I I I I I I I I I I I I I I I
- 41 -
Appendix Table 1: Loss of income between Wave 1 and Wave 2 for Capil
families who were one~parent families at Wave 2
Change in income No.
Decrease of $100 or more 14
Decrease of $50 to $100 21
Decrease of $20 to $50 27
Decrease .of $10 to $20 13
Decrease of $0 to $10 19
TOTAL 94
Note: Loss of income is calculated by adjusting Wave 1 income by CPI change
since the quarter in which the interview was conducted and subtracting
it from income at Wave 2can result in additional losses for sole
parents with income from maintenance or employment.
Seven of the loan group sole parents with an income decline of $50 or more
had a youngest child aged 16 or over and may thus have been affected by the
new eligibility rules', although estimates of the amounts they lost are
complicated by such factors as cessation of maintenance or employment (3),
and being on other payments at Wave 1 (Unemployment Benefit and Invalid
Pension).
Appendix Table 1: Loss of income
I I I I I I I I I I I I I I I I I I I I
- 42 -
CHAPTER 3
EXAMINING HOUSING REPAYMENTS AND COSTS UNDER THE CAPIL SCHEME - T. Barton
Introduction
Under the Capil Scheme, the mortgage is structured such that loan repayments
are pegged to 25 per cent of family income. It is expected that loan
repayments will be adjusted in line with changes in family income. This
means that in the event of family income increasing or decreasing, the
proportion of family income outlayed on mortgage payments should remain the
same.
This chapter looks at how well this aspect of Capil is working. The issues
addressed in this Chapter are:
what proportion of their income Capil families are actually spending on repayments
- who are the families spending more or less than 25 per cent of their income on their loan
the impact on mortgage repayment of income level and changes in real family income
- the differential impact on mortgage of family type and ethnicity
- the contrast in housing costs for Capil families compared to those for renters
Mortgage Repayments
Since Capil loan repayments are pegged to no more than 25 per cent of family
income, it is not surprising that the average percentage of income spent on
mortgage repayments for the Capil group as a whole is 24%. This average,
I I I I I I I I I I I I I I I I I I I I
- 43 -
however, hides much variation. OVer 16 percent of Capil recipients are
spending a not inconsiderable percentage of income on their loan repayments.
Table 3.1: Mortgage as percentage of family income; Capil group Wave 2
Percentage of Income pw
0-15%
16-20%
21-25%
26-30%
31% +
TOTAL
Proportion of Capil group N %
56 14.1
71 17.8
127 31.9
78 19.6
66 16.6
398 100.0
As Table 3.1 shows, while the majority of families are paying around 25 per
cent or less of their family income per week on their repayments, with a
significant proportion (14%) paying only 15 per cent or less, one sixth of
the sample are spending over 30 per cent per week. Fully half the Capil
group indicated they were paying 21 to 30 per cent of their incomes on Capil
repayments.
Further analysis by family type reveals one-parent families are more likely
than couples to be paying more than 25 per cent of income on
I I I I I I I I I I I I I I I I I I I I
- 44 -
their mortgage. Married couple families, on the other hand, are twice as
likely as one-parent families to be paying 15 per cent or less of their
weekly income on mortgage repayments. (See Figure 3.1).
In Figure 3.2, mortgage as a percentage of income is compared for the three
ethnic groups in the capil scheme. OVer two-thirds of the Australian born
families are paying 25 per cent or less of their income on mortgage
repayments, with 14 per cent paying 15 per cent or less. The pattern is
very similar for capil's European born families.
For Asian born families, however, the distribution is markedly different.
The Asian born families are more likely to be spending higher proportions of
their family income on their repayments than either the Australian or
European born families. Nearly half the Asian born families (46%) are
making repayments of more than 25 per cent of their family income, and half
of those are outlaying more than 30 per cent per week. (See Figure 3.2).
For the Capil group as a whole then, while the average Capil mortgage
repayment (24\ of family income) is almost consistent with the Ministry's
policy for repayments of 25 per cent of income, the data reveal that couples
tend to spend lower proportions of their income on repayments than do one
parent families, while Asian born families are much more likely to be paying
a higher proportion of their income on repayments than either the Australian
or European born families. In terms of cash weekly repayments Asian born
families had the highest average weekly repayment for the three groups,
$81.00 per week, followed by European born families ($64.00 per week) and
Australian families ($59.00 per week). The average repayment in dollar terms
for the capil group as a whole was $64.00 per week.
The question arises as to why there is such variation in the proportion of
family income spent on mortgage repayments? How has this situation arisen?
To explain these variations, it is useful to look at patterns of repayment
by current net family income. In addition, the relationship between the
- - - - - - - -' - - - - - - - - - - - -
CD .!! ·e tl. c CD
.9 '0 & J! 55
l
Mortgage as a Percentage of Income by Family Status Loan Group
4OX~-------------------------------------------------------------------.
30%
20%
10X
D Sole Parents
ox" I). ).~ '" ). ~ L ). ~ ). ~ ). ~ I~CouP'es 0-15% 16-20% 21-25% 26-30% 31%+
Mortgage Repayments a8 a Percentage of Income
" (j) C JJ m ~
11:=> lJ1
- - - - - - - -, - - - - - - - - - - - -
fI)
.!! 'e If c CD
.9 "0 &
j
Mortgage as a Percentage of Income by Ethnicity Loan Group .
40%------------------------------------------------------------------,
30%
20%
10%
D Australian
OX" '" ~ • """'" DElropean ),~ ~ ), ~ ), ~ ,~Asian
0-15% 16-20% 21-25% 26-30% 31%+
Mortgage Repayments as a Percentage of Income
11 (j) c ::n m fA I\)
~ 0'\
I I I I I I I I I I I I I I I I I I I I
- 47 -
changes in real family income incurred by Capil families and repayment
levels at Wave 2 is aiso investigated. Before proceeding to these issues,
Figure 3.3 presents a summary of average weekly income levels for selected
Capil groups.
Average Weekly Family Income Levels
OVer half (56 per cent) of Capil families derive their major source of
family income from government benefits, while 44 per cent of families
receive income in the form of salary or wages (see Chapter 2). One-parent
families were almost twice as likely as married couple families to be in
receipt of a benefit (74 per cent and 42 per cent respectively).
consequently, as shown in Figure 3.3, it is not surprising that one-parent
families averaged a lower weekly family income than couple families ($216.00
compared to $341.00). (See Figure 3.3).
Also shown is the high level of average weekly income for Asian born
families compared to European and Australian born families and for capil as
a whole. This explains somewhat their high average weekly repayment ($81.00
per week), compared to European and Australian born families ($64.00 and
$59.00 per week respectively.)
Further examination of current family income reveals nearly two-fifths of
those families with income over $300 per week were paying 15 per cent or
less of their income on mortgage repayments. Conversely, among those
families with weekly income of $200 or under, just under one third were
paying over 30 per cent of their income on repayments. (See Table 3.2)
------------,--------Average Weekly Income Levels of Selected Capil Groups
Couples
Sole Parents
Australian
European
Asian
Total Gapil Group
. . • • . $0 $50 $100 $150 $200 $250
Average Weekly Income Level
-
• $300
. $350 $400
11 (j) C :0 m ~ CA)
"'co
I I I I I I I I I I I I I I I I I I I I
- 49 -
Table 3.2: Family income by percentage of income spent on mortgage repayments
Net family income Wave 2 ($ )
Percentage of income on mortgage
0-15%
16-20%
21-25%
26-30%
30% +
TOTAL % N
$200 &
less
1.0
8.8
29.4
30.4
30.4
100.0 102
$201-$250
2.2
17.2
52.7
20.4
7.5
100.0 93
statistically significant at P<.OOOl
$251-$300
5.3
18.7
48.0
18.7
9.3
100.0 75
$301 &
over
38.3
25.0
9.4
10.9
16.4
100.0 128
Percent all Capil N %
56 14.1
71 17.8
127 31.9
78 19.6
66 16.6
100.0 398
Given Capil's policy pegging payments to 25 per cent of income, it could be
expected that a far greater majority of recipients would be paying 21 to 25
per cent of income on mortgage, regardless of income level, than appear
across all four income groupings.
Overall, families on incomes of $200 or less per week were more than twice
as likely as families with incomes over $300 per week to be paying more than
25 per cent of their weekly income on mortgage repayments (61 per cent
compared to 27 per cent). Families with the lowest incomes were also almost
twice as likely as families on the highest incomes to be paying more than 30
per cent per week on repayments. The data reveal then, an inverse
relationship between level of family income and the proportion of income
spent on loan repayments. It would therefore appear that mortgage
repayments are not being adjusted or maintained in accordance with income
levels.
1 ,I
1 I I I
I I I I I I I
I I' I I I I I
- 50 -
Figure 3.4 provides a composite of characteristics of Capil families paying
15 per cent or less of their income on their loan. As shown these families
are much more likely to be married couple families than one-parent families.
The most striking characteristic shown in Figure 3.4 is the relatively high
proportion (nearly two-fifths) of those families with income over $300 per
week who are in this group (mostly couples). (See Figure 3.4).
They are also substantially more likely to be wage or salary earners than
government beneficiaries. Asian born families, were the least likely of the
ethnic groups to be paying 15 per cent or less of income on mortgage
payments.
On the whole, the families paying the smaller proportion of family income on
their loan repayments tend to be married couple families of European or
Australian background. They are also more likely to be employed and
receiving the higher levels of weekly income.
In contrast, for those families who are spending higher proportions of
their income on mortgage, the picture is somewhat different and more complex
than for those paying the lowest proportions. As Figure 3.5 shows,
proportionately more one-parent families than couples are to be found in
this group. Again the most striking characteristic to emerge is that for
weekly income. Nearly a third of families with income of $200 or less per
week were spending a high proportion of income on their loan (mostly one
parent families). However, a significant number of families with income
over $300 per week were also making these high repayments (mostly couples).
There was little difference between the proportion of wage and salary
earners and the proportion of government beneficiaries to be found in this
group. Figure 3.5 reveals then, that among those families paying a high
proportion of income on mortgage are those on the lowest incomes dependant
on government benefits, especially one-parent families. (See Figure 3.5).
On the other hand, this high repayment group also includes Asian born
families (mainly couples) who were the most likely of the ethnic groups to
I ·.1 ,I ,I I I I' t ·1 I' I I I I' /'
I' I;
I I I' I
- 51 -
FIGURE 3.4
Mortgage as a Proportion of Income Who is paying 15 per cent or less?
One Paren Families ~79)
Couple Families (219)
Australian Families 208)
European Families ~1E ~
Asian Familkrs (72)
<$200 Weekly Income ~02)
>$300 Weekly Income (128)
Wage or Salary ~75)
~overnment Benefits (223)
Total capil Group (~98)
• • 0% 10% 20% 40%
Percentage paying 15% or less
Number in brackets refers to number of cases percentage was based on
I ,I
1 I' t I I I I I' I I' I I I' I I I I I
- 52 -
FIGURE 3.5
Mortgage as a Proportion of Income Who is making the high repayments (30% plus)?
One Parent Families (179)
Couple Families (21~)
Australian Families 208)
European Families (118)
Asian Families (72)
<$200 Weekly Income (102)
>$300 Weekly Income (128)
wage or Salary (175)
Government Benefrts ~23)
Total cap/I Group (398
• • • 0% 10% 20% 30% 40%
Percentage paying over 30%
Number in brackets refers to number of cases percentage was based on
I
I I'
. 1
I I I ,I
I I I I
- 53 -
report they were paying more than 30 per cent of income on their loan
repayments. As previously noted, these families are also more likely to be
employed and have the higher average incomes.
On the whole then, families paying a high proportion of income on loan
repayments tend to be, a) families on the lower income levels, one-parent
families and on government benefits and b) Asian born families, employed and
on higher income levels •
Changes in Family Incomes and Impact on Mortgage Repayments
OVerall, 58 per cent of Capil families had experienced an increase in real
family income since last interviewed. Over two-thirds of couple families
(67%) compared to less than half (47%) of one-parent families had increased
their real family income. Again, the question arises as to whether these
increases or decreases in real family income translated into changes in
mortgage repayments? Table 3.3 reveals a strong association between change
in real income and the proportion of income spent on mortgage.
Table 3.3: Change in real family income since Wave 1, according to percentage of income spent on mortgage repayments
Percentage of income on mortgage
0-15%
16-20%
21-25%
25-30%
30% +
TOTAL % N
Total N=397
Decrease of $50 or
more per week
3.9
2.0
31.4
23.5
39.2
100.0 51
CHANGE IN REAL FAMILY INCOME
Decrease of up to $50 pw
2.6
12.2
40.0
27.8
17.4
100.0 115
Increase of up to $50 pw
7.5
17.2
49.5
19.4
6.5
100.0 93
Statistically significant at P<.OOOl
Increase of $50 or
more per week
31.2
29.0
13.8
11.6
14 .5
100.0 138
I I I I I I , I I I I I I t I I r I I I
- 54 -
Just under one-third of those families who had experienced a large increase
in real family income ($50.00 or more per week) were outlaying 15 per cent
or less of their income on loan repayments. On the other hand, almost two
fifths of families whose real income had decreased by over $50.00 per week,
were paying more than 30 per cent of income on their mortgage.
overall, two-thirds of families with the larger decrease in real family
income (decrease of $50.00 or more per week) were paying more than 25 per
cent of family income on repayments. This was so for only just over one
quarter of those families who had experienced an increase in real income of
over $50.00 per week.
As with level of income, once again the data reveal an inverse relationship
between a change in income and the proportion .of family income outlayed on
loan repayments. Clearly, an increase in real income resulted in lowering
the proportion of income spent on mortgage payments. Likewise, a decrease
in real income increased the proportion of income outlayed on loan
repayments.
These data strongly suggest that for a number of Capil families, repayments
are not adjusted in line with income changes. It seems one-parent families,
with lower incomes, are those least likely to have experienced larger
increases in income since Wave 1. Consequently, they tend to be paying a
higher proportion of income on mortgage than couple families. With the
exception of Asian born families, for couples increased employment (Chapter
2), greater increases in income levels and a higher average income suggest
again, mortgage repayments are not adjusted in line with these changes,
resulting in decreased proportions of income devoted to mortgage. Clearly
family type, especially for Australian and European born families, is an
important factor in explaining the distribution of mortgage repayments as a
proportion of income.
For Asian born families the picture is somewhat different. Although nearly
all Asian families consisted of married couples, on above average income,
only a small number of families tended to pay less than the expected
I I f I t I , I I I I I I f I I , I I t
- 55 -
proportions of their income on mortgage repayments. Unlike other couples,
Asian couples appear to be re-adjusting their repayments to pay a higher
proportion of their income on their loan. Thus, it appears Asian families
are attempting to reduce their loan commitment more quickly than other Capil
families.
Comparison of Housing Costs: Capil and Renter Groups
This section looks at how Capil families compare with the renter group
families in terms of their weekly outlay on accommodation.· Entry into home
ownership brings with it added housing costs such as rates and house
insurance, two mandatory items of housing costs that need to be taken into
consideration when comparing the proportion of family income spent in
homeownership and rent where these costs are often hidden. (For the Capil
group, 'housing costs' within this section refers to weekly mortgage plus
weekly cost of rates and house insurance.)
As previously noted, the average mortgage payment for the Capil group as a
whole was $64.00 per week. However, when rates and house insurance costs
are added, the average weekly cost of housing rises to $75.81 per week. On
average, these costs add approximately 5 per cent to housing costs for the
Capil group.
The average proportion of income spent on rent for the renter group as a
whole is 20 per cent of family income for Ministry of Housing tenants, 34
per cent for private renters and 23 per cent for the renter group as a
whole. In dollar terms, the average weekly rent payment was $83.00. Table
3.4 shows both the percent distribution of weekly housing/rent costs and
average weekly payment in dollar terms for both the Capil and renter groups,
according to tenancy.
I I
f I
I I
,I
" I , I I I
- 56 -
Table 3.4: Weekly Housing Costs: Capil and Renters by tenancy.
Average Average Average Weekly weekly MOH weekly Private weekly payment Capil payment Renter payment Renter payment
$ % $ % $ % $
$50 or less 15.1 46.07 71.0 35.24 23.8 29.43
$51-$75 52.6 63.98 25.8 60.63 11.9 67.25
$76-$100 16.5 83.73 3.2 84.25 35.7 89.17
$101 + 15.8 135.23 28.6 126.38
(Average (Average (Average $75.81 $43.37 $82.96
TOTAL % 100.0 100.0 100.0 N 406 124 42
The majority (53 per cent) of Capil families are paying between $51 and $75
per week on housing costs, with 15 per cent outlaying $50 per week or less.
Nearly three quarters of Ministry of Housing tenants are outlaying $50.00 or
less per week on accommodation compared to just under one-quarter of private
renters.
On the other hand, private renters were twice as likely to be paying over
$100 per week accommodation than were Capil recipients, while no Ministry
tenants reported accommodation costs this high. Overall, the average weekly
housing costs for Capil families, with rates and house insurance included,
most closely resemble accommodation costs for private renters.
Another way of looking at how these groups compare is to examine housing and
rent costs as a proportion of family income.
For example, Table 3.5 shows the percent distribution of housing costs as a
proportion of income for Capil families and rent as a proportion o~ income
for renters.
I I I I I I I , I,
t
I I
- 57 -
Table 3.5: Weekly housing costs as a percentage of income at Wave 2: Capil and Renters
CAPIL - ,Mort, Rates, Ins) RENTERS - ,rent} One- All One- All
Percentage Couples parent Capil Couples parent Renters of income , , , , , ,
15 & less 11.9 4.5 8.5 18.7 15.4 16.9
16-20 9.1 5.0 7.3 34.7 37.4 36.1
21-25 20.1 20.1 20.1 18.7 19.8 19.3
26-30 29.2 31.3 30.2 13.3 11.0 12.0
30 + 29.7 39.1 33.9 14.7 16.5 15.6
TOTAL , 100.0 100.0 100.0 100.0 100.0 100.0 N 219 179 398 75 91 166
A higher proportion of Capil families as a whole pay more of their income on
housing costs than do the control group of renters. Nearly three quarters·
of the renter group spend 25 per cent or less per week on housing costs
compared to just over one third of Capil recipients. Capil families are
more than twice as likely to be spending over 30 per cent of their income on
housing costs than are the renter group. It would seem then, that once
mandatory housing costs such as rates and insurance are added to mortgage
costs, it has the effect of nearly doubling the percentage of Capil families
paying a high proportion (over 25') of income on housing.
For the Capil group, while housing costs echo the differences between
couples and one parent families shown in mortgage repayments, it becomes
more pronounced for one-parent families at the more expensive level of
housing costs. The same pattern is not revealed for the rental group.
There is little difference between couple and one-parent families at all
levels of housing costs as a percentage of income. On the whole, the rental
group appear to be paying substantially lower proportions of their income on
housing costs than do the average Capil family. However, further analysis
of the renter group provides significant differences within this group when
controlling for tenancy.
I I
I "
t "
,I,
I
" t ,I
- 58 -
Figure 3.6 shows the levels of percentage of income spent on housing costs
(with rates and house insurance included) for the Capil group as a whole,
compared with Ministry of Housing tenants and private rental tenants. It is
obvious that the high proportion of renter families paying less than 25 per
cent of their income on housing costs is due to the high proportion of
Ministry tenants in the renter sample. Well over three-quarters of Ministry
tenants pay 25 per cent or less of income on rent, compared to two-fifths of
private renters.
In contrast, nearly half of the private renters (45%) are paying over 30 per
cent of income on housing costs, compared to just 6 per cent of Ministry
tenants. OVerall, the proportion of income spent on housing costs for the
Capil group more closely resemble rental costs for private renters than for
Ministry tenants. (See Figure 3.6).
Further examination of the two rental groups by family type, reveals little
difference for those families in Ministry accommodation in the proportions
of one parent (84%) and couple families (82%) paying 25 per cent or less in
housing costs. Only 7 per cent of Ministry couple families and 4 per cent
of Ministry one-parent families were paying over 30 per cent of their income
on rent. (See Table 3.6)
Table 3.6: Rent as a proportion of family income, renter group by tenancy and family type
MOH tenants Private renters One- One-
Rent as a Couples parent Couples parent percentage of income % % % %
0-15% 20.0 19.1 15.8 4.3
15-20% 40.0 44.1 15.8 17.4
21-25% 21.8 20.6 10.5 17.4
26-30% 10.9 11.8 21.1 8.7
30%+ 7.3 4.4 36.9 52.1
TOTAL % 100.0 100.0 100.0 100.0 N 68 55 19 23
~.- •• -.~--~-~ •••• -.~
0; °e 3!. o
f
:-;)
Housing/Rental Costs as a Percentage of Income by Tenancy Loan and Control Groups
5O%w---------------------------------------------------------------~
40%
30%
20%
10% DLoanGroup
D MOH. Ranters
0% .. 1 ), 1\),),),) h »,),;),1 ), 1),),),)1 ), L),),'" ), """ 1 ~ PrIvate Ranters
0-15% 16-20% 21-25% 26-30% 31%+
Housing Costs as a Percentage of Income
HousIng costs includes mortgage. rates and inSlJ'ance costs
"Tl (j) C JJ m
!» (j)
Ul U)
I J I , I I f t I I' I
• I I f 1 f J I I
- 60 -
For private renters however, although couples are only slightly more likely
(42%) than one-parent families (39%) to be paying 25 per cent or less of
their income on rental, more than one-half (52%) of all one-parent families
are paying more than 30 per cent of their income on housing compared to
approximately one third (37%) of couple families, (and compared to 39 per
cent of Capil one-parent families, see Table 3.5).
These data suggest that a Capil loan may have the most impact on reducing
housing costs for those families renting in the private sector, and this is
especially so for one-parent families, usually on lower incomes.
This section also reveals that Capil families overall, tend to spend a
higher proportion of their income on housing than do renters; with the
exception of one-parent families in private rental, over half of whom are
paying over 30 per cent of their income on rent. On the whole, average
housing costs (when mortgage, rates and house insurance are added together)
in dollar terms are on a par or slightly higher than for renters in the
private sector, while Ministry renters had the lowest housing costs of all
three groups. Obviously, the 'trade off' for Capil families incurring these
higher costs lies in the accumulation of equity in an asset unavailable to
Ministry and Private renters •
Disposable Income After Housing Costs
Families incur gains or losses in income mainly because of changes in
employment or family composition. The Capil scheme is designed to assist
low income families by reducing the 'loss' to net income attributable to
high costs of accommodation where such families seek to be housed in the
private ownership sector. An important measure of the success or otherwise
of Capil is the extent to which participating families experience increased
disposable incomes after housing costs have been deducted.
For the remainder of this chapter analysis will concentrate on the
characteristics of after housing costs disposable income, hereafter 'simply
referred to as 'after housing income'.
I I
I I,
I
I I
- 61 -
Table 3.7 shows the distribution of after housing income for families in
both the Capil and the renter groups. As shown, after housing costs have
been taken into consideration, 61 per cent and 64 per cent respectively of
both the Capil and renter group families have disposable incomes of $200 or
less.
Table 3.7: Disposable income after housing costs, Wave 2: Capil and Renter groups by family type
Capil Renters
After Housing One- All One- All Income Couples parent Capil Couples parent Renters
% % % % % %
$150 & less· 11 55 31 15 59 39
$151-200 32 28 30 24 25 25
$201-300 30 14 23 41 13 26
$301 + 27 3 16 20 3 11
TOTAL % 100.0 100.0 100.0 100.0 100.0 100.0 N 219 179 398 75 92 167
Note: percentages rounded
On average, rental families receive lower after housing incomes. For both
the Capil group and the renter groups, one-parent families are almost twice
as likely to have after housing incomes of $200 per week or less. OVer half
of one-parent families in both the Capil group (55%) and the renter group
(59%) reported after housing incomes of $150 per week or, less. In both
groups a significant proportion of couples have disposable incomes higher
than $300 per week, almost 30 per cent in Capil and one-fifth in the renter
group. Again, examination of the Capil group and the renter group,
according to nature of tenancy, reveals some diversity within the ~enter
group.
I I
1/
I
t
" I, I I
I J
- 62 -
Table 3.8: Disposable income after housing costs, Wave 2: Capil and Renter
groups, by tenancy
CAPIL RENTERS
Income after ALL MoH Private All Renters housing ($) , , , ,
$150 & less 31 37 45 39
$151-200 30 27 17 25
$201-300 23 27 21 26
$300 + 16 9 17 11
TOTAL , 100.00 100.0 100.0 100.0 N 398 124 42 166
Note: percentages rounded
In Table 3.8, the Capil group is compared with the private and Ministry
renters. There is little difference in the proportions of all groups
reporting after housing income of $200 or less. However, private renters
were much more likely to report after housing income of $150 or less,
followed by Ministry tenants and the Capil group. This reflects the high
proportion of private tenants paying over 30 per cent of their income in
rent. Private tenants were only slightly more likely to indicate after
housing income of over $300 than Capil recipients, and much more likely to
do so than Ministry tenants.
,I I)
J
, "
I I,
'I I
- 63 -
Table 3.9: Disposable income after housing costs, according to family type: capil and Renters
Income after housing ($)
$150 & less
$151-200
$201-300
$300 +
TOTAL ,
N
CAPIL
Couples ,
11
32
30
27
100
219
Oneparent ,
55
28
14
3
100
179
MOH
Couples ,
16
24
42
18
100
55
RENTERS
Oneparent ,
54
30
15
1
100
69
PRIVATE
OneCouples parent , ,
11 74
26
37
26
100
19
9
9
9
100
23
Further analysis by family type (Table 3.9) for the renter group revealed
that compared to one-parent families in the Capil group and one-parent
families in Ministry rental accommodation, one-parent families renting in
the private sector were much more likely to have very low disposable income.
Nearly three-quarters (74') of these families had after housing income of
$150 or less, with the remainder evenly distributed over the other income
levels. Couples in private rental more closely resembled the Capil group
couples, while Ministry couples in the renter group were relatively over
represented at the lowest income level and under-represented at the highest.
One-parent families in both Capi1 and the renter group are much more likely
than couples to have lower after housing income, reflecting their lower
income levels. This has the most impact for one-parent families in the
private rental sector, where they are more likely to be paying higher
proportions of their income on rent than one-parent families renting in the
public sector. While couples in private rental are also more likely than
their Ministry counterparts to report higher proportions of income spent on
I J I I I I I I 1 , I 1 I I t I t J I J
- 64 -
rental, the difference is not as dramatic. This suggests a Capil loan would
probably have most impact on the after housing disposable incomes of one
parent families in the rental sector.
Figure 3.7 presents the distribution of after housing income for the Capil
group according to place of birth. On the whole, Australian and European
born families were much more likely than Asian born families to report lower
levels of after housing income. This was particularly true for Australian
born families where over two-thirds of families were in this category. The
higher percentages of Asian born families with higher levels of after
housing income reflects again the higher level of ·family income of this
ethnic group. (See Figure 3.7).
Summary and Conclusions
While Capil policy is to peg mortgage repayments to 25 per cent of family
income, this chapter clearly shows that a number of Capil families, for one
reason or another, are not complying with this policy. Increases in real
income have not always translated into increases in mortgage repayments or,
conversely, a decrease into lower repayments. Indeed those families
spending the lowest proportions of income, tend to be couple families,
employed and on relatively higher income levels. On the other hand,
families spending the higher proportions of their income on loan repayments,
tend in the main to be one-parent families, in the lower Capil income levels
and dependant on government benefits.
The exception here are Asian couple families, employed and with higher than
Capil average incomes, who are much more likely to be paying a high
proportion of income on mortgage than similar families of Australian or
European background. Clearly, family type and its relationship to income
levels has an impact on the proportion of income outlayed on mortgage by
Capil families, especially for those families of Australian and European
background. In the main, Asian families, mainly couples, appear to be
adjusting their loan repayments in line with their increases in income,
thereby facilitating a speedier payout of their mortgage commitment. For
other Capil families, mortgage repayments are obviously not being adjusted
in line with income changes.
~-.~~~-.~~~.~ •• -~~.~
.1 °e tf a. e CJ c
.9 '0 &
I
After Housing Disposable Income by Ethnicity Wave Two. Loan Group
~%-'------------------------------------------------------I
30%
20%
10%
D Australian
D ElJ'OP8an
0% .J L '\. ~'\.'t '\. IQ'~ I '\. '''''''''' ... '\. IQ",,"" I ~ Asian $150& Less $151-$200 $201-$300 $301+
After Housing Disposable Income
'"':l 1-'.
\.Q ~ ti ro W
--.J
~
U1
I J I I I I t t I I I 1 I I I I J I I I
- 66 -
After allowing for mortgage repayments, rates and insurance, the majority of
both the Capil and renter group families have disposable incomes of $200 per
week or less. OVerall, however, renter group families average lower
disposable incomes after housing costs and for both the capil and renter
groups, one parent families are almost twice as likely to have disposable
incomes of $200 or less. In the main, Australian and. European born families
were more likely to have lower disposable income than Asian born families.
Capil families overall, tend to spend a higher proportion of their income on
housing, than do renters; with the exception of one-parent families in
private rental, over half of whom are paying over 30 per cent of their
income on rent. On the whole, for Capil families, average housing costs
(when mortgage, rates and house insurance are added together) in dollar
terms are on a par or slightly higher than for renters in the private
sector, while Ministry renters had the lowest housing costs of all three
groups. Obviously, the 'trade off' for Capil families incurring these higher
costs lies in the accumulation of equity in an asset unavailable to both
Ministry and private renters.
I
I I J, I' I I,
I, t I I,
I I I
- 67 -
CHAPTER 4
COPING FINANCIALLY AS A CAPIL FAMILY - F. Kaas
If the Capil scheme is to be judged successful, recipients of loans must be
better off financially and feel that the non-financial benefits of home
purchase outweigh the additional responsibilities entailed (e.g. repairs,
rates, etc).
Financially, families in the long term should be able to accumulate capital
which would otherwise have been 'lost' within the private rental sector. In
the short to medium term, Capital Indexed Loans seek to ease the burden
placed on house purchasers in the early stages of repayment by the
traditional credit foncier mechanism. For low income families inability to
meet repayments in the early years can prevent purchase of a house, or can
make repayments a major financial burden. When repayments are set at a
fixed level, lower income families often have little disposable income after
meeting their repayments. The Capil instrument aims to make home purchase
available to lower income groups and to reduce the burden of high repayments
by setting them at 25 per cent of family income. Capil families should then
be able to meet other living costs more readily than those paying off a
traditional housing loan because they have more disposable income.
This section of the report examines the extent to which Capil families are
coping financially, and where relevant, compares loan group families with
families in rental accommodation. The measures incorporated in this part of
the evaluation are:
reported difficulties with meeting various costs such as credit payments, mortgage repayments or rent, and daily living costs;
respondents,' assessments of their current financial circumstances such as the ability to save or spending more each week than the level of income received;
respondents' perception of their current financial status compared with a year ago; and
I I I I I I , , I I I 1 I I I I I I I I
- 68 -
respondents' estimation of their likely financial circumstances within a year's time.
It is intended that this information will be supplemented at a later date
with analysis of the financial circumstances of families who have sold their
homes and left the Capil scheme and of the level of equity in their homes
achieved by capil families still in the scheme.
The above indicators for both Capil participants and renter group members
are analysed according to a number of factors some of which may be
attributable to being involved in the Capil scheme and others which may be
argued to affect families regardless of their tenure status. Those factors
which may be attributable to participation in the Capil scheme relate to
mortgage and other housing costs. Therefore, financial coping measures have
been analysed according to the level of mortgage and total housing costs as
a proportion of income, and by the level of disposable income once mortgage
and housing costs have been deducted.
Factors which may not be directly related to participation in Capil but
which do influence the level of financial coping through their impact on
family income include changes in employment and in family status.
Consequently financial coping indicators have also been analysed according
to changes in disposable income, changes in employment and/or family status
and by principal source of income.
Experience of Financial Difficulties
The first indicator of how well families are coping financially is the
extent to which they have difficulty meeting the ordinary costs of living.
Table 4.1 shows the proportion of families that reported they had frequent
or occasional difficulty with 7 goods or services. It appears that one
parent families were more likely to have experienced difficulties than
couples, particularly in paying for clothes, food and entertainment.
I I
I I I,
t· 'I I I I,
" I I I I I I
I
- 69 -
Table 4.1: Financial difficulties experienced since Wave 1 by loan and renter groups, per cent of each group responding 'frequently' or
'occasionally'
Difficulty experienced
Mortgage/rental arrears
frequently occasionally
Insufficient money for food
frequently occasionally
Insufficient money to pay bills
frequently occasionally
Obtaining credit frequently occasionally
Meeting credit payments
frequently occasionally
Insufficient money for clothes
frequently occasionally
Insufficient money for entertainment, pleasure, etc
frequently occasionally
CAPIL GROUP One
Couple n=225
8 23
7 25
11 45
7 9
9 26
18 35
38 28
parent n=181
6 27
13 29
18 43
7 9
12 27
37 30
48 35
PRIVATE RENTERS One
Couple n=19
11 11
11 37
11 68
16 11
16 21
21 53
42 37
parent n=23
9 9
13 48
22 57
13 4
4 35
30 44
44 44
MOH TENANTS One
Couple n=55
6 20
2 26
6 44
9 11
11 22
13 35
33 38
parent n=69
3 23
13 35
15 58
12 10
12 22
38 38
65 19
* Other respondents either had no difficulty obtaining credit or meeting payments or have never sought credit.
One third of loan families have experienced frequent or occasional
difficulties with mortgage arrears and food, and more than half have had
I I I I I I I I I I I I I I I I I I I I
- 70 -
difficulties paying for clothes, bills or entertainment. Life is still a
struggle for many loan group families with 13 per cent of sole parents
stating they frequently had insufficient money for food. The proportion of
sole parents frequently having insufficient money for food was identical for
the other tenure groups.
Among couples, almost half of private renter couples had experienced
frequent or occasional difficulties paying for food, compared with 32 per
cent of Capil couples and 28 per cent of couples in ~inistry of Housing
rental accommodation. ' A similar pattern emerged for frequent mortgage and
rental arrears, although slightly more Capil and Ministry of Housing
families reported occasional arrears difficulties than did private renters.
This may reflect less secure tenure in the private sector. One-parent
families in the loan group also experienced a lower incidence of difficulty
in most areas compared with similar families in private rental. On many
measures, capil sole parents seemed in a similar or better financial
position to Ministry of Housing sole parents.
It is in the area of meeting daily living costs that the experience of one
parent families contrasts most sharply with that of couple families. As
described above, the problem of frequently having insufficient money for
food was almost twice as common among Capil one parent families as couples
(13% compared to 7%) and was also markedly higher for sole parent renters.
For mortgage arrears this pattern does not hold across the tenure groups,
sole parents reported a lower incidence of difficulties than couples.
(Perhaps sole parents trade off expenditure on food and housing differently
to couples).
Sole parents reported more difficulties than couples in paying bills, buying
clothes and spending on entertainment. For couple families about 20 per
cent frequently experienced insufficient money for clothes and about 10 per
cent frequently could not pay bills. For one-parent families more than a
third frequently experienced having insufficient money for clothes and about
18 per cent frequently had difficulty paying bills.
I I I I I I I , I I I I I I I I I I I I
- 71 -
All families reported very highincidences of not having enough money at
some stage for meeting the costs of entertainment and leisure activities.
Again, however, sole parents more frequently reported difficulty finding
money for this expenditure.
The picture is thus one of ongoing struggle for low income families
regardless of housing tenure, although modified by low housing costs
significantly reducing difficulties for Ministry tenants and Capil families.
For those buying their homes through the capil scheme at least a third have
experienced mortgage arrears, more than a third of families have not had
enough money for food at some time, more than half have not been able to buy
clothes and two-thirds have been unable to spend money on leisure or
entertainment activities.
Housing tenure does seem to make a difference, however, in that couples and
one-parent families in the private rental sector report even higher
incidences of such difficulties than those in the Capil scheme. It appears
then that Capil and Ministry tenancy do" reduce the financial difficulties
experienced by low income families to some degree.
Comparing the experiences of families according to their place of birth, as
shown in Table 4.2, similar proportions of Australian and European
background experienced difficulties frequently or occasionally with such
items as meeting credit payments (42 per cent) and arrears in housing
payments (35 per cent). However they were different in regard to living
costs such as food, (38 per cent compared with 50 per cent), and clothing,
(64 per cent compared with 77 per cent).
I I I I I I
I I I I I I I I I I I I
- 72 -
Table 4.2: Financial difficulties experienced by Capil group families since Wave 1 according to place of birth, per cent who have occasionally or frequently experienced difficulty
Difficulty experienced
Difficulty meeting credit payments
Mortgage arrears
Difficul ty in obtaining credit
Insufficient money for food
Insufficient money for clothes
Insufficient money to pay bills
Insufficient money for entertainment, pleasure, etc
Note: percentages rounded
Australians
n = 212
42
35
19
38
64
65
82
Europeans n = 122
43
35
17
50
77
69
86
Total all Asians Capil group n = 72 n = 406
14 37
19 32
6 16
10 37
14 59
19 58
30 74
A very different experience of financial difficulties is reported by
families of Asian origin, with much lower proportions in all categories.
Only 10 per cent reported frequent or occasional difficulty in finding money
for food, 14 per cent for clothing, and 19 per cent for housing payments or
bills. The predominance of couple families among this group is an important
factor in reducing the level of difficulty experienced. As noted earlier,
one-parent families have not'experienced increases in income to the same
extent as couple families and have experienced reductions in income to a far
greater degree than couples.
Financial Difficulties and Change in Income
As shown in Table 4.3, families experiencing the largest decreases in
incomes reported the highest incidence of financial difficulty on all items.
For example, 44 per cent of those in the loan group who had large decreases
I I I I I' I I I I· I' I I I I I I I I I I
- 73 -
in income also had mortgage arrears at some stage compared with 28 per cent
of those with large increases in income. Nearly 75 per cent of the group
with the largest decrease in income had experienced frequent or occasional
difficulty in buying clothes compared with 51 per cent of those with large
increases in income.
Table 4.3: Financial difficulties experienced since Wave 1 interview by change in real family income - Wave 1 to Wave 2 for Capil group
Difficulty experienced
Difficulty meeting credit payments
Mortgage arrears
Difficulty obtaining credit
Insufficient money for food
Insufficient money for clothes
Insufficient money to pay bills
Insufficient money for entertainment, pleasure, etc
Other
Decrease Decrease Increase Increase greater up to up to greater
than $50 $50 $50 than $50 n=50 n=115 n=93 n=138
49.0 32.2 35.5 37.0
44.0 30.4 32.3 28.3
16.7 15.7 22.8 10.9
49.0 40.9 43.0 24.8
74.5 58.3 62.4 51.4
66.7 63.5 58.1 50.0
90.2 70.8 79.3 66.7
9.8 12.2 10.8 6.5
Total n=396
N %
146 36.8
126 31.8
62 15.8
146 36.9
234 58.9
230 57.9
291 73.9
38 9.6
A potential advantage of the Capil scheme for families is that repayments
are reduced if family income falls, thereby reducing at least one dimension
of financial difficulty. (In practice, however, repayments are often not
adjusted when income falls). In addition, the housing security of a family
is not threatened as would be the case in the private rental sector or under
traditional foncier financing.
I I I I I I I I I· I I I I I I I I I I I
- 74 -
Families with Arrears Agreements
About 10 per cent of Capil families entered into an agreement with the
Ministry to continue repaying their loan at an appropriate rate and to repay
arrears when savings were available for this purpose. Both couple and one
parent families were involved in these agreements in similar proportions,
but differed in an unusual way. As shown in Table 4.4, 17 out of 38 of
those with agreements had experienced increases in income greater than $50
per week - a much higher proportion than families without arrears
agreements.
Table 4.4: Families with MOH arrears agreements, according to family type and level of change in income
Change in income
Decrease greater than $50 pw
Decrease up to $50
Increase up to $50
Increase greater than $50 pw
TOTAL
pw
pw
Statistically significant at
Couple families
N
2
2
5
12
21
p<.02
One-parent families
N
5
4
3
5
17
While for one-parent families those with arrears agreements were roughly
evenly spread across the groups according to income change, 17 out of 21
families had experienced an increase in income.
This counter-intuitive association may indicate that for some families
increased levels of income do not .necessarily make coping with difficult
financial circumstances any easier or may suggest that arrears and the
establishment of an arrears agreement stimulates (or pressures) families to
find ways to increase their incomes and maintain their payments. The
I I I I I I I I I I I I I I I I I I I I
- 75 -
longitudinal nature,of the evaluation will enable the longer term effects of
changes in income and cost structures to be examined thereby determining
whether permanent increases in income result in more settled patterns of
financial management to occur, for example.
Coping With Mortgage Repayments
Capi1 families were also asked how difficult or easy it was to meet monthly
mortgage repayments. As shown in the Table 4.5, about half the families
felt they were 'just managing'. Sixteen per cent of couple families and 11
per cent of one-parent families said they found it difficult to meet their
repayments, with the remaining 30 per cent of one-parent families and of
couples reporting that meeting the mortgage was 'easy'.
Table 4.5: Difficulty currently experienced in meeting mortgage payments, according to family type
Difficulty/ease in meeting Couple One-parent mortgage payments families families Total
Difficult 16.0 11.0 13.8
Just managing 48.0 58.6 52.7
Easy 36.0 30.4 33.5
TOTAL \ 100.0 100.0 100.0 N 225 181 406
Differences are not statistically significant
Although Capi1 repayments are initially set at about 25 per cent of family
income, the second stage interviews found that there was considerable
variation around that level. When the level of difficulty in meeting
repayments was analysed, a relationship was found between ease of meeting
mortgage payments and the ratio of mortgage to income. Those families
paying more than 30 per cent of their income reported a high incidence of
difficulty, those spending smaller proportions of their income on mortgage
repayments being less likely to report difficulty meeting payments.
I I I I I I I I I I I I I I I I I I I I
- 76 -
Table 4.6: Difficulty of currently meeting mortgage payments, according to percentage of income spent on repayments
Per cent spent on mortgage payments
Difficulty/ease in meeting mortgage payments
Difficult
Just managing
Easy
TOTAL % N (Total 398)
Less than
15
5
36
59
100 56
16-20
9
55
37
100 71
Statistically significant at p<.OOl
Note: percentages rounded
21-25
13
56
31
100 127
26-30
15
54
31
100 78
More than
30
24
56
20
100 66
As shown in Table 4.6, 24 per cent of families paying more than 30 per cent
report difficulty compared with only 5 per cent for those whose mortgage
payments were less than 15 per cent of their income. Nevertheless, at all
levels of payment except less than 15 per cent, more than half of the
families said they were 'just managing'
Families Financial Situation at Time of Wave 2 Interview
Families in both loan and renter groups were asked to describe their usual
financial situation in terms of whether they were able to save. Those
families who experienced the greatest extent of difficulty in meeting costs
of various kinds described themselves as in the worst financial situations.
As indicated in the bottom row of Table 4.7, the vast majority of families
were grouped into the two categories of either 'no money left' (35%) or
'money left goes on bills' (42%). Only about 13 per cent were able to save
while 11 per cent were spending more than they received, or 'dissaving'.
The rest of Table 4.7 shows the proportion of each of these groups.
(dissavers etc.) who reported frequent or occasional difficulty paying for
food, clothes and other services. The dissavers had experienced financial
difficulties of major dimensions, with nearly 90 per cent reporting that at
some time since the last interview they had no money to pay bills, 82 per
I I I I I I I I I I I I I I I I I I I I
- 77 -
cent with insufficient money for clothes, 61 per cent unable to afford food
and 62 per cent unable to pay mortgage commitments. The proportion
experiencing these difficulties is less among those in a better financial
position.
Table 4.7: Financial difficulties experienced by loan group families, according to financial situation at Wave 2, per cent of each group who responded 'frequently' or 'occasionally'
Difficulty experienced
Mortgage arrears
Insufficient money for food
Insufficient money for bills
Obtaining credit
Making credit payments
Insufficient money for clothes
Insufficient money for entertainment, pleasure,etc.
TOTAL
Able to save n=51
22.0
11.8
29.4
2.0
19.6
35.3
45.1
12.6
Financial Situation
Money left, goes on bills
n=169
23.1
22.5
46.7
10.8
30.2
45.6
70.4
41.6
No money left n=142
37.3
55.6
72 .5
24.3
40.8
76.8
85.6
35.0
(All) statistically significant at p<.OOl
Spend more than receive
n=44
61.4
60.5
88.6
25.0
72.7
81.8
84.1
10.8
At the other end of the spectrum the savers reported that 12 per cent had
insufficient money for food at some time since the last interview, 35 per
cent were unable to afford clothes and 22 per cent had been in mortgage
arrears.
When the spending situation of families is analysed according to family type
and the loan and rent er groups are compared at Waves 1 and 2, several
important outcomes emerge. (See Table 4.8).
.. _ ...... - _"_"1_"_" __ "- 78 - - -
Table 4.8: Financial situation of Capil and renter group families at Wave 1 and Wave2, according to family type
Able to save
Some money left, goes on bills
No money left at end of week
Spend more than receive
TOTAL % N
LOAN Couple
families
Wave 1
25.3
46.2
21.3
7.1
100.0 225
Wave
12.4
44.9
33.3
9.3
100.0
2
Statistically significant at p<.Ol
GROUP One-parent
families
Wave 1 Wave 2
13.9 12.8
45.0 37.8
32.8 36.7
8.3 12.8
100.0 100.0 180
PUBLIC RENTERS PRIVATE Couple One-parent Couple
families families families
Wave 1 Wave 2 Wave 1 Wave 2 Wave 1 Wave
9.3 12.7 7.2 7.2 15.8 31.6
38.9 49.1 37.7 37.7 36.8 36.8
35.2 34.5 39.1 36.2 31.6 31.6
16.7 3.6 15.9 18.8 15.8
100.0 100.0 100.0 100.0 100.0 100.0 55 69 19
RENTERS One-parent
families
2 Wave 1 Wave 2
13.0 8.7
21.7 47.8
39.1 34.8
26.1 8.7
100.0 100.0 23
I I I I I I I I I I I I I I I I I I I I
- 79 -
Comparing Capil group families' financial situation at the Wave 2 interview
with that at the first interview shows that couple families report a
dramatically reduced proportion of savers, a substantially increased group
with no money left at the end of the week and a slightly enlarged group of
dissavers. One-parent families report a slightly reduced savers group and a
substantially increased proportion of those who spend more than they
receive.
Comparing the two family types, couple families report a substantial
reduction in the number who are saving while for one-parent families the
outcome of most concern is the increase in the proportion of dissavers.
Both family types now report similar proportions of those able to save. It
should be noted that investment in home purchase is an important form of
saving.
For families in the renter group, trends for couple families were very much
in the opposite direction. Couple families able to save increased as a
proportion and those dissaving were substantially reduced, particularly
those in private rental. For one-parent families there was much less
change. There was a substantial fall in the proportion of those in private
rental able to save while there was no change for those in the public
sector. Conversely, the proportion of those dissaving in the private sector
fell dramatically while it rose slightly for those in the public rental.
Financial Situation According to Place of Birth
When the Capil group is examined according to place of birth clearly
different patterns emerge. Again the Australian and European groups show
similar patterns, as shown in Table 4.9, although the Australians feature
the highest proportion of dissavers.
I I I I I I I I I I I I I I I I I I I I
- 80 -
Table 4.9: Financial situation of Capil group families at Waves 1 and 2, according to place of birth
Able to save
Some money left, goes on bills
No money left at end of week
Spend more receive
TOTAL , N
than
Australian
Wave Wave 1 2
15 10
46 35
31 40
8 15
100 100 212
Place of birth European
Wave Wave 1 2
17 12
47 49
27 30
9 8
100 100 121
Statistically significant at p<.OOl
Asian
Wave Wave 1 2
43 19
43 49
10 29
4 3
100 100 72
A dramatic difference emerges for the Asian born group, however, with the
proportion of savers more than halved from 43 per cent to 19 per cent.
Such factors, particularly where families have substantially increased their
income and have chosen to undertake additional expenditures, mean that
increased dissaving cannot be simplistically equated with a deterioration in
financial circumstances.
Better Or Worse Off Than A Year Ago?
Respondents in both the Capil and the renter groups were asked if they felt
they were financially better or worse off than a year ago. Despite the
changes in their savings position (discussed in the previous section),
families in the Capil group were mainly of the view that they were better
off now or at least 'the same' as a year ago. Table 4.10 compares the
situation as reported by families in both Capil andrenter groups.
I I I I I I I I I I I I I I I I I I I I
- 81 -
Table 4.10: Change in financial position over previous year, loan and renter groups according to family type
Change in financial position
Better now
The same
Worse now
Don't know
TOTAL , N
Capil group
Couple
48.0
27.1
24.0
0.9
100.0 225
One-parent
50.8
24.3
23.8
1.1
100.0 181
Total
49.3
25.9
23.9
1.0
100.0 406
renter Group
Couple
35.1
48.6
16.2
100.0 74
One-parent
27.2
39.1
33.7
100.0 92
Total
30.7
43.4
25.9
100.0 166
Families in the Capil scheme feature a higher proportion reporting that they
were better off, 49.3 per cent, than those in the renter group, 30.7 per
cent, and a lower proportion saying they were worse off, 23.9 per cent
compared with 25.9 per cent in the rental sector. The contrast between
family types is even greater with one-parent families in the Capil group
comprising the highest level of those who saw themselves as better off (50.8
per cent) and the same family type in the renter group having the highest
proportion who felt they were worse off, 33.7 per cent.
Couple families in the Capil group were more polarised than those in the
renter group. Forty-eight per cent of the Capil group couples felt they
were better off, compared with 35.1 per cent in the renter group, while. 24
per cent felt they were worse off compared with only 16 per cent of the
renter couples.
The difference is almost entirely due to differing circumstances of capil
group couples and couples renting from the Ministry of Housing. As table
4.11 shows, couples in the private rental sector exhibit an almost identical
pattern to couples in the Capil scheme, whereas couples renting in the
public sector feature less proportions who are either better or worse off
and correspondingly, twice the proportion that regard themselves as
financially 'the same' as in the previous year. One-parent families in the
public sector exhibit a similar, less polarised pattern to couples, again in
contrast to one-parent families in the private rental sector.
I I I I I I I I I I I I I I I I I I I I
- 82 -
Table 4.11: Perceived change in financial position over previous year, renter group according to nature of tenancy and family type
Perceived * ** change in Ministry of Housing Private Rental financial position Couple One-parent Total Couple One-parent Total
Better now 30.9 26.1 28.2 47.4 30.4 38.1
The same 56.4 42.0 48.4 26.3 30.4 28.6
Worse now 12.7 31.9 23.4 26.3 39.1 33.3
TOTAL , 100.0 100.0 100.0 100.0 100.0 100.0 N 55 69 124 19 23 42
* Statistically significant at p<.05 ** Differences not statistically significant
When analysed according to place of birth, each group of Capil families
exhibits a similar pattern, as shown in Table 4.12.
Table 4.12: Change in financial position over previous year, Capil group according to place of birth
Change in financial position
Better now
The same
Worse now
TOTAL , N
Australians
50.0
24.3
25.7
100.0 210
Europeans
47.9
28.1
24.0
100.0 121
Differences not statistically significant
Asians
52.1
28.2
19.7
100.0 71
Total
49.8
26.1
24.1
100.0 402
Families of Asian background have the highest rate of those who said they
are better off (51.4 per cent), and the lowest rate of those who see
themselves as worse off, (19.4 per cent).
I I I I I I I I I I I I I I I I I I I I
- 83 -
Factors strongly associated with families' assessment as to whether they are
better or worse off include changes in employment status, changes in income
and the proportion of income devoted to meeting housing costs.
Perceived Change in Financial Position and Changed
Employment Status
Table 4.13 shows the differing perceptions of families according to their
changed employment status since the last interview. As those who
experienced reductions in employment amounted to no more than 7 per cent of
case responses, particular family types were not distinguished and are not
included in the table. Nevertheless, of all those with reduced employment, : ~ ..
43 per cent reported that they were better off, while only 11 per cent felt
that they were worse off.
Table 4.13: Perceived change in financial position over previous year, Capil group according to change in employment and family type
Perceived change in financial Couples, position no change
Better now 40.9
The same 30.4
Worse now 28.7
TOTAL % 100.0 N 116
Change in Employment status
One-parent families, no change
49.1
24.6
26.3
100.0 115
Couples, increased employment
56.0
23.1
20.9
100.0 68
One-parent families: differences not statistically significant Couples: statistically significant at p<.02
One-parent families, increased employment
62.5
14.6
22.9
100.0 46
As shown in Table 4.13, those to report the highest proportion who felt they
were better off were one-parent families who had increased their employment,
while about 24 per cent felt they were worse off. Couple families with
increased employment reported 56 per cent better off and only 16 per cent
worse off. Of those who had experienced no change in their employment
status, one-parent families reported a higher proportion than couples who
I I I I I I 'I I I I I I I I I I I I I I
'I
- 84 -
were better off, 49 per cent compared with 41 per cent, while 26 per cent
reported that they were worse off compared with 28 per cent of couple
families.
consequently, it seems that an increase in employment is strongly related to
families' perceptions of being better off financially, and those to be most
positive about this were one-parent families.
Perceived Change in Financial Position and Change in Income
Improved employment is commensurate with increased income and the
relationship between higher income and the perception of being better off
financially is evident in the data. Table 4.14 shows the relationship
between changed income and perceived change in financial position.
Table 4.14: Perceived change in financial position over previous year, Capil and renter groups according to change in income
Change in Income
Decrease greater than Decrease Increase
$50 pw up to $50 pw up to $50 pw
Capil Renter Capil Renter Capil Renter
Better now 45.1 14.3 48.7 24.3 40.9 28.6
The same 31.4 28.6 26.5 45.7 33.3 59.5
Worse now 23.5 57.1 24.8 30.0 25.8 11.9
TOTAL , 100.0 100.0 100.0 100.0 100.0 100.0 N 51 21 113 70 93 42
For Capil group: differences not statistically different For Renter group: statistically significant at p<.OOOl
Increase greater than
$50 pw
Capil Renter
58.1 57.6
20.6 27.3
21.3 15.2
100.0 100.0 136 33
Not surprisingly, those families in both Capil and renter groups to report
the highest proportions as better off were those who had experienced the
greatest gains in income. Those who had enjoyed increases of more than $50
per week reported nearly 60 per cent as better off for both Capil and renter
I I I I I I I I I I I I I I I I I I I I
- 85 -
groups. The groups where quite different perceptions exist between capil
and renter group families, are those where income has fallen. In the renter
group families who see themselves as worse off outnumber those who see
themselves as better off, with nearly 60 per cent of those whose incomes
have declined by more than $50 per week saying they were worse off. By
contrast, among Capil group families only 23.5 per cent of those with the
greatest drops in income regard themselves as worse off while nearly twice
as many, 45 per cent, still say they are better off.
Perceived Change in Financial Position and Proportion of Income Devoted to
Mortgage
A further factor associated with perceived change in well-being is the
percentage of income devoted to mortgage repayments. Table 4.15 shows the
relationship between mortgages as a proportion of income and perception of
changed financial position for families in the Capil group.
Table 4.15: Change in financial position over previous year, Capil group families according to proportion of income committed to mortgage payments
Proportion Change in Financial Position of income committed to Better The Worse mortgage (%) now same now No.
less than 15 Couple families 77 .5 12.5 10.0 40 One-parent families 50.0 25.0 25.0 16
16-20 Couple famili~s 41.5 34.1 22.0 41 One-parent families 60.0 6.7 33.3 30
21-25 Couple families 43.3 28.4 28~4 67 One-parent families 51.7 26.7 20.0 60
26-30 Couple families 38.5 38.5 20.5 39 One-parent families 46.2 35.9 17.9 39
more than 30 Couple families 40.6 25.0 34.4 36 One-parent families 47.1 23.5 26.5 34
Again, a high proportion of families regard themselves as better off even
when mortgage repayments comprise more than 30 per cent of income. At this
I I I I I I I I I I I I I I I I I I I I
- 86 -
level of repayments 41 per cent of couples report that they are better off
while 47 per cent of one-parent families regard themselves similarly. Not
surprisingly, nearly 80 per cent of those couple families whose mortgage
represents less than 15 per cent of income say they are better off, while
only 50 per cent of one-parent families at that level say the same. This
result may reflect a more cautious approach on the part of those families.
Overall it seems that Capil participants regard themselves as better off
financially than a year ago. Those to be most satisfied in this respect
were those with increased employment, the largest increases in income and
the smallest proportions of income devoted to repayments. Generally, one
parent families reported higher proportions as better off.
Better Or Worse Off In The Year To Come?
When asked to predict the state of their financial position over the coming
year both Capil and renter families expressed much greater optimism than
pessimism with Capil participants again recording higher proportions than
those in the rental sector. Table 4.16 shows the responses to this question
according to family type.
Table 4.16: Predicted change in financial position over coming year, Capil and renter groups according to family type
Predicted change Capil group. Renter Group •• in financial position Couple One-parent Total couple One-parent Total
Better off then 57.0 46.9 52.4 50.0 31.8 39.9
The same 37.2 48.6 42.4 45.5 51.1 48.7
Worse off then 5.8 4.6 5.2 4.5 17.0 11.4
TOTAL , 100.0 100.0 100.0 100.0 100.0 100.0 N 207 175 382 70 88 158
• statistically significant at p<.05 •• statistically significant at p<.Ol
As shown, couple families in the Capil group recorded the highest proportion
predicting they would be better off in a year, at 52 per cent. One-parent.
I I I I I I I I I I I I I I I I I I I I
- 87 -
families were more cautious but not nearly as much as those families in the
renter group. One-parent families renting were the least optimistic of all
groups, only 30 per cent saying they would be better off, and the most
pessimistic with 16 per cent predicting they would be worse off. No other
family type registered much more than 5 per cent making similar predictions.
Those who are paying a high proportion of their income in mortgage
repayments are nevertheless optimistic about the forthcoming year. Fifty
per cent of those in the Capil group paying 30 per cent or more of their
incomes consider they will be better off compared with only 39 per cent of
those paying a similar rate as rent. Not surprisingly, a higher proportion
of those paying a relatively low proportion of their incomes toward their
mortgage felt they would be better off with 70 per cent of couple families
paying less than 15 per cent of income in mortgage commitments, recording
the highest rate of optimism.
The measure to show the greatest amount of variation within the Capil group
was that to do with changed employment status. For both couple and one
parent families with increased levels of employment about 62 per cent felt
they would be better off while only 41.6 per cent of those who had
experienced no change in their employment situation were as optimistic.
Nevertheless, only 5.6 per cent of these predicted they would be worse off
with 47 per cent saying they would be 'the same'. This result is mirrored
in the outcome measured according to disposable income where only 42 per
cent of Capil families receiving $200 per week or less predicted they would
be better off compared with 69 per cent of those receiving $400 per week or
more.
Summary
Overall the picture that emerges for families in the Capil scheme is one of
a continuing struggle to manage on low incomes. Many families have
experienced financial difficulty at some time in meeting the cost of basic
goods and services. One-parent families, in particular, occasionally or
frequently experience financial difficulty in paying for food, mortgage
arrears and clothing.
I I I I I I I I I I ~
I I I I I I I I I I
- 88 -
Those families having the most difficulty are those whose incomes are still
low, whose incomes have dropped and whose housing payments constitute a high
proportion of their income. It will be important for these families to
receive assistance in the form of reduced mortgage commitments, as intended
in the Capil approach. One-parent families are most in need in this regard.
Nevertheless, when compared with families in the renter group, especially in
the private rental sector, Capil families, especially one-parent families,
report fewer financial difficulties in their financial position over their
previous situation and are, on the whole, more optimistic about their
financial position in the foreseeable future.
Approximately one third of loan families had at some stage had mortgage
arrears or had insufficient money for food. Just under 10 per cent of
families said they frequently had difficulty with these expenses.
Consistent with their lower incomes, one~parent families were more likely to
have experienced frequent difficulties than couples, particularly in paying
for clothes, food and entertainment.
Difficulty in meeting mortgage payments was also related to proportion of
income spent on repayments - 24 per cent of the families spending more than
30 per cent of their income on the mortgage were finding payments difficult,
compared with 5 per cent of those spending less than 15 per cent of their
income.
Nonetheless, loan families generally felt they were better off financially
than a year ago and expected further improvement in the year ahead. Half of
both the one and two parent groups said they were better off and another
quarter said their financial position was much the same as a year ago.
Renters, particularly one-parent families, were much less likely to feel
they were better off and more likely to say they were worse off.
I I I I I I I I I I I I I I I I I I I I
- 89 -
CHAPTER 5
DETERMINANTS OF HOUSING SATISFACTION AMONG CAPIL RESPONDENTS - M. Wulff
Introduction:
This chapter explores the question of-the housing satisfaction of Capil
clients. If we accept that an objective of the Capil housing policy goes
beyond the provision of shelter per se to offering low-income families an
acceptable and satisfying environment, then government policy evaluation
must take into account the elements beyond bricks and mortar that comprise a
satisfying housing environment. How satisfied are the Capil clients with
their housing situation? What makes for housing satisfaction under the Capil
scheme?
The Capil scheme offers eligible low-income families the opportunity to move
out of the private or public sector and into the ranks of home-owners. Quite
clearly in Australia, owning a home is considered to be part of the Great
Australian Dream and something that nearly all families strive for.
Moreover, in a society in which nearly 70 percent of the population own
their home, the inability to attain homeownership is not only a serious
disappointment to families, but indicative of the economic and social gap
between those who "have" and those who "have not" made it in Australia.
The Wave 1 interviews with the Capil clients vividly illustrated the meaning
of homeownership to these families. The following are some of the responses
to the open-ended question: " I wonder if you could tell me what receiving
this loan from the Ministry of Housing has meant to you and your family"?
Now we feel very secure and happy. We have something to work for and know that everything we do around the house is for our benefit ••••• we now have a sense of purpose. unemployed 37 year old married father of three teenagers,
Security, a roof over our heads. No other way of achieving the same. Gives us something to look forward to in life. widowed 31 year old mother of an 11 year old son.
I I I I I I
I I I I I I I I I I I I I
- 90 -
It's made me more secure. Much happier as a family ••• I'm on top of the world. I have security for myself and my children ••• the children are happy. 43 year old widowed mother of two children.
Like winning Tattslotto. OWn a bit of land. Independence. Something that will become ours and when we go, it goes to the kids •••• it's basically what you live for, to own your home and pass it on. 24 year old married father of one child, seasonal worker.
These comments reflect the general sentiment of Australians that owning a
home provides security, independence, privacy and something to pass on to
children.
While tempting to view the entry into home-ownership as automatically
resulting in great satisfaction for the families, it must be kept in mind
that home-ownership also brings with it additional responsibilities
(maintaining leaking roofs and sagging floor-boards) and costs. The Capil
scheme does not necessarily produce all satisfied customers: difficulties in
finding a home in the desired location; the financial limitations on the
cost of housing; inadequate understanding of the Capil scheme; or unexpected
repair costs can all dampen the families pleasure with their new home.
Furthermore, Capil clients may differ not only in their level of
satisfaction with their new dwelling, but in the aspects of their
residential environment that either please or displease them. For these
reasons, it is necessary to look more closely at the issue of housing
satisfaction. Now that the Capil respondents have been in their homes for up
to two years, the glow of "new homeownership" may have dimmed in the light
of rising housing costs, housing repairs and general housing expenditures.
This chapter examines the reaction of Capil respondents to various elements
of their housing environment and seeks to explain why some families are less
satisfied than others.
During the interview, respondents were asked to provide their subjective
assessment on a scale of 1 to 5 of their pleasure or displeasure with a
series of sixteen items related to their housing situation.
I I I I I I
I I I I I I I I I I I I I I
- 91 -
Table 5.1 shows the proportion of respondents who report that they are
either satisfied or very satisfied with each of the specific items listed.
Table 5.1: Satisfaction with housing items by tenure status, , satisfied or very satisfied
Items related to dwelling Size General condition Amount of natural light Amount of privacy Space for self Space for children Outdoor space
Items related to location Closeness to public transport Closeness to shops Closeness to schools General location Quality of neighbourhood
Items relating to housing costs Size of mortgage or rent payment Rates Fuel bills Repairs costs
CAPIL n=406
70.7 69.2 80.5 81.5 77.1 67.5 85.2
74.4 79.8 77 .1 78.8 78.6
66.5 47.8 41.6 54.4
MOH n=122
64.5 62.1 87.9 63.7 62.9 57.4 78.6
84.4 79.8 82.6 75.6 64.5
79.0
34.4
Private renters
n=41
50.0 45.2 61.9 52.4 54.8 42.9 69.0
78.0 82.9 87.8 59.5 71.4
63.4
31.0
Over two-thirds of Capil respondents report that they are satisfied with
every aspect of their home, with the exception of items related to housing
costs. They tend to be more satisfied with items related to the dwelling
than are the Ministry of Housing tenants or private renters. Private
renters reveal the lowest levels of satisfaction with each of these items.
Three quarters or more of Capil families are satisfied with all aspects of
their location. In general, their levels of satisfaction compare favourably
with renters. Public renters are particularly satisfied with the
accessibility of their locations as indicated in the items referring to
I I I I I I I I I I I I I I I I I I I i
- 92 -
closeness to public transport, shops, and school, but are somewhat less
satisfied with the quality of the neighbourhood (the latter is likely to be
a judgement of the quality of the surrounding estate). Private renters
also report high satisfaction with most items related to the location.
Although all items related to housing costs are not strictly comparable
between the Capil group and renters, it is here that most differences appear
among the tenure groups. Two thirds of the Capil families report that they
are satisfied with mortgage payments, but considerably fewer families report
satisfaction with the related aspects of owning a home: namely rates, fuel
bills and repair costs. Public tenants display a high level of satisfaction
with their rent, but a low level of satisfaction with fuel bills. Private
renters are much less satisfied with rent than those in the public sector.
Many studies have shown that satisfaction is best viewed as a multi
dimensional concept and not determined solely on the basis of a single
indicator, such as the size of the dwelling or the general condition of the
house. For much of the analysis in this chapter, the sixteen individual
items are combined into three main areas of satisfaction: satisfaction with
the dwelling; satisfaction with housing costs (rates, mortgage repayments,
fuel bills); and satisfaction with location (including the neighborhood and
access to local services). The issue of satisfaction with the costs of
repairs is taken up in the chapter discussing repairs and home improvements
undertaken by the capil families.
Housing Satisfaction at Wave 2: Comparing the Capil Loan Group with Private
and Public Renters
Figure 5.1 compares the general satisfaction levels of Capil families with
public and private renters on three elements: the dwelling, location, and
their mortgage or rent payments. (See Figure 5.1)
While Capi1 families, on the whole, tend to be more satisfied with their
dwellings than the renters, the public renters by far outstrip the Capil
group in their satisfaction with location and rent payments. Indeed, the
Capil group have a level of satisfaction with location and costs that is
similar to private renters. The obviously higher satisfaction level of the
~-----~----~~~------
i ! c7J -is l
Overall Satisfaction with Dwelling, Location and Costs: Capil Loan Group and Public and Private Renters
80%, i< <
70%
60%
50% I 1"-.. "J 1"-.. "-..~ '" "-.. ~ 40%
30%
20%
1
D capil Group
D Public Aenters
10% .. " • " "vs),'>)."'-] I " • " h'\V\X'>'V1 b ~ 1.Y\"""Yi I ~ Private Ranters
Dwelling * Location ** Costs
* the variable "dwelling" takes into account seven individual items relating specifically to the house
* * "location" takes into account five individual items relating specificall yto location
The percentages indicated refer to the proportion of each group responding "satisfied" or "very satisfied" on each and every item comprising either "dwelling" or "location".
.J
I-rj 1-'-0 C ti CD
Ul
......
"" w
I I I I I I
I I I I I I I I I I I I I
- 94 -
MOH tenants says much for the central location and accessibility of Ministry
flats and for the relatively small proportions' of income spent on housing
costs in the public sector. On the other hand, the Capil families appreciate
their dwellings to a greater extent than do tenants and most tenants would
prefer a Capil home, as evidenced by their presence on the Capil waiting
list.
Family status does make a difference to the overall level of housing
satisfaction. (See Figure 5.2).
• In the Capil group, relatively more respondents in one-parent families
report that they are satisfied with the various elements of their housing
environment than respondents in married couple families. The same pattern
does not occur for public renters; instead, married couple families are
slightly more satisfied with their location and rent payments than are sole
parents. This reversal in the pattern of satisfaction leads to the tentative
suggestion that receiving a Capil loan has had relatively more impact on the
housing satisfaction of sole parents than on married respondents. Private
renters (and numbers do not permit disaggregating by family status)
generally rank lower on each element of housing satisfaction. They tend to
be more dissatisfied with their dwellings and location than their rent
payments.
The Impact of Ethnicity on Housing Satisfaction
Ethnic background also plays a strong part in explaining the housing
satisfaction of the Capil families. As the following figures show, the Asian
born families are considerably less satisfied with all aspects of their
housing environment than are the Australian or European born. (Note: the
small number of Asian families in the Control group (8) does not merit a
statistical analysis, yet the general pattern of lowered satisfaction does
not appear to hold true.)
In the following figures the changing level of housing satisfaction over the
course of the Capil study is shown for each ethnic group. Quite clearly, the
ethnic background of the respondents, particularly in the way it impacts on
housing experience and housing expectations, exerts a strong influence on
levels of housing satisfaction~ (See Figure 5.3)
~.~-.--~~~~~~~~-~~---
,--_ .. _-----_._._--------- ---------------_.,- ---------------_._--_._--_._---_ .. , Comparison of Capil Loan Group & Public & Private Renters I On Elements of Residential Satisfaction By Family Status % Satisfied With ...
100%·------------------------------------------------------~
90%
80%
70%
60%
50%
40%
30%
20%
10%
D CepII Couples
D Clpil Sole PInInIs
1S3 NIIIo COUples
~ N)IIo Sole rw.rta
0% L-I '" J'\. '\. ~~ " ),L. " ~~ '\. f\ '\. ~~,,~ I ~ Total PrIvat8 AIn1ar
Dwelling Location Mortgage-Rent
L ________ _ ... __ . ________________________ ..J
'"':I 1--''Q s:: Ii CD
U1
"->
1.0 VI
.. ; __ ....... -...... _f ' .... ' .. ' .. M' ... __ .. ~. ~
Changing Levels of Satisfaction By Ethnicity Dwelling
DPreGapil
DWave1
.. " ), I), ), ), ),1 1 ), ), I)')'" J " ), """" 1 1 0 Wave 2 Asian
Ethnicity Note: For comparability with Wave 1 , dwelling satisfaction is measured by three items: "amount of privacy", "amount of space for self", and "amount of space for
children"
!-rj ~.
lQ C ti (1)
U1
w
(0 0'1
I I I I I I -I I I I I I I I I I I I I I
- 97 -
Figure 5.3 presents the respondents' assessment of their level of
satisfaction with their pre-Capil residence; with their Capil dwelling at
the time of the first interview (wave 1); and again with their Capil
dwelling at the most recent follow-up interview (wave 2).
Not surprisingly, Capil clients at Wave 1, all recent home-owners, rated
their housing satisfaction as dramatically higher than that experienced in
their former residences. This. was true of all three ethnic groups. Nearly 90
percent of each group rated their housing satisfaction, immediately post
Capil, as high. A "honeymoon effect", that is, the initial excitement of
finally being in a home of their own, appears to be operating. Two-thirds
of both the Australian-born and European-born groups continued to express
satisfaction with their house at Wave 2; less than half the Asian-born
group, however, remained satisfied with their house.
A similar "honeymoon effect" appears in Figure 5.4, which examines changing
levels of satisfaction with housing costs (mortgage repayments, rates, fuel
bills). Satisfaction with housing costs increased for most Capil clients,
regardless of ethnicity, immediately post-Capil. One to two years in
homeownership (the length of time between the Wave 1 and Wave 2 interviews)
has significantly dampened the respondents' satisfaction with the costs of
owning a home. Indeed, overall the respondents' satisfaction with what they
are paying for housing is well below pre-Capil levels. This is particularly
true for Asian born clients, whose satisfaction with housing costs is less
than one-third of what it was before they purchased a Capil home. For
Australian born clients the drop in satisfaction is to about two-fifths of
pre-Capil levels. (See Figure 5.4)
Overall, the respondents are satisfied with the location of their new Capil
homes and the dramatic declines in satisfaction levels evidenced for the
dwelling do not appear (see Figure 5.5). At Wave 1, satisfaction with
location was at a high level for all ethnic groups with over 85 percent of
Capil respondents expressing satisfaction with their location. By Wave 2,
however, this satisfaction had diminished for each ethnic group. For the
Australian-born and European-born clients, the satisfaction with their
location was still higher, however, than that expressed at their pre-Capil
residence. For the Asian-born respondents, however, their satisfaction level
had dropped at Wave 2 to about the same as it was at the pre-Capil period.
(See Figure 5.5)
~-~~~-~-~~~~~~~~--~-
100%
90%
80%
! 70%
8 60% Q c Oil ::::J 50% 0 ~ .c 40% -~ 'tJ 30% :! (I) +J 20% c71 -c 10% ~ l. 0%
Changing Levels of Satisfaction By Ethnicity Housing Costs (Mortgage, Rates, Fuel Bills)
DPreC8pil
DWave1
"', "' """'""" , , , "" " , 1>",' , ~ Wave 2 Australian European Asian
Ethnicity
I-tj 1-'. lQ C 11 CD
U1
~
~
00
~~-.~-~~~.~~~-~~.~~-
c: 0 +0 ID ()
.9
.c: -~ '0 CD -= fIJ +0
c7l 1: CD e a?
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Changing Levels of Satisfaction By Ethnicity Location
o PreGapil
DWave1 .. > >, > > > >. , > > > > > D > D > > >, I ~ Wave 2
Australian European Asian
Ethnicity
Note: For comparability with wave 1, location is measured by one item, "the location of your home"
t-tj 1-'lQ C 11 CD
U1
U1
~ ~
I I I I t'
" I 'I ,11
I 1, , J ,-1\ "
I I 'I' I·
- 100 -
Thus ethnic background does appear to exert an impact on levels of housing
satisfaction. For each element of satisfaction (i.e. dwelling, housing
costs, and location), the Asian-born group express a lower level of
satisfaction. As well, they experienced relatively greater declines in
satisfaction from Wave 1 to Wave 2 than did the other two ethnic groups.
Average Declines in Satisfaction Levels, Wave 1 to Wave 2
Given the overall changes in the level of residential satisfaction between
the initial and the most recent interviews, it is useful to look more
closely at the characteristics of respondents whose satisfaction level
either decreased, stayed the same, or increased. For this analysis, each
respondent was given an "average satisfaction score", a figure which takes
into account their satisfaction on the individual items comprising location,
housing costs and the house itself. Over half the Capil respondents (56
percent) reported a lower level of housing satisfaction at Wave 2 than they
did at Wave 1. For one-third of the sample (33 percent), their reported
level of satisfaction stayed the same and only a minority of respondents
(under 11 percent) reported increased levels of satisfaction with their
Capil home.
Further analysis on the factors associated with changing level of
satisfaction indicated that diminished housing satisfaction is not the
result of the loss of employment between the first interview and Wave 2 or a
drop in income. Nor is it related to family disruption that may have been
experienced such as divorce or separation. Instead, the families most
likely to have experienced an overall decrease in housing satisfaction were
Asian-born, had experienced difficulty in coping financially since Wave I,
and consequently had to cut back on social occasions. (See Figure 5.6)
On the other hand, those least likely to have experienced a decline in
satisfaction tended to be the "long-distance movers". Increased levels of
satisfaction were reported by those families who, in selecting a Capil home
two years previously, had moved a considerable distance from their former
residence (the very group likely to report low levels of satisfaction at
Wave 1). As they became more familiar with their new environment, the
disruption experienced by the initial move lessened and their overall level
of satisfaction increased.
~'~ ~. ~i_~ ~~_I __ ~'. _~ ~ ~ ~_ Decline in Overall Residential Satisfaction By Selected Characteristics of Capil Loan Group % of Families with a Decline in Residential Satisfaction
. Frnancial Coping Decreased (66)
Asian Born Families (66)
Cut Back on Social Occasions (122)
Long Distance Movers (30)
TotalCapil Families (406)
• • • • • • • 0% 10% 20% 30% 40% 50% 60% 70%
Number In bracket refers to the number of cases percentage Is based on
80% '"Xj 1-'
I.Q ~ Ii CD
U1
0'\
I-' o I-'
I I I I I I I I I t I t "
I I I I I I I I
- 102 -
While half the Australian born Capil clients at Wave 2 reported a lower
level of residential satisfaction than they had at the first interview, the
satisfaction level of fully 60 percent of the European born respondents and
70 percent of the Asian born respondents had declined.
The respondent's perceived ability to cope financially made a considerable
impact on their overall level of housing satisfaction. seventy-two percent
of respondents who reported at Wave 2 more difficulty coping financially
than they had at Wave 1 also expressed a lower level of satisfaction with
their housing. On the other hand, respondents coping better financially at
Wave 2 tended to either maintain the same level of satisfaction or increase
it.
Determinants of Housing Satisfaction
This section of the chapter now examines more closely the determinants of
satisfaction; in particular, what are the factors which most explain
satisfaction with their Capil dwelling or with housing costs. (Given the
uniformly high levels of satisfaction with location, that issue is not
pursued in this section.) This type of question goes beyond merely
describing levels of satisfaction to attempting to explain residential
satisfaction. Without a working knowledge of the contributing factors to
housing satisfaction, little action can be taken by the Ministry to raise
the satisfaction levels of Capil clients.
Regression analysis is the most appropriate statistical technique for
ascertaining the differential impact of several factors on the level of
housing satisfaction. A combination of family, housing, income, and life
satisfaction variables have been incorporated into the regression analyses
(see Appendix for a description of all variables employed in the regression
analyses). A step-wise regression technique was used and only the variables
which emerged as statistically significant are included in the model. The
following briefly summarizes the results of the two regression models: the
first to explain satisfaction with the house itself (keeping in mind that
just over half the Capil sample report that they are "satisfied" or "very
satisfied" with the Capil house), and satisfaction with housing costs
(reported satisfaction with mortgage payments, fuel bills, and rates are
combined in this score).
I ,I,
I I,
t I,
I I I,
t ,I I' ,I
I I' ,I,
- 103 -
Explaining Housing Satisfaction
Model 1 graphically. presents the key factors related to housing satisfaction
of the Capil clients. All the variables described in the model are
statistically associated with housing satisfaction and the positive or
negative sign next to the beta score indicates the direction of the
relationship. The beta score denotes the strength of the relationship.
Model 1: Regression Model Explaining Satisfaction with Housing Beta Scores and R-Square
INDIVIDUAL AND FAMILY CHARACTERISTICS
Family income -....... -.21
Asian born
HOUSING CHARACTERISTICS SATISFACTION WITH DWELLING
Crowding index ~ ~.18
Age of dwelling""""'---
GENERAL LIFE SATISFACTION .31
Sense of purpose in 1ife~ .17
Satisfaction with standard of livingl
* All variables are significantly related at .00 level
-R-square = .251
N = 386
Asian-born respondents are statistically more likely to report a lower level
of satisfaction with their Capil house than Australian or European born
respondents. This not unexpected pattern also was shown in the previous
analysis. What is different about the regression analysis is that it
suggests that lowered satisfaction levels among the Asian born hold true,
even when other factors are controlled such as general life satisfaction or
other housing characteristics.
I I I I t I I I I ., I t I I I I I I , I
- 104 -
Family income is inversely associated with housing satisfaction, suggesting
that the lower the family income, the higher the level of satisfaction. This
suggests that some element of housing expectations is intervening in terms
of level of satisfaction: the lower income families, possibly expecting
less, tend to be more satisfied with the houses they have purchased. It is
also related to the type of families who, on the whole, have lower incomes:
that. is, the sole parent families. As noted previously, there are relatively
more satisfied respondents among sole parent than married couple families.
(Note: Family type was not included in the regression models because of it's
high (.51) correlation with family income).
Nonetheless, this inverse relationship between family income and housing
satisfaction is not one that is found in most studies of housing
satisfaction. Perhaps this is because most studies of residential
satisfaction are carried out on a population of private home purchasers. The
Capil sample, on the other hand, drawn from the waiting list of the Ministry
of Housing, may be significantly different in this aspect from a random
'sample of private home-purchasers. The underlying factor may be housing
expectations: the lower the family income, the lower the housing
expectations with the outcome that a Capil house is more than satisfactory.
On the contrary, for the better off of the Capil families, their higher
housing expectations may not be met with a Capil home loan.
With regard to the dwelling itself, two features affect reported
satisfaction: the extent of crowding experienced by the family and the age
of the dwelling. Being crowded, (measured in terms of the the number of
bedrooms for the size of the family), not surprisingly decreases a family's
satisfaction with their dwelling. Moreover, purchase of an older dwelling
tends to further diminish satisfaction: as the negative beta score of -.18
shows, the older the dwelling, the less satisfied the family. As the next
chapter on repairs and improvements reveals, older dwellings bring with them
extra and often unexpected repair costs.
The level of housing satisfaction expressed by a respondent is clearly
related to overall subjective well-being. Those respondents who in general
ranked their sense of purpose in life as high and appeared satisfied with
their standard of living tended to be satisfied with their house. Although
this finding does not appear startling, it serves as a useful reminder that
housing satisfaction stems, at least in part, from subjective factors quite
unrelated to the dwelling or to the socio-demographic characteristics of
families.
I I I I , I I I I I I I I J I I I I I I
- 105 -
Explaining Satisfaction with Housing Costs
On the whole, at the Wave 2 interviews the Capil families reported a sharp
drop in the level of satisfaction with housing costs from that described at
their initial Capil interview two years previously. Moreover, the general
level of satisfaction with housing costs was considerably below that
reported with respect to their pre-Capil rental residences. What are the
characteristics associated with satisfaction (or the opposite,
dissatisfaction) with housing costs? "Housing costs" in this regression
model is a combined score on satisfaction with mortgage payments, rates, and
fuel bills.
The following variables emerged as significantly related to satisfaction
with housing costs.
Model 2: Regression Model Explaining Satisfaction with Housing Costs Beta Scores and R-square
INDIVIDUAL AND FAMILY CHARACTERISTICS
Australian born ~12
Family income,,-.20
HOUSING CHARACTERISTICS
No significant variables
GENERAL LIFE SATISFACTION
SATISFACTION WITH HOUSING COSTS
/ .45
Satisfaction with standard of living/
* All variables are significantly related at .00 level of significance
N = 387
R-square = .248
Australian-born respondents were statistically more likely to report that
they were satisfied with their housing costs than were overseas born, in
this case including both European and Asian migrants. Family income shows
the same relationship to housing cost satisfaction as it did in the previous
I I I I t I I I I I I I I I I I I I I I
- 106 -
regression model, that is, those families on lower incomes are more likely
to be satisfied with their costs than are the better off families in the
sample.
There are no particular features of the dwelling itself that explain
satisfaction with housing costs. In other words, this analysis suggests that
families do not base their assessment of the housing costs they have
incurred in their Capil home on whether they have a new or old dwelling or
whether they are relatively crowded or not. What is much more important in
understanding their level of satisfaction with housing costs is the overall
satisfaction the respondents feel about their standard of living. Thus, the
families that tend to be satisfied with their standard of living, be they
rich or poor, in a new house or old, are more satisfied with their housing
costs.
Summary and Conclusions
For the Capil clients, satisfaction with one's residential environment rests
on a variety of factors, ranging from specific features of the dwelling to
characteristics of the respondents' themselves. Moreover, actual housing
conditions are not the only factors to influence satisfaction; cultural
values and attitudes, previous housing experience and future housing
expectations all play a role in the overall level of satisfaction with the
environment.
As seen in this chapter, the majority of Capil clients report that they are
satisfied with almost all aspects of their housing environment. The notable
exception to this pattern is the associated costs of owning a home, such as
rates, fuel bills and repair costs. Housing satisfaction generally has
diminished over the past two years for over half the Capil families, perhaps
in part due to a fading away of the euphoria of new homeownership
experienced at the time of the initial interviews, and partly a growing
dissatisfaction with housing costs.
In brief, the main influences on the level of housing satisfaction seem to
be both cultural and subjective, rather than specific to the physical
dwellings per se. The cultural influence is evidenced by the strong impact
of ethnic origin on nearly every aspect of housing satisfaction. That the
I I I I I I I I I I I I I I I I I I I I
- 107 -
Asian born Capil families are considerably less satisfied than others is of
concern and suggests their inadequate understanding of the scheme itself or
the costs of home-ownership. Just around one-quarter of the Asian families
are satisfied with the rates and fuel bills they must pay.
The importance of subjective factors can be seen in a number of ways: first,
the quite clear contribution of general life satisfaction variables on
housing satisfaction, indicating that respondents with a generally positive
outlook on life tend to be positive about their housing environment as well;
second, the fact that within the capil group the low income families
generally report higher housing satisfaction than the relatively better off
Capil families, suggesting that the housing satisfaction is a function of
expectations, and third, the general finding that particular features of the
dwelling tend not to be associated with housing satisfaction.
The housing satisfaction of the control group of renters rests almost
completely on whether they are private or public sector tenants. Public
renters report higher housing satisfaction with their location and their
rent payments than do either Capil families or private renters.
The general decline in satisfaction experienced by the Capil group of
homeowners since the first wave of interviews reflects a pattern not unlike
any new group of homeowners: great satisfaction in the early days (as
evidenced in the initial interviews) which moderates over time and
increasing dissatisfaction with the costs associated with homeownership.
These findings suggest that residential satisfaction, in large part, rests
on factors beyond the Ministry's direct control. One policy relevant area,
however, suggested by the analysis is the area of satisfaction with housing
costs. As satisfaction is so closely related to expectations, the Ministry
could undertake to inform families fully at the outset of the loan
application process of the costs of owning a home, costs that are likely to
be unexpectedly high in the first few years of homeownership. These programs
may be particularly useful for overseas born clients who may be faced with
living in a home-owning society for the first time.
I I I I I I I I I I I I I , I I I I I I
- 108 -
In sum, while satisfaction is not the only measure by which to evaluate the
Capi1 program, it does offer insights into how the capil scheme is working
for families. Based on the results of this analysis, it appears that the
majority of Capil families people are satisfied with their dwellings and the
locations they have chosen. But the area of least satisfaction is housing
costs. As a mainstay of the Capil scheme is homeownership at affordable
repayments, this message does not appear to be conveyed to the majority of
Capil families. The concept of equity growth (which offers a reason for
paying a mortgage rather than rent) appears not to be part of the
respondents' assessment of the acceptability of their housing costs.
Moreover, the considerably lower levels of housing satisfaction expressed by
the Asian-born respondents suggests that for this group of Capil clients,
the difficulty they face in other aspects of their lives which detracts
from their general life satisfactions, coupled with an inadequate
understanding of the nature of the Capil loan, diminishes their general
enjoyment of home-ownership.
I I I I I I I I I 'I I I I I I I 'I I I' I
- 109 -
Appendix
Variables and Variable Coding Used in Regression Models
Variable Name
DEMOGRAPHIC VARIABLES
Age of Respondent
Australian-born
Asian-Born
Age of Youngest Child
HOUSING VARIABLES
Age of Dwelling
Previous Housing Tenure
Crowding Index
Total Repair Costs
FAMILY ECONOMIC FACTORS
Family Income
Major Family Income Source
Financial Coping
Coding
Age in single years
O=Born Elsewhere l=Australian-born
O=Born Elsewhere l=Asian-born
Age in single years
Continuous variable (in single years)
O=former private renter l=former MOH tenant
Number of persons in the household divided by number of bedrooms in dwelling
Total dollars (' 00 dollars) spent on repairs, home maintenance and home improvements reported at Wave 2.
Total net weekly income (after taxes) of respondent and partner (in '00 dollars)
O=government benefits l=wages and salary
O=not able to save l=able to save
I I I I I I I I I I I I I I I I
I I I
WELL-BEING MEASURES
Sense of purpose in life
Satisfaction with standard of living
- 110 -
Computed variable ranging from 3 (very dissatisfied) to 15 (very satisfied) based on the respondent'ssubjective assessment of three items: how doyou feel about "your life as a whole", "what you are accomplishing in your life" and the "sense of purpose and meaning in your life".
Computed variable with scores ranging from 2 (very dissatisfied) to 10 (very satisfied) based on respondent's subjective assessment of two items: how do you feel about "your standard of living" and "your income".
HOUSING SATISFACTION VARIABLES
House satisfaction
Housing Cost Satisfaction
Computed variable ranging from 7 (very dissatisfied) to 35 (very satisfied) based on respondent's assessment of 7 items: how satisfied are you with "the size of your house"; the "outdoor space"; "amount of privacy"; "space for yourself"; "space for children"; "the condition of your house"; and "the amount of natural light".
Computed variable ranging from 3 (very dissatisfied) to 15 (very satisfied) based on respondent's assessment of 3 items: how satisfied are you with "the size of your mortgage", "the rates"; and "fuel bills".
I I I I I I I I I I I I I I I I I I I I
- 111 -
CHAPTER 6
REPAIRS, RENOVATIONS & HOME IMPROVEMENTS AMONG CAPIL FAMILIES- M. Wulff
A great deal of housing activity has occurred between the Wave 1 and Wave 2
interviews centering around repairing and improving the homes. About two
thirds of Capil families have made some form of repair, alteration or
addition to their home, at a cost ranging between a low of $30.00 to a high
of $14,000.
The desire of a new home-owner to immediately make some alteration to the
home is not uncommon, yet most Capil families live within quite constrained
financial circumstances. Repairing and improving the home can have several
meanings: repairs necessitated by the run-down condition of the house;
improvements motivated by a wish to put a personal touch into the house;
extensions or additions necessitated by increases in the size of the family.
While the costs incurred in this process, on the one hand, drain the
family's after housing disposable income, on the other hand they can be
viewed as adding to the overall value of the home, thus increasing the home
owner's equity.
While most families said that they were aware prior to purchasing the house
that the work needed to be done, nearly a quarter of the families reported
that although they knew some repairs were required, they were unaware of the
extent, and another quarter were quite unprepared for the work they felt
they had to carry out. Less than four per cent of the families who undertook
repairs or improvements felt that it was non-essential, or "cosmetic" as one
respondent described it.
The types of repairs undertaken varied greatly, to the extent that the
original twenty-one categories proved insufficient to capture all the
specific work reported. Some families reported specific repairs such as re
wiring the house or constructing a garden shed (the latter a very popular
activity), while others spoke in general terms about renovating a kitchen or
a bathroom. The housing activity carried out by the families can best be
I I I I I I I I I I I I I I I I I I I I
- 112 -
summarized in six categories: heating, plumbing, basic or structural (re
wiring, stumping, roofing etc.), general renovation, extensions, and outside
improvements.
It is extremely difficult to make the distinction between "choice" and
"necessity" in much of the work described by the families. To some extent,
however, the first three categories can be viewed as necessary, while the
last three fall more into the area of discretionary expenditure on home
improvements. But these distinctions must be made with caution because what
are sometimes categorized as "general renovations and improvements" were
necessitated by the sub-standard condition of the home.
This chapter will examine the level of expenditure on repairs and home
improvements, the nature of repairs undertaken, and the ways in which
families financed these repairs.
Home Repairers and Improvers
A wide range of families undertook repairs and improvements; nonetheless,
certain types of families were more likely than others to do so. For
example, as shown in Figure 6.1, European-born or Australian families were
more likely to have carried out repairs and renovations than Asian families.
Over two-thirds of European and Australian-born did repairs, compared with
only half of the Asian families. (See Figure 6.1)
Couples, on the whole, were more likely than sole parents to have carried
out repairs. This is likely a result of the greater labour force
participation and the higher average family incomes of couples. As also
indicated in Figure 6.1, families with a wage and salary earner were more
likely than those on benefits to do repairs, and those families on higher
incomes (for example, over $400 per week) were statistically more likely
than those on lower family incomes to do repairs.
Figure 6.2 suggests that doing repairs is a result of both opportunity
(provided by adequate income) and necessity (fueled by the run-down nature
of the house). In other words, it is not only that income allows the
opportunity for repairs and improvements, but that certain houses stand in
need of considerable repair. (See Figure 6.2)
I I I I I I I I I I I I I I I I I I I I
- 113 -FIGURE 6.1
Characteristics of Repairers and Home Improvers
X Who Undertook Repairs and Improvements Between Wave 1 & Wave 2
Australian (208)
European (118)
Asian (71)
Couples (218)
Sole Parents (179)
Wage & Salary Earners (172)
Benefits (225)
Family Income <$200 (100)
Family Income $200-$300 (166)
Family Income $300-$400 (65)
Family Income $400+ (60)
Total Capil Families (39n
• • • • • • • Oi. 10i. 207. 30i. 40i. 50i. 6Oi. 70i. 80i.
Number in bracket refers to the number of cases percentage is based on
I I I I I I I I I I I I I I I I I I I I
- 114 -FIGURE 6.2
Characteristics of Dwellings Repaired and Improved
% Repaired and Improved Between Wave 1 and Wave 2
Built Less Than 10 yrs (103)
Built Between 1960-1976 (123)
Built Post-war to 1960 (101)
Built Pre-war (59)
Solid Brick (16n
Concrete (35)
Fibro Cement (4n
Timber (148)
Total Dwellings (39n
• • • • • • • 07. 10% 20% 30% 40% 50% 60% 707. 80%
Number in bracket refers to the number of cases percentage is based on
I I I I I I I I I I I I I I I I I I I I
- 115 -
There is a definite pattern to the type of dwellings in which repairs were
carried out. Older dwellings, particularly those constructed prior to the
Second World War and those built right after the war were statistically more
likely to have had repairs than more recently constructed dwellings. In
addition, timber houses received more repairs than did those constructed of
solid brick. Thus, while income allows the opportunity for repairs, families
who purchased either an older dwelling or a timber dwelling were likely
faced with more required work.
Types of Repairs and Improvements
Figure 6.3 presents the proportion of "repairers", that is, families
undertaking repairs, who carried out a particular type of repair or
improvement. The average cost of these jobs is also included in the Figure.
General home renovations were the most popular category of repair and
covered many activities from reports of painting the interior of the house
to renovating a kitchen or bathroom or putting new floor coverings down.
Over sixty per cent of the repairers stated that they had done a general
home improvement or renovation since the last interview. Although the cost
of these general improvements varied greatly, the average cost was $958.
(See Figure 6.3)
O~tside improvements ranged from the construction of garden sheds, putting
up new fences (relatively common activity) or landscaping the garden or some
part of the outside area. Just under half of all repairers engaged in this
kind of housing improvement between the Wave 1 and Wave 2 interviews. Such
work was also expensive at an average cost of just over $900.
Just under thirty per cent of repairers carried out basic or structural work
(for example, restumping, replastering, rewiring, rising damp, new roof).
These, on average, were less expensive than home renovations and outside
improvements and averaged around $681.
Plumbing was, on average, the least expensive repair to carry out at $478.
About thirty per cent of repairers reported work related to plumbing.
Expenses related to heating were. the most costly at $1200 on average. This
perhaps explains why only about 12 per cent of repairers installed heating.
-------------~--~-~-
Types of Repairs and Improvements % of Repairers Who Did the Following ...
Home Renovations ($958)
Outside Improvements ($908)
Basic Structural ($681)
Plumbing ($478)
Heating ($1,225)
Extem 'ons ($3,476)
• • • • • • 0% 10% 20% 30% 40% 50% 60% 70%
l N=263 J Number in brackets refers to average amount spent on that item
'---------------------------
'Tl G) C :0 m O'l
(.V
, I
~
~ 0'1
I I I I I I I I I I I I I I I I I I I I
- 117 -
Another expensive repair is an extension to a home, at nearly $3,500.
Extensions or additions specifically refer to adding a new room to the
house, be it a family room, extra bedroom, etc. Only five per cent of
repairers added on to their homes in this way.
Level of Expenditure on Repairs
A substantial minority of families (37 per cent) did not undertake any
repairs or improvements between the Wave 1 and Wave 2 interviews. As
described previously, although all types of families undertook repairs,
families on lower incomes, Asian born families, and sole parents were less
likely to undertake repairs than others. (See Figure 6.4)
But as Figure 6.4 reveals, those families who undertook repairs spent
considerable amounts of money. While some families spent less than $500,
many families expended much greater amounts. Indeed, about twenty per cent
spent over $2000 including a minority of families (4.5 per cent) who spent
over $5000.
In looking further at the amounts expended on repairs, certain types of
families were more likely to spend more than others. For example, among
repairers, couples spent relatively more on repairs and improvements than
did sole parents. (See Figure 6.5)
While about 36 per cent of couples undertaking repairs spent more than
$2000, only 23 per cent of sole parents did so. About one third of sole
parent repairers spent between $1000 and $2000. These differences, however,
did not emerge as statistically significant.
Table 6.1 presents the expenditure on repairs by place of birth. Australian
born repairers spent relatively less than the overseas born on repairs.
Interestingly, the Asian families, although less likely to undertake repairs
in the first place, when they did so they tended to have the highest
expenditures. Nearly 40 per cent (38.9 per cent) of Asian repairers spent
over $2000.
--------------~-~---I
level of Expenditure on Repairs and Home Improvements
(N = 406)
$5.000+ 4.61
$2.001-$5,000 14.81
$1.001-$2.000 18.8X
$500-$1.000 18.8X
No Expenditure S7.81
Less than $500 13.41
."
cv C JJ m 0>
~
~
t-' co
--------------------Level of Expenditure on Repairs and Home Improvements By Family Type of Wave Two Repairers
~8
Differences are not statistically significant
Sole Parents N-108
Expenditure
o Less than $500
CS] $500 - $1,000
~ $1,001- $2.000
~ $2,001- $5,000
~ Over $5,000
"Tl
G) C ::0 m C1>
<..T1
I-' I-' \D
I I I I I I I I I I I I I I I I I I I I
- 120 -
Table 6.1: Level of expenditure on repairs and home improvements by birthplace of Wave 2 repairers
Level of expenditure Australia
Less than $500 27.4
$500-$1000 20.0
$1001-$2000 27.4
$2001-$5000 18.5
over $5000 6.7
TOTAL , 100.0 N 135
statistically significant at
Birthplace
Europe
17.9
21.8
24.4
24.4
11.5
100.0 78
.02
Asia
5.6
27.B
27.B
38.9
100.0 36
Expenditure on repairs is, in part, dictated by the family's financial
situation. Figure 6.6 compares the expenditure levels of repairers with less
than $200 per week net with those having net incomes over $400. Those
families on lower incomes were far more likely to report spending less than
$1000 than those on the higher net incomes. Half of those families with over
$400 per week spent above $2000 compared with one-quarter of the lower
income group. (See Fig.ure 6.6)
Dwellings built prior to World War II required substantially more expensive
repairs than those built in the last ten year. About forty per cent of
families living in pre WWII dwellings outlayed more than $2000 on repairs
compared with 19 per cent of those in more recently constructed homes. (See
Figure 6.7)
Metropolitan dwellings received more expensive repairs than those outside
the metropolitan area. About thirty per cent of homes in non-metropolitan
areas received repairs costing less than $500 compared with only 14 per cent
of those in the metropolitan area. About thirty seven per cent of
metropolitan dwellings had repairs worth over $2000 compared with twenty-two
per cent of non-metropolitan homes •. A minority of repairers in both the city
and the country spent over $5000 on their homes: 9 per cent in the city and
five per cent in the country. (See Figure 6.B)
--------------------Level of Expenditure on Repairs and Home Improvements By Net Weekly Family Income of Wave Two Repairers
Family Income Le .. Than $200 Weekly
N=53
Statistically significant at .09
Family Income Greater Than $400 Weekly
N=48
Expenditure
D Less than $500
[SJ $500 - $1,000
o $1.001- $2,000
~ $2.001- $5,000
~ Over $5,000
-,
"'Tl (j) c :n m 0>
0>
I-' N I-'
--------------------I
Level of Expenditure on Repairs and Home Improvements By Age of Dwelling of Wave Two Repairers
I "',. 16%
DwelII~ Built In Laat Ten V .....
NaSS
~-
l __ Statistically significant at .02
Dwelling Built pre World War TWo
N=41
Expenditure
D Less than $500
Q $500 - $1,000
o $1,001- $2,000
~ $2,Q01- $5,000
~ Over $5,000
I
T1 (j) C JJ m 0>
~
I-' IV IV
--------------------Level of Expenditure on Repairs and Home Improvements By Location of Wave Two Repairers
I I
Metropolitan Loc8tIon
M=14O
Statistically significant at .02
r- ---,
Non-Metropolitan Location
N=109
30%
Expenditure
o Less than $500
CS] $500 - $1,000
o $1.001- $2,000
~ $2,Q01- $5,000
~ Over $5,000
"I
11 (j) C JJ m ?> 00
f--' N W
I I I I I I I I I I I I I I I I I I I I
- 124 -
Sources of Finance for Repairs and Improvements
Given the levels of money being put into the Capil homes, how did families
finance such outlays?
It is surprising the extent to which families relied on their own savings or
funds to meet the costs of repairs and improvements. Seventy per cent of the
families drew on their own financial resources in order to cover the repairs
costs. (Although most of this group relied on carefully acquired savings,
several reported other sources of family funds such as wins at the TAB,
worker's compensation payouts, Tattslotto wins etc.) (See Figure 6.9)
Only about thirteen per cent of repairers actually took out a loan from a
bank or finance company. (A small number of families in this category put it
on the gas bill or SEC bill or even the credit card.) Friends or family
provided a loan to cover the expenses for about 16 per cent of the families.
There is no particular pattern to financing repairs by family status,
although couples were slightly more likely than sole parent to use savings
and sole parents to use loans from family or friends, but these differences
are not statistically significant.
Table 6.2: Source of finance for repairs and improvements by family status of Wave 2 repairers.
Family funds
Bank or Finance Co
Loans from family or friends
TOTAL , N
Family type
Couples
72.0
12.7
15.3
100.0 150
Differences are not statistically different
Sole parents
67.9
13.8
18.3
100.0 109
What is statistically significant, however, are the differences that appear
for the three ethnic groups. Nearly all the Asian families relied on their
- 125 -
I I FIGURE 6.9
I I
tn
I .... c: (J) "0 Cl) c
E ~
I ~N
~ E~ ~R
I Q.
E -I "'C~ C:CI)
I ca ... .-~ca .- Co
I ca Cl) Q.a: 0) Cl) LO
a:O C\.I 11
I O~ z
I LLCI) Cl) >
~~ I c: .-LL
I 'I-0 c 8 tn .9 Cl)
I Cl) ~ g e "e ~
~ u:: ::::J In ~
I 0 i~ ~N tn ·c cO ~a u. .....
I I I I
I I I I I I I I I I I I I I I I I I I I
- 126 -
own family funds to cover repair costs; indeed none used bank loans and only
three families (8.1 per cent) had a loan from family or friends. Australian
and European born respondents, however, drew on similar sources for their
repairs: mainly family funds or savings, with some using bank loans and
loans from other family members or friends.
Table 6.3: Source of finance for repairs and improvements by birthplace of Wave 2 repairers
Source of finance
Family funds or savings
Bank or Finance
Loan from family or friends
TOTAL % N
Co
Australia
66.2
16.5
17.3
100.0 139
Significant at .02 level
Birthplace
Europe
67.5
13.3
19.3
100.0 83
Asia
91.9
8.1
100.0 37
Family income, to some extent, determined the ability to use family savings.
Among repairers, those families on the lowest incomes were far more likely
to call upon family or friends for a loan than those on the higher weekly
income levels. For example, nearly one-quarter (23.2 per cent) of those
families having less than $200 per week income acquired a loan from family
or friends compared with only 6.7 per cent of those families with over $400
per week.
I I I I I I I I I I I I
I I I I I I
- 127 -
Table 6.4: Source of finance for repairs and improvements by net weekly family income of repairers
source of finance
Family funds or savings
Bank or Finance
Loan from family or friends
TOTAL , N
Co
Up to $200
62.5
14.3
23.2
100 •• 0 56
Net weekly family income
$201-$300
71.6
9.2
19.3
100.0 109
$301-$400
73.8
16.7
9.5
100.0 42
Differences are not statistically significant
Over $400
75.6
17.8
6.7
100.0 45
Borrowing from family and friends was not an easy option, nor without
consequences for the families. Figure 6.10 shows a clear relationship
between borrowing from family and friends and dissatisfaction with the costs
of the repair work as well as difficulty in raising the money. Sixty per
cent of those families that relied on family and friends to finance their
house repairs reported that they were dissatisfied with the costs of
repairs. In addition, close to half this group said that it was "very
difficult" to raise the money. In contrast, families who were able to rely
on their own saving or personal funds for the repairs were, on the whole,
satisfied with repair costs and did not report great difficulty in raising
the money. (See Figure 6.10)
As shown in Figure 6.11, however, there is a steady decline in the ability
to rely primarily on family savings or personal funds as repair costs rise.
Although 80 per cent of those repairers outlaying less than $500 relied on
their own funds, less than sixty per cent of those spend over $5000 were
able to do so. Family funds could not be stretched sufficiently to meet some
of the more expensive repairs. (See Figure 6.11)
Part of the difficulty is that many repairs required highly paid
professional involvement. Despite much evidence of the owners' willingness
to put "sweat equity" into their homes, many, for one reason or another,
- - - - ~ - :- -".- - - -' - (- - - ~ - - -Impact of Financial Source on Difficulty in Raising Repair Money & Satisfaction With Repair Costs
Percent Say "Dissatisfied With Repair Costs"
FrIende family Loan (.ta)
Bank « FInInce CCl CM)
FemOyFundll 78)
01 101 201301401 60Z IlOl 701
StatisticaOy significant at .000 level Number In brackets refers to number of cases percentage was based on
Percent Say nvery Difficult to Raise Repair Moneyn
FrIenda-Fam11y Loan (~ .)
Bank«. __ r-Co. CM}
family fUI ~ (178)
01 101 201 301 401 50S eoz 70Z
11 G) C JJ m
0)
o
f-' N 00
- - - - -. -- - - -, - - --- - - -' - ~ -Use of Family Funds and Savings to Meet Repair Costs By Level of Expenditure on Repairs % Who Used Family Funds or Savings
90%~~------------------------------------------------------------~ (N=53)
80% (N=54)
(N=65)
70%
60% (N=18)
50%
40%
30%
20%
10%
0% .. " '\ '\ ~ '\ '\" ,,'\ '\ ) '\ '\ ,\1 ... '\ '\ ") '\ '\ ,\1 L '\ '\ ..... '\ '\ '\ 1 l '\ '\ 4. '\ '\ '\ 1
Less than $500 $500-$1,000 $1,001-$2,000 $2,001-$5,000 Over $5,000
Level of Expenditure
Number in brackets refers to number of cases percentage was based on
" G) C JJ m 0)
I-' IV I.D
I I I I I I I I I I I I I
I I I I
- 130 -
were unable to do so and had to call in professional help. In over half the
repairs undertaken, professional help was involved. The owner, either on
his/her own or with friends was responsible for the repairs in about forty
per cent of cases. The owner worked with the professional or brought in
professional help for only part of the project in 27 per cent of cases. In
other words, nearly three-quarters of the repairers were putting their own
effort into carrying out the repairs and improvements. Work was carried out
solely by professional labour in only thirty per cent of the cases. (See
Figure 6.12)
Figure 6.13 shows that sole parents were considerably more likely to rely on
professional assistance than couple families. Very few sole parents, 10 per
cent, did the repairs on their own, but many, 36 per cent, called upon
friends to assist. In contrast, over one-quarter of the couples (27 per
cent) did the repairs or improvements themselves, and many were involved
with a professional in carrying out the work. On the whole, Figure 6.13
suggests that couples have not only their higher average incomes to rely on
for repairs, but greater ability to do the repairs on their own. (See Figure
6.13)
Different patterns of doing repairs and improvements are apparent for the
three ethnic groups as well. While Australians had a greater capacity for
calling on friends to help with the repairs (or even doing the repairs
themselves), overseas born families relied more on professional help. Asian
families were even more likely to use professional assistance than European
born and they relied very little on the involvement of friends. This is
likely a reflection of their considerably shorter time in Australia and
their lack of networks to help with repairs. This reliance on professional
assistance also explains their relatively higher expenditure on repairs and
improvements discussed previously. (See Figure 6.14)
Figure 6.15 suggests the types of repair jobs where professional help was
most likely to be used. In three-quarters or more of the heating and
plumbing repairs, professional help was relied on.
Seventy per cent of families undertaking structural repairs called on
professional assistance, while just over sixty per cent of those doing
extensions did so. General home improvements and outside improvements needed
professional assistance in about half the families. It is in these latter
two areas that owners are most self-reliant on getting the jobs done. Home
---~~-~--~~--~~-~---
Responsibility for Carrying Out Repairs & Improvements
N=256
Owner & Friends 22.4%
Owner 19.9%
Professional 30.4%
Owner & Professions 27.3%
"'Tl G) c :n m 0>
I\)
I-' W I-'
--~~~~--~~~~~~~~~~~-
Responsibility for Carrying Out Repairs & Improvements By Family Status of Wave Two Repairers .
CoupI .. N-161
13%
27%
24%
36%
Sole Parents N-111
38%
~ ~< 35% 1 110
% ~ "'> Y' 16%
Statistically significant at .000
D ~lCrlll'Otl"
CS] awn.,. PrcnIIIGI.r
rs:sJawn. ~ awn.,. RIIndI
"ll G) C JJ m CJ)
w
I-' W N
---~~~~-~~---~----~-
Responsibility for Carrying Out Repairs & Improvements By Birthplace of Wave Two Repairers
50%~-------------------------------------------------------------~
N=142 N=83 N=37
40%
30%
20%
10%
0'" .. > ,> > > "'>>>>1 > ,> > »»», > ~ awn. 6 ""'"-000. 'AI " )" )" 1).,"")1 I ~ "_NIl
Australian European Asian
Statistically significant at .Q2
11 (j) C ::0 m 0>
~
....... w w
I I I I I I I I I I I I I I I I I I I I
- 134 -
improvements and outside improvements perhaps are areas where doing the work
is at the discretion of the owner, rather than demanded by the condition of
the house. (See Figure 6.15)
Limited income also necessitates doing repairs on your own or calling upon
the help of friends, as indicated in Figure 6.16.
While about half the families on incomes less than $300 per week carried out
the repairs themselves or with friends, far fewer families on relatively
higher weekly incomes did so. This suggests that many families use their own
labour and that of friends as a result of limited income.
Looking Back: Home Repairers and Improvers Since Entry into Capil Home
Many Capil families have been actively repairing and improving their homes
since the early days of moving in. Indeed, 47 per cent of the families could
be described as "chronic repairers", that is, they reported carrying out
repairs at the Wave 1 interview and continued doing repairs up to Wave 2.
(See Figure 6.17)
Figure 6.17 presents a typology of repairers based upon their home repair
and improvement activity since the Wave 1 interview. About thirteen per cent
of the Capil families have not undertaken any repairs whatsoever. About one
quarter of the families could be termed "early repairers", that is, they
reported doing repairs at the Wave 1 interview, but had ceased doing any
further work after that. The "late starters", on the other hand, (about 16.5
per cent of the families) embarked on repairs somewhere between the Wave I
and Wave 2 interviews. The largest category, however, are the "chronic
repairers" who have steadily been improving their homes since they first
purchased a home under Capil.
Figure 6.17 also presents the total average expenditures on repairs
(including both Wave 1 and Wave 2 reported costS) outlayed by each of these
groups. What these average expenditures indicate is that steady involvement
in home repairs and improvements is expensive. Early repairers spent the
smallest amount, an average of $703.00. Late starters on average spent
double that amount, $1610, and the chronic repairers nearly double again
($2902).
.. - - ... ' .. , - - ...... - .... - .. ' - - .. -Use of Professional Help by Nature of Repair % Who Used Professional Help
Heating (29)
Plumbing (69)
Structural (70)
Extensions (16)
Home Improvements (161)
Outside Improvements (122)
• ' . • • • • • 0% 10% 20% 30% 40% 50% 60% 70%
Number in bracket refers to the number of cases percentage is based on
80%
T1 {j) C :IJ m (j)
U1
I-' W U1
~--~--~-~~--~--~--~-
X of Owners who Carried Out Repairs Themselves or with Friends By Family Income of Wave Two Repairers
6O%w_--------------------------------------------------------------~
N=58 N=110 N=42 N=45
50%
40%
30%
20%
10%
ox- . > ') ') ') ') ') >1 ., ') ') ') ') ') ') ] ') ') ') ') ') ') ') h ') ') ') ') ') ') ,.
<$200 $201-$300 $301-$400 $401+
Family Income
Statistically significant at D1
11 G) C ::0 m (j)
(j)
I-' W 0\
----~-------~--~~~~-
Typology of Capil Home Repairers and Improvers Wave One and Wave Two
Chronic Repairers 47.0%
($2902)
N=406
Mean expenditure Is given In brackets
Non-Repairers 12.8%
Early Repairers 23.6%
($703)
late Starters 16.5%
(.t>1 61 0)
T1 (j) C JJ m ?> -..J
I-' W -....J
I
I I I I I' I,
I I I
" I I I I I
I
- 138 -
The question has been raised in other parts of this report as to whether
home repairs are draining money away from repayments to the Ministry of
Housing. Table 6.5 provides some evidence that it is the non-repairers and
the early repairers who tend to be repaying high proportions of their family
incomes to the Ministry.
Table 6.5: Typology of repairers by percentage of income spent on mortgage repayments
Typology of Repairers
Percent Non- Early Late Chronic repayment repairer repairer starter repairer
0-15\ 7.8 11.5 15.4 16.7
16-20\ 17.6 16.7 15.4 19.4
21-25\ 29.4 32.3 35.4 31.2
26-30\ 21.6 16.7 26.2 18.3
30+\ 23.5 22.9 7.7 14.5
TOTAL \ 100.0 100.0 100.0 100.0 N 51 96 65 186
Differences not statistically significant
Although the pattern is not statistically significant, a far greater
proportion of non-repairers and early repairers are paying over the
requisite amount on repayments. Non-repairers are more likely than any other
group to be spending over 26 per cent of their incomes on mortgage
repayments. This may explain why they undertake fewer repairs than the other
groups. Chronic repairers, on the other hand, have the greatest proportion
spending less than 20 per cent of their incomes on repayments. About 36 per
cent of chronic repairers are repaying less than twenty per cent of their
income compared with about one-quarter of non-repairers and early repairers,
and thirty per cent of late starters. Although this is speculative, it may
well be that chronic repairers view home improvements as a better way to
build equity in their homes than increasing repayments.
I I I I I I I I I I I I I I I I I I I I
- 139 -
Summary and Conclusions
Two-thirds of Capi1 families have engaged in home repairs and improvements
since the Wave 1 interview. Indeed, half the families have been steadily
repairing their homes since they first moved in. A considerable amount of
money and of personal effort has gone into improving the homes, shown by the
level of expenditure of the families and the proportion of owners that
personally became involved in carrying out the work. Of the stock of homes
purchased under Capil, older dwellings, particularly pre WWII, and timber
dwellings were more likely to receive repairs.
Families tended to draw on personal savings or funds to carry out repairs,
rather than take out bank loans or borrow from family or friends. Borrowing
from family and friends tended to be the most difficult way to raise money
for the repairs and cause the greatest dissatisfaction with the cost of
repairs.
For some families, home repairs and improvements may be a preferred means of
increasing the value of their homes, as opposed to paying back larger
amounts to the Ministry in the way of mortgage. For other families, repairs
are necessitated by the condition of the home. The extent to which this
pattern of involvement in repairs and improvements is a reflection of
finally having "a home of one's own" or is an on-going drain on family
finances is an. issue that can be investigated in the next follow-up of
families.
I I I I I I I I I I I I I I I I I I I I
- 140 -
CHAPTER 7
RESPONDENTS' PERCEPTIONS OF THE CAPIL LOAN SCHEME - M. Wulff
Clearly many families are grappling with trying to understand the
complexities of the Capil scheme. The opportunity for access into home
ownership is attractive, as are the low initial repayments. But the
stumbling block appears to be that the nominal increases in repayments are
perceived as real, despite the Ministry's attempts to convince the families
otherwise. Coupled with this is a balance statement that shows the amount
outstanding rising. For many families, it is difficult to separate out the
expectations of mortgage repayments that are experienced by the bulk of
Australian mortgagees, that is, initial repayments, however high, that
nonetheless appear to decline in real terms over the life of the loan, from
the unique aspects of Capil: low repayments which rise only with the
Consumer Price Index adjustment or increases in family income. Despite the
Ministry's attempts to emphasize the notion of "equity growth", the analysis
in this chapter suggests that for many families this is a remote and
confusing concept.
During the interviews with the Capil families, the respondents were reminded
that "on a Capil loan the amount outstanding increases in the first few
years of the loan". The respondents were then asked to assess how well they
understood this aspect of how the loan works. (See Figure 7.1)
It is clear from Figure 7.1 that one-quarter of the Capil families said they
had "great difficulty" understanding how the Capil loan works. An additional
28 percent of the families admitted to "some difficulty" in understanding
this aspect of the loan, making it a total of well over half the Capil
families not understanding the loan very well. About thirty percent of the
families judged themselves as having a fair understanding, while only a
minority of families (less than one-fifth) thought they had a good
understanding.
- - .-. - - - - - - ....... - - - - - -Capil Families Understanding of Loan Balance
N =406
Good Understanding 17.2%
Fair Understanding 29.6%
Great Difficulty 24.9%
Some Difficulty 28.3%
~------------------------------------------------------~
11 G) C :D m -..t
......
"'" ......
I I I I I I I I I I I I I I I I I I I I
- 142 -
Clearly the factor most associated with understanding the loan scheme is
ethnicity. While about 17 percent of Australian born respondents rated
themselves as having "great difficulty" in understanding how the Capil loan
works, 27 percent percent of the European born and fully 42 percent of the
Asian born did so. Indeed only 7 percent of the Asian born families felt
they had a good understanding of the scheme. (See Figure 7.2)
Although ethnicity is most associated with difficulty in understanding the
scheme, Figure 7.3 reveals that there are other explanatory factors as well.
In particular, those with only a primary school education are the most
likely to experience difficulty in understanding the scheme. Nearly three
quarters of those with primary school education had at least some difficulty
understanding the scheme. In contrast, about one third of those with post
secondary education experienced difficulty, still a not inconsiderable
proportion suggesting that even the more highly educated among the Capil
families are grappling with its' financial complexities. (See Figure 7.3)
Other characteristics point to certain groups having difficulty
understanding the scheme, although they are not statistically significant as
are ethnicity and educational level. Sole parents, for example, are
slightly more likely than married couples to express difficulty in
understanding the scheme, pensioners more than wage-earners, and those with
family incomes less than $200 per week compared with those on higher
incomes. The latter variables, of course, are correlated, but do point to
the picture of the lower income pensioner families having the most
difficulty in understanding the scheme. Younger respondents, more than older
respondents, also express difficulty in understanding the scheme.
Implications of Lack of Understanding of the Capil Scheme
A lack of understanding of the Capil scheme has several implications:
namely, a decline in satisfaction with housing costs in general, greater
dissatisfaction with the Capil loan scheme on the whole, and greater
tendency to question the worthwhileness of the Capil scheme.
For example, Figure 7.4 suggests that the better the understanding of the
Capil loan scheme the more satisfied with housing costs. While only 16
percent of those expressing great difficulty understanding the scheme are
~---~-------~-~~~~~~
(I)
Capil Families Understanding of Loan Balance By Ethnicity
50%~.--------------------------------------------------~
40%
30%
.!!! 20% E {f 15 CD Cl
~ CD e :.
10% o Australian
fSSJ European
0% .. I», ~ ». I\»'»'»'»'J I ». ~ >I\».».,\"\.'I I > ». "),,,,\'».'1 t. ». ), ",».».),),'1 I ~ Asian ~ 4i ~
Great Difficulty Some Difficulty Fair Understanding Good Understanding
11 (j) C ::0 m -.,J
I\)
t-'
"'" w
.' .. ' - - - -... - - - ...... -. - - ...... Who Has Difficulty Understanding Capil Loan Balance? Selected Characteristics % Having Great or Some Difficulty
Primary School Education (52) I Post-Secondary Education (64) I Married Couples (225) I Sole Parents (181) I Wage Earners (175) I Pensioners (231) I Familiy Income <$200 (102) I !
Family Income over $400 (62) I I
Aged less than 35 (176) I, I
Aged 35 and over (230) J I ,
Total Gapil Group (406) J i • • • • • • • •
0% 10% 20% 30% 40% 50% 60% 70% 80%
Number in bracket refers to the number of cases percenta~ is based on
~
" (j) C :D m -..j
w
I-'
""" """
I I I I I I I I I I I I I I I I I I I I
- 145 -
satisfied with housing costs, nearly a third of those with a good
understanding are satisfied with housing costs. (See Figure 7.4)
On the other hand, those most dissatisfied with the Capil scheme tend to be
those who understand it least.
Half of the respondents expressing great difficulty in understanding their
Capil loan balance were dissatisfied (or neutral) about the entire Capil
scheme. The proportion dissatisfied with the Capil scheme tends to decline
as their understanding of the loan balance increases. (See Figure 7.5)
Respondents were asked towards the end of their interviews to assess " on
balance, how worthwhile an investment do they feel home ownership is under
Capil, considering all the expenses related to owning a home". While on the
whole, three-quarters of the sample felt home ownership under Capil was a
worthwhile investment, the 'proportion who feel so declines markedly if they
do not understand the Capil loan balance. (See Figure 7.6)
What the Capil families say about the scheme
The capil respondents were given an opportunity to say how they felt about
the scheme in an open-ended way. At the same time, they were asked what
changes they would like to see made that would make Capil "more workable for
you and your family".
Just over half the sample responded that Capil was working well for them. Of
this group, most made no comments or recommendations for change to the
scheme, and about ten percent even included positive comments about the
financial security it brought or the fact that it was cheaper than rent.
(See Figure 7.7)
It has enabled me to buy a house I would not have been able to buy otherwise. I never thought of any changes.
Another group of respondents could be described as saying that overall they
were satisfied, but had reservations about some aspect of the scheme. This
"happy, but" group overwhelmingly mentioned something to do with the
outstanding loan balance increasing. Some typical comments are:
-----------~~---~---
I I Satisfaction With Housing Costs
By Understanding of the Loan Balance X Satisfied With Housing Costs
. Total Gapil Group (406) I
Great Difficulty (96)
Some Difficulty (113) I
Fair Understanding (116)
--
Good Understanding (6n
- • • • 0% 10% 20% 30%
Number in bracket refers to the number of cases percentage is based on
• 40% 50%
~I
_ ... J
" (j) C J.J m -.J .po.
I-'
""" 0"\
-. - .! - - - - -. - - - - .. - .. - - - .. -I I I
I
Dissatisfaction With Capil Loan Scheme By Understanding of the Loan Balance % Dissatisfied or Neutral About Capil Scheme
Great Difficulty (100)
Some Difficulty (115)
Fair Understanding (120)
Good Understanding (70)
• • • • • 0% 10% 20% 30% 40% 50%
Number in bracket refers to the number of cases percentage is based on
l I
I I
60%
"'Tl (j) C JJ m -.J
U1
I-' .I::> -J
--------------------
L._. __
Whether Homeownership Under Capil is Worthwhile By Understanding of the Loan Scheme % Undecided Or Say Capil Is Not a Worthwhile Investment
Great Difficulty (100)
I
Some Difficulty (115) ,
Fair Understanding (120)
Good Understanding (70)
-. • • • 0% 10% 20% 30% 40% 50%
Number in bracket refers to the number of cases percentage is based on
----.----.~ ._-----_._._--_._------------_.
"Tl G) c :n m "-.J . 0>
~ ,j::.
co
-----------------~--r----I --I Open-ended Responses to
"How well do you think this loan scheme is working for you?"
Not Working Well 8O.8J
Working Wel~ But _ 18.41
L--________ _
(N = 406)
Working Well 51.01
11 (j) C JJ m -.J
-.J
~
"'" \.0
I I I I I I I I I I I I I I I I I I I I
- 150 -
Good idea, but ••• It's not fair that the mortgage keeps increasing even though you're paying it back. You'll never own the house.
It will work very well after some years, but now I must pay more or else I will never pay it off.
I am happy with it. The only thing I don't understand is that we're given a set interest rate, and then the CPI increase goes on it every three months, and you think you're getting somewhere with your payments and all of a sudden you're $2000 higher than your initial loan. It's very depressing. I feel as though I am getting nowhere.
Fairly well. If the CPI came down. The CPI is going to make the house harder to payoff. I didn't know I would have to pay it when I took the loan. The woman did not tell me about the CPI, only about the low interest. I rang the Ministry when I got the first statement, because I got a fright when I saw the statement •••. Apart from the CPI, I am quite happy.
It's great, but for low income earners it's hard because prices on other things go up all the time. In fact, when I started work I was worse off - I had to pay for child-care; I lost my pension benefits and I also had higher mortgage payments!
Some families mentioned that it was working well, but that they felt overly
tied to the house:
Working really well. Only thing wrong is we have to stay here. If my husband gets a job somewhere else, which he did, he can't move. And he lost that job.
About thirty percent were unhappy with the scheme and usually told the
interviewer what it was that they were unhappy with and what they would
recommend to change the scheme. Two-thirds of this group of respondents
mentioned, not surprisingly, their confusion with the structure of the Capil
loan, lack of either initial or on-going information about the scheme
provided by the Ministry, or what they viewed as "unfair" about this aspect
of the loan:
Shocko ••• it was just the fact that the CPI business wasn't impressed upon you. You were thinking you were getting a low interest loan and the next minute the interest rate had jumped to goodness knows what
I I I I I I I I I I I I I I I I I I I I
- 151 -
This respondent went on to say that she and her husband went to the local
bank manager for some clarification on the loan:
We even went to the Bank to see what we could do because we got such a shock. The bank manager said he was going to send it into Choice magazine for the best gobbledygook award! He was totally amazed and he said that the government had been regulating them and he said that if he tried to put a contract like that on a person he'd be in jail. He could not make up a contract like that and not tell people how much they were going to repay.
Another dissatisfied client •••
I had to get the man next door to explain why the amount outstanding increased. He explained it a lot better than the Ministry •••• I did ring the Ministry once. You can't get information on the phone ••• they pass you from one person to another.
A small number of families were unhappy with Capil because they felt they
had lost the ability to move houses if their family circumstances changed.
The did not have the flexibility that home owners with more conventional
mortgages had.
Not working well. We don't have the option to sell. We're trapped here for the next thirty years.
And from another respondent •••
If I need to relocate myself for study, it would help if I could rent the house rather than sell it.
Do families see Capil as a worthwhile investment?
As many of the above comments indicate, many families because of their
limited understanding of the Capil scheme have difficulty seeing it as an
investment opportunity. As shown in Figure 7.6 while two-fifths of the
respondents who have great difficulty understanding the Capil scheme are
undecided or dissatisfied with Capil as an investment, the proportion
declines significantly if people feel they have a good understanding of the
I I I I I I I I I I I I I I I I I I I I
- 152 -
way the loan scheme works. This sections now looks at other factors that
impact on whether families view Capil as an investment, both immediate
factors such as meeting monthly mortgage payments, and long-term factors
such as the growth in equity in their homes.
Mortgage Repayments and Perceiving Capil as Worthwhile Investment
It appears that families judge the Capil scheme as an investment on the
criteria of their immediate capacity to repay. As Table 7.1 reveals, while
nearly 90 percent of families with repayments consisting of less than 15
percent of their family income view Capil as worthwhile, the proportion
declines to 66 percent of those families paying over thirty percent of their
income. Nearly one-quarter of those families paying over the requisite
amount, that is over 25 percent of their income, are undecided or negative
about Capil as an investment.
Table 7.1: Perceptions of Capil as worthwhile investment by proportion of family income spent on mortgage repayments
Is Capil a worthwhile investment?
No
Undecided
Yes
TOTAL , N
Significant at .1
0-15
3.6
7.1
89.3
100.0 56
Percentage
16-20
5.6
19.7
74.6
100.0 71
of family
21-25
9.4
13.4
77 .2
100.0 127
income
26-30
6.4
23.1
70.5
100.0 78
30+
10.8
23.1
66.2
100.0 65
Another indicator of how Capil's investment value is viewed is shown in
Table 7.2, where the ease or difficulty of meeting mortgage repayments is
directly related to the perception of Capil as worthwhile.
I I I I I I I I I I I I I I I I I I I I
- 153 -
Table 7.2: Perception of Capi1 as worthwhile investment by ability to meet mortgage payments
Is Capi1 a worthwhile investment?
No
Undecided
Yes
TOTAL , N
Significant at .000
Ability to
Difficult
17.9
35.7
46.4
100.0 32
meet mortgage payments
Just managing
7.0
15.5
77.5
100.0 69
Easy
5.1
11.8
83.1
100.0 304
The proportion of families viewing Capil as worthwhile increases
dramatically with reported ease of meeting mortgage repayments. While 46
percent of families having difficulty meeting repayments state that Capil is
a good investment, 77 percent of families "just managing" to meet payments
and fully 83 percent.of families finding it easy to meet repayments state
that it is worthwhile.
Location and capil as a Worthwhile Investment-
Since the potential of Capil as an investment stems in part from increases
in property value, location with it's consequent impact on market values of
housing, makes a difference to the investment potential of dwellings
purchased under Capil.
Figure 7.8 looks at the proportion of families who bought homes· in different
areas by whether they think Capil is a worthwhile investment. Differences do
appear by region.
Although trends in property values would indicate that the metropolitan
housing market is a better investment than the country, it is the country
respondents who, on the whole, think Capil is a good investment. Almost all
the country respondents rate Capil as a good investment compared with just
--------------------
L __ .
Percentage Who Think Capil is a Worthwhile Investment By Region
Country (74)
Other Metropolitan (24)
Eastern Metropolitan un
Western Metropolitan (12n
Westernport (103)
-
. • • • • ---y-
0% 10% 20% 30% 40% 50% 60%
Number in bracket refers to the number of cases percentage is based on
J
l
• • 70% 80%
-----._-_._----_.
• 90% 100%
--.--
"T1 G) C ::D m -..I
00
I-' U1 ,j::>.
I I I I I I I I I I I I I I I I I I I I
- 155 -
over 60 percent of the Westernport families. To what extent the respondents
perceptions of the investment value of their homes are accurate (or indeed
to what extent respondents are even aware of the value of housing in their
areas) are not examined in this report, but are issues which can be taken up
in the next round of interviews. Nevertheless, it does appear that location
does not play a strong part in the families' perception of their
"investment".
For example, those families who purchased a less expensive home with their
Capil loan (a home under the mean price for the sample as a whole, $56,600
in 1985) tend to think Capil is a good investment more than families who
purchased a dwelling above the mean price.
Table 7.3: Perception of Capil as a worthwhile investment by original purchase price
Purchase Purchase Is Capil a cost cost worthwhile below mean above mean investment? < >
No 7.0 8.9
Undecided 10.7 24.1
Yes 82.2 67.0
TOTAL , 100.0 100.0 N 214 191
Significant at .000
While 82 percent of families who paid less than the mean housing price rated
Capil as worthwhile, only 67 percent of families paying above the mean
housing price did so. Again, this suggests a tendency to see the
worthwhileness of Capil in terms of immediate financial outlay, rather than
long-term benefits.
The purchase price of the dwelling, on the whole, tends to have a stronger
impact on the perception of Capil as worthwhile than does location. (See
Figure 7.9)
--------------------% Perceive Capil as Worthwhile Investment By Purchase Price and Location
Metro.,olitan Familie.
Below X&S.OOO (tU)
Above t6S.OOO (tU)
Non-Metropolitan Familie.
!Below S48.OOO (97)
Above S48.OOO (80)
I
OZ 20Z <40% eoz 80J 100% OZ 20Z 40Z eoz 80% 100%
Mean Purchase PrIce Is $53.000 Mean Purchase PrIce Is $49,000
Number In brackets refers to number of cases percentage is based on
11 G) C JJ m -.,J
CD
I-' U1 0'1
I I I I I I I I I I I I I I I I I I I I
- 157 -
As shown in Figure 7.9, whether in the metropolitan or non-metropolitan
area, those families paying less than the mean price for their housing
tended to view Capil as worthwhile more than those who paid above the mean.
Of course, as with location, whether they are correct in the long run is at
this stage unknown. The issue of growth in equity in the home, and the
impact of location and original purchase price, will be pursued in the next
follow-up of Capil.
Summary and Conclusions
For the most part, families have difficulty understanding the Capil scheme,
particularly the reasons why they see their "balance outstanding"
increasing, and especially when they, however mistakenly, consider that they
are paying more this year than they did last. Their reference group for
judging their mortgage repayments seems to be mortgagees on conventional
finance whose repayments "look like" they are staying the same, while for
the Capil group repayments "look like" they are increasing. As this analysis
shows, a better understanding of this aspect of the loan scheme would
improve overall satisfaction with their housing costs and with the scheme
itself •
There is little evidence in this analysis that the families have a notion of
"equity growth" in mind when they judge the worthwhileness of Capil as an
investment. Rather than equity growth (which in large part requires a long
term view), the families rank Capil as a good investment if they have
relatively low repayments (less than 15 percent of their family income) that
are easy to meet. Such low repayments, in fact, are what are causing their
"balance outstanding" to increase and their dissatisfaction with Capil to
mount! The original purchase price of their home, more than the location
where they bought, also relates to their perception of Capil as an
investment.
In sum, clearer and more accessible information on how the Capil scheme
works would improve client satisfaction. Families also need to understand
more clearly the factors that make Capil a "good investment", that is, the
relationship between the appreciating property values of their homes and
their outstanding debt, (i.e. their equity) and the effect of various
repayment levels on this overall ratio.
I I I I I I I I I I I I I I I I I I I I
- 158 -
CHAPTER 8
CAPIL HOME OWNERSHIP - P. Napper
General Satisfaction With Capil Itself
Overall, two thirds of the loan group indicated they were satisfied with
Capil. Table 8.1 shows that two parent families were marginally more likely
to be dissatisfied with Capil and that a slightly greater proportion of sole
parents were satisfied with Capil.
Table 8.1: Satisfaction with Capil by family status
One-parent Couple Total
Dissatisfied 35 51 86 19.3 22.7 21.2
Neither satisfied/ dissatisfied 21 31 52
11.6 13.8 12.8
Satisfied 125 143 268 69.1 63.6 66.0
TOTAL N 181 225 406 44.6 55.4 100.0
Ethnic background had an influence on families' satisfaction with the Capil
scheme. Australian born families were more satisfied with the Capil scheme
(see Table 8.2). European born families had higher levels of
dissatisfaction than Australian and Asian families, however, nearly 20 per
cent of Asian born families were more ambivalent about the Capil scheme,
being neither satisfied or d.issatisfied at this stage.
I I I I I I I I I I
I I I I I I I I I
- 159 -
Table 8.2: Satisfaction with Capil by ethnicity
Australia Europe Asia Total
Dissatisfied 41 30 14 85 19.3 25.4 19.4 21.1
Neither satisfied/ dissatisfied 22 16 14 52
10.4 13.6 19.4 12.9
satisfied 149 72 44 265 70.3 61.0 61.1 66.0
TOTAL N 212 118 72 402 52.7 29.3 18.0 100.0
It could be hypothesised that families who had experienced 'real' increases
in income since Wave' 1 may be more satisfied with Capil because of their
enhanced capacity to afford the extra costs of home ownership and, possibly,
increase their mortgage payments in order to increase their equity in their
property. Similarly, families who have experienced reductions in income in
real terms since Wave 1 might be expected to register higher levels of
dissatisfaction with the Capil scheme.
Table 8.3 shows that families with 'high' real increases in weekly income
($50 or more per week) had the highest proportion who were dissatisfied with
the Capil scheme (25% of 'high gain' families) and the lowest proportion
(64%) who were satisfied with Capil. Twenty-two per cent of families with
high real losses of weekly income $50 or more per week were also
dissatisfied with Capil, but they were also the groups with the highest
number satisfied with the Capil scheme.
I I I I I I I I I I I
I I I I I I I I
- 160 -
Table 8.3: Satisfaction with Capil by income change
Decrease Increase of $50 Decrease Increase of $50 or more upto $50 upto $50 or more
per week per week per week per week Total
Dissatisfied 11 19 18 34 82 21.6 16.5 20.2 24.6
Neither satisfied/ dissatisfied 2 19 12 16 49
4.0 16.5 13.5 11.6
Satisfied 38 77 59 88 262 74.4 67.0 66.3 63.8
TOTAL N 51 115 89 138 393 13.0 29.3 22.6 35.1 100.0
Similarly, families on low incomes might be expected to feel less satisfied
about Capil because of their restricted ability to meet household costs. In
fact families with incomes under $250 were marginally more likely to be
satisfied with the Capil scheme (see Table 8.4). Workforce participation
was not a significant factor in influencing families' satisfaction with
Capil as couples and singles in and out of the workforce had similar
satisfaction levels, the more significant differentiating factor was family
status, with single parents, either working or not working, having higher
satisfaction levels than couples, in or out of the work force (see Table
8.5).
I I I I I I I I I I I I I I I I I I I I
- 161 -
Table 8.4: Satisfaction with Capil by Income
Dissatisfied
Neither satisfied/ dissatisfied
Satisfied
TOTAL N
Under 250
39 20.0
22 11.3
134 68.7
195 49.0
Over 250
44 21.7
29 14.3
130 64.0
203 51.0
Total
83 20.8
51 12.8
264 66.3
398 100.0
Table 8.5: Satisfaction with Capil by work force participation
couple One-parent Couple not One-parent not
working working working working
Dissatisfied 31 20 16 19 22.8 22.5 20.3 19.0
Neither satisfied/ dissatisfied 18 13 8 2
13.2 14.6 10.1 12.0
Satisfied 87 56 55 69 64.0 63.0 69.6 69.0
TOTAL N 136 89 79 100 33.7 22.0 19.6 24.7
Total
86 21.3
51 12.6·
267 66.1
404 100.0
Table 8.6 shows that respondents with lower educational levels (i.e. primary
school qualifications) had the lowest levels of general satisfaction with
the Capil scheme. Interestingly, respondents with lower secondary
I I I I I I I I I
I I I I I I I I I I
- 162 -
qualifications recorded the highest level of satisfaction, and respondents
with higher (upper secondary, tertiary) levels of education. recorded similar
levels of dissatisfaction with the Capil scheme to the lowest education
group, and had relatively low levels of satisfaction with the Capil scheme.
There does not appear, therefore, to be a clear pattern of relationship
between education levels and overall satisfaction with Capi1.
Table 8.6: Satisfaction with Capil by level of education
Lower Upper primary secondary secondary Tertiary Total
Dissatisfied 15 10 38 17 BO 2B.3 9.0 25.B 27.0 21.3
Neither satisfied/ dissatisfied 8 16 18 7 49
15.1 14.3 12.2 11.0 13.1
Satisfied 30 86 91 39 246 56.6 76.7 62.0 62.0 65.6
TOTAL N 53 112 147 63 375 14.1 30.0 39.2 16.7 100.0
When families were asked to subjectively assess their financial situation,
those who were able to save money each week had the highest satisfaction
rating with Capil and, correspondingly, the lowest dissatisfaction ratirig.
Those families who reported that they 'spent more than they made' or 'had no
money at the end of the week' were more dissatisfied with the Capil scheme
(see Table B.7).
I I I I I I I I I I I I I I I I I I I I
- 163 -
Table 8.7: Satisfaction with Capil by financial situation
Spend No Money more money left Able than at end goes to make of week on bills save Total
Dissatisfied 9 29 41 7 86 20.4 20.4 24.3 13.7 21.2
Neither satisfied/ dissatisfied 7 21 17 7 52
16.0 14.8 10.0 13.7 12.8
Satisfied 28 92 111 37 268 63.6 64.8 65.7 72.6 66.0
TOTAL N 44 142 169 51 406 10.8 35.0 41.6 12.6 100.0
Capil and disadvantages of home ownership
Capil families were asked what they thought the major advantages and
disadvantages of home ownership were, now that they were established in
their own homes and had a perspective of ownership which was less influenced
by the immediacy of the move into ownership which may have affected their
opinions at Wave 1.
In identifying the advantages of home ownership, three main themes emerge
from families' responses:
i the independence and security of ownership
ii the economic advantages of home ownership: home ownership as an investment, and freedom from high rental
iii qualitative aspects of ownership - mainly privacy and space (see Table 8.8)
One-parent families more frequently cited the issues of independence and
security as major advantages while married couples were more likely to
identify the economic advantages of home ownership (see Table 8.8).
I I I I I I I I I I I I I I I I I I I I
- 164 -
Table 8.8: Major advantages of home ownership by family status
One-parent Couples Total
Independence & security 59.7 53.3 56.2
Economic advantages 27.6 33.8 31.0
Privacy/space 6.6 7.1 6.9
other 6.1 5.8 5.9
TOTAL , 100.0 100.0 100.0 N 181 225 406
Australian born families were more likely to identify the economic
advantage~ of ownership, while European born families more frequently
identified the issues of privacy and space. The advantages identified most
frequently by all ethnic groups, however, were the independence and security
of home ownership (see Table 8.9).
Table 8.9: Major advantages of home ownership by ethnicity
Australia Europe Asia
Independence & security 57.1 56.6 52.8
Economic advantages 34.9 27.0 26.4
Privacy/space 4.2 12.3 5.6
Other 3.8 4.1 15.3
TOTAL , 100.0 100.0 100.0 N 212 122 72
Other factors such as family income and financial coping did not, in
general, significantly impact on the types of advantages identified.
Total
56.2
31.0
6.9
5.9
100.0 406
I I I I I I I I I I I I I I I I I I I I
- 165 -
When families were asked to identify major disadvantages with home
ownership, three main areas of dissatisfaction with home ownership can be
identified:
i the financial costs associated with home ownership, for example
rates, repairs and general maintenance
ii characteristics of the capil loan itself, such as the increasing
loan balance or CPI adjustments to payments
iii geographic or social isolation or a lack of mobility; in these
cases, responses indicated either that home ownership had involved a
physical move which had left families with inadequate access to
services or social/family networks. For others, ownership meant
they were unable to move to take up job opportunities or to a
preferred location. They were unwilling to sell their property and
stated that the Ministry of Housing would not permit them to rent
out their dwelling.
In addition, a significant proportion of the loan group could not identify
any major disadvantage of home ownership (see Table 8.10).
Married couple families were more likely to identify problems with the capil
loan, while single parents more frequently identified financial costs as a
major disadvantage. (see Table 8.10).
Table 8.10: Major disadvantages of home ownership by family status
One-parent Couples Total
No disadvantages 36.5 38~2 37.4
Financial costs 48.6 44.4 46.3
Loan characteristics 3.3 8.0 5.9
Lack mobility/isolation 5.0 6.7 5.9
Other 6.6 2.7 4.4
TOTAL , 100.0 100.0 100.0 N 181 225 406
I I I I I I I I I I I I I I I I I I I I
- 166 -
Australian born families were more likely to state there were no
disadvantages of ownership while Asian and European born families more
frequently had concerns about the financial costs of home ownership, as well
as aspects of the Capil loan (see Table 8.11).
Table 8.11: Major disadvantages of home ownership by ethnicity
Australia Europe Asia Total
No disadvantages, 42.9 30.3 33.3 37.4
Financial costs 43.9 49.2 48.6 46.3
Loan characteristics 2.4 8.2 12.5 5.9
Lack mobility/isolation 7.1 4.9 4.2 5.9
Other 3.8 7.4 1.4 4.4
TOTAL , 100.0 100.0 100.0 100.0 N 212 122 72 406
Families' subjective rating of their financial coping did affect their
perceptions of the disadvantages of home ownership. Families who were
'financial copers' - they were able to save money each week, were far more
likely to see no disadvantages with home ownership and far less likely to
identify the financial costs of ownership as a disadvantage.
I I I I I I I I I I I I I I I I I I I I
- 167 -
CHAPTER 9
CONCLUDING COMMENTS - F. Maas
The capi1 scheme is aimed at allowing low income families to have access to
home ownership, thereby accumulating equity, and at the same time to enable
them to cope with the extra responsibilities and costs that accompany such a
move. The key to Capil being successful in these twin aims lies in the
capacity to adjust the level of mortgage repayments to changes in family
income.
Monitoring of the Capil and renter groups over the three years 1984 to 1987
has been mainly characterised by clear gains in employment and by the
resultant increased levels of income. This has been particularly so for
couple families although one-parent families have also increased their
labour market activity considerably.
At the same time, large numbers of families have experienced no change in
their employment or family circumstances and many of these have suffered
declines in incomes, as have those who have lost employment.
These changes are reflected in the patterns of financial coping evident in
the Capil group. Those who are coping best are those who have experienced
the greatest gains in income and those who are struggling most are those who
have suffered losses in income. An important finding is that significant
proportions of such families living on very low incomes are nevertheless
paying high proportions of income in housing costs. If the Capil instrument
is to provide a buffer against further hardship for these families, loan
repayments need to be adjusted to allow for recovery from adverse economic
circumstances.
Gains in income appear to provide some families with an opportunity to
reduce the outstanding balance of their mortgage and for others, extra
capacity to repair or improve properties.
The operation of the Capil scheme appears to have been of considerable
benefit to those families who would otherwise have been accommodated in the
I I I I I I I I I I I I I I I I I I I I
- 168 -
private rental sector. Even those Capil one-parent families who are in
receipt of the lowest levels of income, are financially better off than
their counterparts in private rental. This is affirmed in these families'
assessment of their financial position and in the projections for the
future.
To this stage, Capil has operated differentially for couple families
compared with one-parent families. These families have been able to move
into home ownership at a time when traditionally they might not have been
able to. Couples have enjoyed greater gains in employment and income and
have the highest hopes for their financial future.
For one-parent families, the move into Capil has been associated with less
gains in income and employment. For those still on low incomes financial
difficulties.are considerable, yet compared with. similar families in the
private rental sector, they are better off and are strongly assertive of
that perception. These families have been able to consolidate their housing
tenure at a time when they experience significant barriers to employment
associated with parenthood. They nevertheless have the opportunity to
increase their employment in the future and to build on the foundation
provided by participating in the Capil scheme.
The next phase of the evaluation will take place in 1989. By this time most
families will have been in their homes for 5 years and a fuller assessment
of many factors will be possible. An important area for assessment will be
the extent to which Capil properties have appreciated in value and the
extent to which families have been able to establish a share of the equity
in their homes. At that stage more comprehensive assessments will be
possible regarding the economic outcomes for participants, an important
aspect of longer term objectives for the scheme. In the meantime it will be
important to fine tune some of the operational procedures of the scheme so
that the short to medium term goals of allowing affordable access to home
ownership may be more fully achieved.