The sharp rise in unemployment, particularly among families, has increased the number of households having difficulty making ends meet. Housing costs can be a major part of these financial problems as housing commitments are generally made when incomes are much higher and may not be easily adjusted when incomes fall (see article 'Living Day to Day' by McDonald and Brownlee elsewhere in this issue).

To supplement case study information from the AIFS Australian Living Standards Study, data about the housing circumstances of unemployed people were drawn from the Australian Bureau of Statistics' 1990 Income Survey, unit record tape. The group studied in this article are couples who had both had jobs, but one or both had become unemployed; these families often have had a sharp drop in their incomes.

Housing expenditures vary by tenure type and over time. Low-income public renters have their rents related to income while private tenants' housing costs generally rise in line with prices. Home buyers usually have high repayments when they first purchase but have the prospect of declining housing costs (relative to earnings) after ten to 15 years.

Housing tenure, and the extent to which families have paid off their homes, therefore plays a large part in determining the extent of financial hardship during periods of reduced capacity to pay. Private renters and home buyers who have recently purchased are the most likely to face the prospect of having to find alternative accommodation if unemployment continues.

Table 1 shows the weekly housing costs of couples who were buyers or private renters and who had both worked (full-time or part-time) during 198990 but were receiving unemployment benefits when interviewed in OctoberDecember 1990. The table indicates that buyers at that time were more likely to have high housing commitments than private renters, with almost 16 per cent having repayments of $150 per week or more. (An unemployed couple with one child then received just under $280 per week in income support, including family allowance.)

Rent assistance (up to $36.20 per week in 1992 for a couple with one child) is available to unemployed private renters who are receiving social security benefits, but there is no similar allowance to help unemployed buyers keep up their house payments. Recent buyers who are retrenched are thus likely to find it very difficult to keep up their house payments.

However, as mortgage repayments represent the purchase of an asset, many argue it is not appropriate to provide extra assistance to unemployed home buyers and that, instead, lending institutions should be more flexible in their repayment policies. Lending bodies may be willing to do this for a short period, but are likely to be reluctant if buyers have very little equity in the dwelling.

Levels of equity of buyers and owners are set out in Table 2, which looks at three groups. The first two groups consist of couples who were both employed during 198990 but one or both were unemployed at the time of the survey. Group one were receiving unemployment benefits at the time of the survey. Group two were not receiving unemployment benefits (mostly because one partner was still in employment). Group three consisted of all remaining couples who owned or were buying their houses.

Table 2 shows that a substantial proportion had considerable equity in their dwelling, but a total of 19 per cent of the couples on unemployment benefits and 12 per cent of the unemployed couples not on unemployment benefits estimated that, in 1990, they had less than $30,000 of equity in their dwelling.

Those unable to meet repayments or make arrangements with their financing authority, as the case studies from the AIFS Australian Living Standards Study show (see recession article elsewhere in this magazine), face the very real prospect of having to sell their home. However, when these families attempt to backtrade or buy in a more suitable location (such as closer to employment, transport or family), they will face stamp duty charges of several thousand dollars (depending on which state they buy in) another type of 'poverty trap'.

Housing costs can be a major factor in child poverty, particularly among home buyers. More low-income buyers could be helped to cope with the hardship caused by the fall in their incomes if the (small) existing Commonwealth-funded mortgage relief schemes were expanded. However, this would not overcome the broader issue of the 'turnover tax' imposed whenever owners or buyers relocate. Examining alternatives to State Government stamp duty should be included with other measures to assist families, particularly those who are unemployed.

The high costs of housing adjustment affect not only those in temporary hardship but all those (including the aged and those changing employment) who want to move to housing of a more appropriate size or location.