The households interviewed were asked about their experiences and expectations of home purchase, including trade-offs, compromises made and financial strain as a result of paying for their housing when on low-moderate incomes. Trade-offs were discussed in terms of compromises made to current housing needs and realistic expectations, rather than to ideal house type or ‘dream home’. They were explored in relation to dwellings (house size, quality, age and so on) and location (distance, travel times, desirability of location, safety and so on). As well, a detailed account of the financial implications of house purchase, from planning and saving, described above, to the experience of meeting mortgage and other costs, was also explored.
8.1.1 Housing and locational trade-offs
While the sample of purchasers is small, it is nonetheless striking how few perceived that they had made housing (dwelling) specific compromises to the homes they purchased, as illustrated in Table 30. Eight households appeared to have made no real trade-offs to their dwellings, while four had made moderate trade-offs only. These results are perhaps surprising in view of the well-publicised ‘housing affordability’ problems in Melbourne.
Table 30: Summary of extent to which housing specific trade-offs are made among young, recent migrant and disrupted households
Trade-offs in terms of housing size/type Young households (n = 4) Recent migrant households (n = 2) Disrupted households (n = 6) No trade-offs 1 (Case 4) 2 (Cases 3, 9) 5 (Cases 2, 6, 8, 11, 12) Moderate trade-offs 3 (Cases 1, 7, 10) 0 1 (Case 8) Extensive trade-offs 0 0 0
Source: Interviews with low-moderate income home purchasers in Melbourne metropolitan area (n = 12). Where any trade-offs or compromises are indicated at all in the interviews, these tend to be relatively minor and aesthetic and are in many cases aspects of housing that can be modified in time. Examples include renovating outdated kitchens and making other modifications to homes to make them ‘their own’, being able to slowly add the ‘extras’ not affordable at the time new homes are built (e.g. better quality lighting), improving garden landscaping, and making improvements to their homes sometimes very slowly over substantial periods of time as and when they are able. A number of households had bought land and built new dwellings via registered builders. In other cases, households had purchased very recently built housing. In these cases, there appears to be a relatively high level of satisfaction, and hence lack of a sense that trade-offs have been made.
In contrast, all but two households made trade-offs in the location where they bought in order to afford their homes. In some cases, these trade-offs are substantial, as shown in Table 31. The classification of trade-offs takes account of the distances household members travel to employment and networks, their own assessment of compromises made during the purchase process, and their apparent overall desire to live in the locations they purchased in (relating this primarily to time of purchase). Table 31: Summary of extent to which location specific trade-offs are made among young, recent migrant and disrupted households
Young households (n = 4) Recent migrant households (n = 2) Disrupted households (n = 6) No trade-offs 1 (Case 1) 1 (Case 3) 0 Moderate trade-offs 2 (Cases 7, 10) 0 3 (Cases 5, 6, 12) Extensive trade-offs 1 (Case 4) 1 (Case 9) 3 (Cases 2, 8, 11)
Where no or only moderate trade-offs are made, this is typically because the locations in which the households were able to purchase are close to employment and/or networks, often in reasonable proximity to where they had been living previously and/or with a high degree of perceived amenity:
I didn’t want to be in the city, I always wanted a quiet place. When you come home with all the hustle and bustle, you have to really feel it’s home sweet home, it should be welcoming. So that’s the way that even the location that I bought land back home as well to build a beautiful place away from the city, like 20 minutes drive, you can do everything and come back home and you are peaceful. (Case 3: Pratima, single, adult children, recent migrant household, new housing in Area 1).
In most cases in this sample, however, trade-offs are made in order to enter the housing market. Housing which is affordable is purchased, typically in areas as close as possible to those in which households actually prefer to live. Sometimes, however, it is purchased in any location where it is perceived to be affordable:
Basically I was just looking for something I could afford. I just decided at one point I was never going to be able to buy in Melbourne again, looking at the prices, and so when I saw a couple of units around here that were actually in my budget, it was like, oh my God, and I sort of figured, well, if the neighbourhood was extremely bad, I could always rent it out … Price was a huge factor. I wasn’t in a position to just pick a neighbourhood. (Case 11: Christine, single, school-aged child, disrupted household, established housing, Area 3).
As well, in what appears to be a relatively common experience, households adjust their expectations or see positive aspects about their choices, regardless of constraints. In the following case, for example, a young home purchaser ‘just loved’ the location of a new estate she chose to purchase within, despite it being a considerable distance from employment (over an hour each way commuting by car) as well as further away from family and friendship networks than she would like:
There’s another estate that’s across the road, I looked at it and I hated it. So then I drove across to this side of the road and just fell in love with the place. Like the trees and lakes and everything like that. And then I just forgot all about the other side, which is on our ridge, it was about $30 000 a block cheaper on that side of the road. But then I liked this side. (Case 4: Tracey, single, no children, young household, new housing, Area 1).
In some ways it is not surprising that we find extensive locational trade-offs are made among those interviewed, given the sampling strategy: households in outer metropolitan areas in and around Melbourne were targeted in the qualitative component of this study. It is nonetheless striking that, among this group, the trade- offs made to locations in which purchasers buy appear to strongly offset the need to make substantial trade-offs in terms of dwelling type (a house) and housing quality.
8.1.2 Financial strain
Despite making sometimes substantial trade-offs in the locations in which they bought their homes, most households interviewed experienced at least some degree of financial difficulty during the purchase process, as well as ongoing financial strain associated with meeting housing costs, as indicated in Table 32. The extent ranged from ‘no strain’, to ‘moderate/high strain’ (finances are manageable but ‘tight’) to ‘extensive strain’ (meeting housing and basic living costs is difficult and stressful).
Table 32: Summary of extent to which financial strain related to house purchase is experienced by young, recent migrant and disrupted households
Young households (n = 4) Recent migrant households (n = 2) Disrupted households (n = 6) No strain 0 0 1 (Case 5) Moderate to high strain 1 (Case 1) 1 (Case 9) 5 (Cases 2, 6, 8, 11, 12) Extensive strain 3 (Cases 4, 7, 10) 1 (Case 3) 0
Source: Interviews with low-moderate income home purchasers in Melbourne metropolitan area (n = 12). As Table 32 shows, most of those interviewed live with either moderate/high or extensive financial strain in order to meet their housing and other living costs.22 Many expect to do so for the foreseeable future. Even where financial strain is moderate, needing to live frugally as a result of housing costs is experienced as limiting and is a source of frustration for some families:
My husband is frustrated that despite earning decent money we still can’t have the kind of home he expects to be able to have, like his friends have. (Case 1: Jody, partnered, young children, young household, established housing, Area 3).
Four households are classified as living with extensive financial strain, with some experiencing unforeseen events which contributed to their difficulties. Events include those within the household, such as the birth of children and associated foregone earnings of at least one household member, as well as those beyond the immediate control of household members, such as unemployment and interest rate rises:
So I thought ‘How am I going to pay the mortgage?’ before my commitment and I felt if I have work continuously I will not have much problem, because I know that I don’t have other extra extravagances in our lives, we are really economical … So I thought ‘I can manage’. Honestly, if I continue to have work, it wouldn’t be a problem for me. (Case 3: Pratima, single, adult children, recent migrant household, new housing in Area 1).
As well as events such as employment difficulties and the birth of children, financial inexperience among some households appears to contribute to financial strain. Many young households, for example, some of whom had not experienced domestic budgeting and management prior to purchasing, and many of whom were living on low wages, experienced moderate to extensive financial strain:
When we bought, interest rates hadn’t gone up at all and just after we bought it they went up and up and up again. I thought, oh my God, when is this ever going to end. So yeah, it’s a bit, I mean, obviously I knew that it wasn’t going to be easy. We weren’t going to be able to have all this money … but the prices, grocery shopping just keeps going up and up and up, and I was like, ‘Where is my money going? We don’t even have any food.’ It just keeps going up, the prices of everything. (Case 10: Brianna, partnered, no children, young household, established housing, Area 3).
22
One household is classified as having no financial strain. In this unusual case a couple lived at their rented business premises for several years, while saving a substantial amount of money to put towards
For some young households, purchasing was associated with getting a full-time job and hence little change to disposable income after housing costs. However, it can also impact upon their lifestyles and expenditure:
Before, we didn’t really try that hard to save, so before we moved in, saving wasn’t really a big issue. But after we moved in, we can’t have takeaway any more, we can’t go out, can’t buy alcohol, can’t do this, and it’s just buying things and you can’t have the food that you want all the time. Yeah, nothing major. I mean, we haven’t got great cars but they work, so who cares? (Case 10: Shane, partnered, no children, young household, established housing, Area 3).
Financial strain appears most acute among households with one income earner. Such households appear not only to experience financial strain but also have a sense of burden which they must bear by themselves:
Being on one income, I don’t have a partner, it is harder. You probably want to go out on a Saturday night, you can’t. That’s something that hit me once I had the house, though the funny thing is I factored everything else, but when it came to having a bit of entertainment, that had to go. So it’s not as though if you had a partner you could say ‘Oh stuff it, we’ll just take it out of your wage and let’s have some fun’. It’s not easy. (Case 8: Tina, single, no children, disrupted household, new housing, Area 3).
Finally, many households expected that the financial strain would ease up during the terms of their mortgages, but that they nonetheless would experience some degree of financial strain for at least some time to come:
The only disadvantage is again, it comes down to the mortgage and sometimes you want to do something to the house and you’ve got to still think twice in regards to doing it … Is always going to be there. Unless I win Lotto … I know it sounds awful but I wish Mum and Dad cark it earlier, that’s the only way I can pay it off. (Case 8: Tina, single, no children, disrupted household, new housing, Area 3).
In summary, the households interviewed in this study, all of whom live many kilometres from the metropolitan centre, have tended to make trade-offs to the areas in which they live. This has meant that, for most of the households, no to modest trade-offs to housing quality have also been required. However, despite the sometimes substantial locational trade-offs, almost all live with moderate/high to extensive degrees of financial strain to meet housing and general living costs and most expect to do so for a considerable period of time, providing some insight into the statistical analysis presents in Chapter 6. The impacts of the trade-offs made by households and their experiences of financial strain on the realisation of the potential psycho-social and social benefits of home ownership, respectively, are explored below.