RDP 2017-05: The Property Ladder after the Financial Crisis: The First Step is a Stretch but Those Who Make It Are Doing OK Appendix A: Data

The primary data used to examine the dynamics of home ownership are annual household-level longitudinal data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey that cover the period from 2001 to 2014. The survey tracks individuals over time and provides detailed information on various household characteristics.

A wealth module is conducted as part of the HILDA Survey every four years. This module asks detailed questions about household assets and debts, and has so far been included in the 2002, 2006, 2010 and 2014 surveys. The HILDA Survey does not explicitly identify households as FHBs. Instead, this information must be inferred from responses to previous wealth modules.

A.1 Identifying Indebted FHBs

The past three wealth modules of the survey (2006, 2010 and 2014) have included a variable, ‘rpage’, which asks the household reference person whether they have ever owned residential property and, if so, the age at which they first acquired, or started buying, this property.

Another variable, ‘hspown’, available in the 2001 and 2002 surveys only, asks households whether they still live in their first home. This variable allows us to identify FHBs directly for these years.

We combine the information from ‘hspown’ and ‘rpage’ into the one variable identifying indebted FHBs. For 2001 and 2002 we use the ‘hspown’ variable and the ‘rpage’ variable is used thereafter.

We compare the FHB age reported by households in the ‘rpage’ variable across the 2006, 2010 and 2014 wealth modules. Where households report their FHB age in more than one wealth module, we check for inconsistencies in the age they report across the different modules.

In doing so, we find several cases where the FHB age that households report varies by only one year across the wealth modules, but only four cases where the FHB age varies by more than one year, which suggests households are fairly good at recalling how old they were when they became home owners, give or take a year.

We drop the households for which the FHB year varies by more than one year from the sample. We then use the combined FHB age variable to calculate the year of FHB purchase:

A household is identified as an FHB if the current year matches the reported year of FHB purchase. We verify this by checking that the FHB year of purchase is also the first year the household reported being an owner-occupier and the first year they reported having a mortgage.

The percentage of owner-occupier households identified as FHBs in any given year is, on average, between 1 and 2 per cent over the course of the survey, which is broadly in line with aggregate measures. This corresponds to between 50 and 100 households each year.

As we are interested in how households' debt decisions have changed, we only focus on indebted FHBs for our analysis, which are FHBs who report having positive mortgage debt. It should be noted that around 11 per cent of FHBs have no debt, which may reflect things such as inheritances or bequests.

A total of 1,202 households are identified as indebted FHBs. The comparison group used in the analysis is ‘potential FHBs’, which are all renter households under the age of 60 years who have never owned a property before. This group consists of a further 19,497 households. In total, over the period 2001 to 2014 there are 20,699 household in our sample.

A.2 Variable Definitions

The definitions for other HILDA Survey data used in the regression analysis are shown below (with associated variable names):

Age: The age of the household head (where the age is restricted to be between 18 and 60 years of age) (HGAGE)

Household disposable income: Total annual household disposable income ($'000) (HIFDITP – HIFDITN)

FHB debt: Each household's estimate of their current holdings of owner-occupier housing debt ($'000) (HSMGOWE + HSSLOWE)

Couple household: A dummy variable equal to one if the household reference person reports being in a couple household (HHFTY)

Household size: Number of usual residents in the household (HH0_4 + HH5_9 + HH10_14 + HHADULT)

Tertiary education: A dummy variable equal to one if the household head's highest level of educational attainment is higher than Year 12 and equal to zero otherwise (EDHIGH1)

Migrant household: A dummy variable equal to one if the household head's country of birth was not Australia and equal to zero otherwise (ANCOB)

Full-time employee: A dummy variable equal to one if the household head's employment status is full-time employee and equal to zero otherwise (ESDTLl)

Unemployment expectations (> 50%): A dummy variable equal to one if the household head reports a 50 per cent or higher chance of losing their job in the next 12 months and zero otherwise (JBMPLOJ)

Major urban area: A dummy variable equal to one if the household reports living in a major urban area and equal to zero otherwise (HHSOS)

The definitions for non-HILDA Survey variables used in the regression analysis are:

State housing prices index (log): Weighted median state housing price data from Australian Property Monitors (APM)

FHB incentives ('000s): State FHB government incentives (internally constructed series)

Variable mortgage rate: Standard variable owner-occupier mortgage rates (RBA statistical table F5 Indicator Lending Rates)