Examination of the impact of housing and labour market factors, demographics and service availability on rates of homelessness across Australia over the past decade.

  • Project dates: 2016

Structural drivers of homelessness are frequently acknowledged in the Australian homelessness research and policy sector but rarely, if ever, investigated.

Building on recent work by Batterham (2012) the project will specifically examine housing market, labour market, income, demographic and service availability factors and their impact on rates of homelessness across Australia from 2001 to 2011.

An Australian first, this project also addresses key research questions under Priority Topic 1: Targeting service provision by modeling future demand for homeless services in this year’s National Housing Research program.

In documenting the relationship between housing market, labour market and demographic factors and homelessness, it will identify the most appropriate policy levers for reducing rates of homelessness (e.g. employment initiatives, distribution of housing stock). Better understanding of the structural drivers of homelessness may also enable us to predict future housing and service demand, ensuring prevention and early intervention strategies are designed to succeed.

By assessing the impact of structural drivers on two groups (lone persons and indigenous persons) who are over represented in the homeless population, it will also shed light on the optimal location and targeting of homelessness services,

It will investigate four key research questions.

  1. What role do housing market factors play in shaping the incidence of homelessness across Australia over time? If the housing market does play a role in shaping the incidence of homelessness, is it because:
    1. There is a shortage of low cost rental properties for those on low incomes (the housing shortage hypothesis)?; or
    2. People experiencing homelessness are gravitating to areas where affordable housing opportunities are more abundant (the sorting hypothesis)?
  2. What role does household income and labour market factors (unemployment rate, underemployment and structural decline in Australian regions ) play in shaping the incidence of homelessness across Australia and over time (the poverty hypothesis)?
  3. Does the location of homelessness services shape the incidence of homelessness across Australia and over time (the magnet hypothesis)?
  4. How do these processes affect sub-populations, specifically indigenous and lone-person households?

To date Australian homelessness research, including AHURI research, has focused on identifying and analysing individual level causes of homelessness (e.g. mental illness, family breakdown, substance abuse) (e.g. Kolar, 2004; Baker et al, 2011). While the impact of housing market factors on homelessness rates are acknowledged, this relationship has not been investigated (e.g. Westmore and Mallett, 2011).

Housing researchers have completed a significant body of research that documents key features and issues in Australian housing markets that might affect the incidence of homelessness. For example, PRO/60603 examined the impact of housing affordability problems for low-income people. PRO50502 examined changes in the utilisation of low cost rental stock and found that higher income households crowd out low income households – worsening shortfalls in low cost rental stock. PRO50382 investigated the role of household mobility in socio-spatial polarisation in the housing market. Other AHURI research examined the relationship between housing affordability, location and labour markets (PRO60279). However, with the exception of the National Housing Supply Council reports (2008), housing research has not examined the relationship between homelessness and housing market factors.

In contrast, international researchers have investigated this relationship. Higher rates of homelessness in the U.S. (Lee, Price-Spratlen and Kanan 2003; Elliot and Krivo 1991; Honig and Filer 1993) and Scotland (Kemp, Lynch and Mackay 2001) are associated with tight housing market conditions. Relationships between rates of homelessness, poverty and income (Quigley, Raphael and Smolensky 2001), unemployment (Kemp, Lynch and Mackay 2001) and some demographic/household factors (Lee, Price-Spratlen and Kanan 2003; Elliot and Krivo 1991; Early 2005) are also reported.

Batterham’s (2012) recent research begins to address the evidence gap around the relationships between structural drivers and homelessness in Australia. This cross sectional research explored the relationship between regional rates of homelessness and housing market conditions across Victoria at the time of the 2006 census, controlling for labour market conditions, demographic factors and the location of homelessness services.

In Victoria homelessness tended to be concentrated in areas with relatively high proportions of private rental stock, lower median rents and relatively low household incomes. Median household income had a strong moderating effect on the relationship between rates of homelessness and median rents in an area. Household income also mediated significant positive relationships between the percentage of indigenous persons and rates of homelessness, suggesting that low-income is important in understanding homelessness among the indigenous population.

These findings could be explained in part by either the sorting or the poverty hypothesis. The sorting hypothesis accepts that tight housing markets, where rents and prices are high, might precipitate homelessness. People attempt to resolve their homelessness, by moving to lower income areas, with low rents and more affordable housing. However, because low-income households are frequently crowded-out of low cost rental stock by middle-income households, homelessness remains unresolved in these areas despite a relatively abundant stock of affordable housing.

An alternative explanation (the poverty hypothesis) is that homelessness is precipitated by poverty/low income and lack of job opportunities, and so areas where incomes are low tend to have higher rates of homelessness. Since low income tends to be associated with low rents and residence in rental housing, these areas also tend to have relatively more rental housing and lower rents.

It has also been suggested that people experiencing homelessness move to areas where homelessness services are located (magnet hypothesis). Though the findings from this first study did not support the magnet hypothesis, these dynamic process could not be fully investigated using a cross-sectional research design that cannot monitor movement and shifts over-time. The limitations of this initial research will be addressed by an approach based on the use of a panel data set.

This project provides an evidence base that describes and Project Funding Application Form Funding Round 2013 analyses the way structural factors influence rates of homelessness.

It will provide evidence to address key policy and program issues such as the geography of affordable rental housing and the location of homelessness services. In doing so it will help policy makers determine the most appropriate policy levers for reducing rates of homelessness (i.e. employment initiatives, location of affordable housing initiatives or direct homelessness service provision).

It will also provide an estimate of the impact of structural drivers on particular sub-populations, assisting policy makers to predict future demand for homelessness services, and therefore inform the development of targeted, cost effective preventative responses.


Baker, E, Beer, A, Mallett, S, Batterham, D, Pate, A, Lester, L 2011, Addressing homelessness amongst persons with a disability: Identifying and enacting best practice, A FaHCSIA National Homelessness Research Project, The University of Adelaide, Adelaide.

Early, D 2005, ‘An empirical investigation of the determinants of street homelessness’, Journal of Housing Economics, Vol 14, pp. 27-47.

Elliott, M & Krivo, L J, 1991, ‘Structural Determinants of Homelessness in the United States’, Social Problems, Vol 38(1), pp. 113-131.

Honig, M & Filer, R K 1993, ‘Causes of Intercity Variation in Homelessness’, The American Economic Review, Vol 83, no 1, pp 248 – 255.

FaHCSIA 2008, The Road Home: A National Approach to Reducing Homelessness (The White Paper), Commonwealth of Australia, Canberra.

Kemp, P A, Lynch, E & Mackay, D 2001, Structural Trends and Homelessness: A quantitative analysis, Homelessness Task Force Research Series, Scottish Executive Central Research Unit, Scotland.

Kolar, V 2004, Home First: A longitudinal study of outcomes for families who have experienced homelessness, Final report, Hanover Welfare Services, Melbourne

Lee, B A, Price-Spratlen, T & Kanan, J W 2003, ‘Determinants of homelessness in metropolitan areas’, Journal of Urban Affairs, Vol 25(3), pp. 335–355.

National Housing Supply Council 2008, State of Supply Report, Commonwealth of Australia, Canberra.

Quigley, J M, Raphael, S & Smolensky, E 2001, ‘Homeless in America, Homeless in California’, The Review of Economics and Statistics, Vol 83(1), pp. 37 – 51.

Westmore, T & Mallett, S 2011, Ageing in what place? The experience of housing crisis and homelessness for older Victorians, Final Report, Hanover Welfare Services, Melbourne.

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