A life cycle analysis of housing affordability options for first home owner-occupiers in Australia

Abstract

This paper presents a life cycle analysis of several policies for improving housing affordability for first home owner-occupiers in Australia: the First Home Owner Grant, housing equity partnerships and deposit loans. The analysis is by simulation of a housing tenure choice model in which a representative adult household makes a lifetime plan concerning the timing of the first home purchase, and the amount of housing and non-housing consumption in each period. An insight from the life cycle framework is that policies to improve housing affordability can have a life cycle timing effect on housing demand and house prices.