Examining building age, rental housing and price filtering for affordability in Melbourne, Australia

Abstract

Governments worldwide have responded to housing affordability challenges with supply-side solutions. Proponents of these approaches often draw on the notion of ‘filtering effects’ to argue that new supply naturally trickles down to lower-income households over time, improving affordability. This study examines the characteristics of Naturally Occurring Affordable Housing in Melbourne, Australia, analysing how dwelling age impacts rental cost. We specify a non-linear relationship between building age and rents through hedonic rent modelling, reflecting a premium for historic properties in inner Melbourne. We also conduct a cluster analysis of rental listings and measure affordability by clust..