A MODEL OF HOUSING TENURE CHOICE IN AUSTRALIA

This paper reports the results of an econometric analysis of tenure ch oice in Australia's two largest cities, Sydney and Melbourne. Particul ar attention is given to assessing the significance of the user cost o f owner-occupied housing for tenure decisions. Using cross-sectional d ata from a 1991 housing survey, this study shows that including user c osts in the tenure choice model results in a substantial improvement i n goodness-of-fit, but also causes the marginal probability for perman ent income to become negative. It is suggested that this may reflect a tendency for higher income groups in the two cities to live in inner locations where renting is more common because prices are high relativ e to rents. (C) 1995 Academic Press, Inc.