New modelling simulates 2021 unemployment rate and incidence of Housing Affordability Stress

Stressed woman during COVID

New economic modelling on the impacts of the coronavirus pandemic shows that once COVID-19 government support interventions end, total unemployment in 2021 could peak at 1.752 million under the most severe of three scenarios modelled.

Under even the mildest scenario contemplated in the study, total unemployment would exceed one million people, on par with the highest unemployment rate recorded this year to date.

A complete phasing out of JobKeeper in March 2021 is also forecast to tip 124,000 households into housing affordability stress with 73 per cent of these households being private renters.

The research, ‘Supporting Australia’s housing system: modelling pandemic policy responses’, undertaken for AHURI by researchers from the University of Adelaide and Curtin University examines the likely impacts on individuals, and their households, of lost employment and income due to COVID-19, and the consequences for their ability to meet their own housing costs.

Lead author Professor Chris Leishman, Director of the University of Adelaide's Centre for Housing, Urban and Regional Planning, said the analysis has shown that without the JobKeeper, JobSeeker and coronavirus supplement interventions, the implications of large-scale job losses on households’ ability to meet housing costs would have been devasting.

“Without government intervention, Australian households in housing affordability stress would have nearly doubled, from 757,000 at the baseline to more than 1.36 million, even after Commonwealth Rent Assistance (CRA) had been taken into account,” Professor Leishman said.

“The modelling reveals that some 103,500 households entered situations of housing affordability stress as a result of the pandemic.

“The policy concern is that if these highly successful government interventions are withdrawn prematurely, almost a third of those saved from suffering housing affordability stress will now experience it.

“Without an extension of the JobKeeper income support measures beyond March 2021, the number of households living in housing affordability stress is likely to increase significantly, to at least 793,000, and could reach as high as 893,000.”

The researchers found that a hypothetical phase four of JobKeeper which extended support through a reduced payment of $650 per fortnight would be more than sufficient to reduce the number of households in housing affordability stress below the baseline. Coupled with rent assistance and a national 25 per cent rent relief scheme, such an extension could halve the number of housing affordability stress cases.

“The modelling reveals that some 103,500 households entered situations of housing affordability stress as a result of the pandemic. Professor Chris Leishman

“Our research shows that the number of households living in a precarious employment and housing affordability situation is already very high,” Professor Leishman said.

“The 2021 scenario modelling shows that Commonwealth rent assistance is not sufficient to fully mitigate the impacts of an economic downturn in any of the scenarios we examined.

“The COVID-19 pandemic has had a disproportionate impact on younger workers, and those working in less secure public-facing occupations. Lower-income workers and private renters are also disproportionately affected.

“Serious consideration should be given to the development of further support measures that would benefit these households.”

The research modelled a range of economic outcomes on employment and unemployment by sector, on earnings and incomes, and then on the housing outcomes of specific groups of interest, including mortgage holders, private renters, and small investor landlords, in Australia from late 2020 and through 2021.

The three unemployment scenarios considered ranged from mild, where job losses are half the ABS observed rate in quarter two of 2020, to job losses by industry group that mirror the early lockdown period, through to severe where they are 1.5 times the ABS observed rate in quarter two of 2020.

The job losses and potential future job losses that COVID-19 has caused are concentrated in public-facing industries including arts, leisure, accommodation and food services.

Under the severe scenario, job losses in accommodation and food services could be as high as 31.8% while other sectors, such as electricity, gas, water and waste services were forecast to record mild job growth of 2.1% under the same scenario.

The analysis included a specific focus on three types of household: those suffering financial stress, those living on the edge (being close to losing their homes), and those living in double precarity (facing job insecurity and unaffordable housing).

The full report can be downloaded from the AHURI website at

Tagged in housing, COVID-19, stress, AHURI