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Article
Publication date: 10 June 2021

Graham Squires, Don Webber, Hai Hong Trinh and Arshad Javed

The purpose of this paper is to examine the relationship between house price affordability (HPA) and rental price affordability (RPA) in New Zealand. The cointegration of…

Abstract

Purpose

The purpose of this paper is to examine the relationship between house price affordability (HPA) and rental price affordability (RPA) in New Zealand. The cointegration of HPA and RPA is of particular focus given rising house prices and rising rents.

Design/methodology/approach

The study examines the lead-lad correlation between HPA and RPA. The method uses a generalised least square technique and the development of an ordinary least squares model.

Findings

The study shows that there is an existence of cointegration and unidirectional statistical causality effects between HPA and RPA across 11 regions in New Zealand. Furthermore, Auckland, Wellington and Canterbury are the three regions in which the results detect the most extreme effects amongst HPA and RPA compared to other places in the country. Extended empirical work shows interesting results that there are lead-lag effects of HPA and RPA on each other and on mortgage rates at the national scale. These effects are consistent for both methods but are changed at individual lead-lag variables and amongst different regions.

Originality/value

The study empirically provides useful insight for both academia and practitioners. Particularly in examining the long-run effects, cointegration and forecasting of the volatile interactions between HPA and RPA.

Details

International Journal of Housing Markets and Analysis, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1753-8270

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Article
Publication date: 29 July 2020

Tom Coupe

This paper aims to determine to what extent the housing affordability crisis is a “global” crisis and to what extent there is a variation across countries and over time…

Abstract

Purpose

This paper aims to determine to what extent the housing affordability crisis is a “global” crisis and to what extent there is a variation across countries and over time, in who is concerned about housing affordability.

Design/methodology/approach

The author analyses data from about 500,000 respondents from over 140 countries and uses both descriptive statistics as well as regression analysis (using a random effects within between model [Bell et al., 2019]).

Findings

The findings show that concerns about housing affordability are widespread both within and across countries but the extent of these concerns depends greatly on the country, the subgroup and the indicator analysed. Moreover, in many countries, more people worry about other aspects of life than about housing affordability.

Research limitations/implications

The global diversity in the housing affordability crisis suggests that one should be cautious when extrapolating research findings for a given country to other countries or when proposing housing policy transfer across countries.

Practical implications

The specific nature of the housing affordability crisis varies substantially across countries. Policymakers thus should be aware that there is no guarantee that a housing affordability policy that was effective in one country will also be effective in another country.

Originality/value

This paper is original in its use of the Gallup World poll, a unique survey, which is done world-wide and hence is ideally suited for the purpose of this paper, providing a much more detailed picture of the global housing crisis than so far available in the literature.

Details

International Journal of Housing Markets and Analysis, vol. 14 no. 3
Type: Research Article
ISSN: 1753-8270

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Article
Publication date: 31 July 2020

Yener Coskun

This paper aims to offer an extensive empirical case study analysis by investigating housing affordability in Turkey as a whole, and in Istanbul, Ankara and Izmir over the…

Abstract

Purpose

This paper aims to offer an extensive empirical case study analysis by investigating housing affordability in Turkey as a whole, and in Istanbul, Ankara and Izmir over the period of 2006 and 2017 and its sub-periods.

Design/methodology/approach

This paper develops a theoretically informed model to assess affordability using complementary methodologies in quantitative analysis. This study seeks to help outline the nature of the problem in aggregate level and in the cities; it also seeks to offer lessons about how to address measurement and modelling challenges in emergent market contexts by constructing aggregate-/city-level housing cost-to-income (HCI) ratio, adjusted HCI (AHCI) ratio, housing affordability index (HAI) and effective HAI sensitive to multiple calculation methodologies and alternative data set involving income distribution and poverty tranches.

Findings

HCI, AHCI, HAI and EHAI models generally suggest the parallel results: housing is not affordable in Turkey and in Istanbul, Ankara and Izmir except for the highest income groups. The evidence implies that besides macroeconomic instabilities, distorted interest rates and short average mortgage maturity, poverty and unequal income/wealth distributions are the main reasons of the Turkish housing affordability crisis specifically heightened in metropolitan areas such as in Istanbul.

Research limitations/implications

The evidence provides an insight on housing affordability problems in Turkey. However, small sample size and short observation period create a limit for generalisation of the findings. Further analysis would be required to illustrate how housing affordability changes in different cities of Turkey in a longer period.

Practical implications

By using empirical approaches, this paper helps to understand how serious housing affordability problems of Turkey in aggregate and urban levels. This evidence helps to explain declining ownership ratio in low-income groups and in urban areas. Reliable explanations on existing housing crisis of Turkey also help to develop affordable housing policies.

Social implications

Declining housing affordability and homeownership ratio may translate as the rising housing inequality and insecurity among Turkish households. Moreover, better affordability values of higher income groups suggest that existing inequality, economic/social segmentation, and hence social tension between high and low income groups, may further increase. In this respect, the authors suggest socially important policies such as reducing income/wealth inequalities and increasing affordable housing supply.

Originality/value

This study offers a detailed empirical case study analysis that can be used as an exemplar of how to overcome data constraints in other evolving housing market contexts. This study sets out an approach overcoming the challenges of measurement. This study also combines existing methodological approaches with the modified variables to provide a more realistic aggregate-/urban-level housing affordability picture. The authors calculated some parts of housing affordability ratio and index series using discretionary income, minimum wage and effective minimum wage to show the variations of different measurement approaches. Some constructed series are also sensitive to income distribution and poverty thresholds. Collectively, this empirical approach, developed by using emerging market data, provides a contribution to the literature.

Details

International Journal of Housing Markets and Analysis, vol. 14 no. 3
Type: Research Article
ISSN: 1753-8270

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Article
Publication date: 4 October 2011

Colin Jones, Craig Watkins and David Watkins

The purpose of this paper is to address both the measurement of affordability and variations in affordability between local housing market areas (HMAs).

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Abstract

Purpose

The purpose of this paper is to address both the measurement of affordability and variations in affordability between local housing market areas (HMAs).

Design/methodology/approach

The practical data issues that arise from measuring local affordability are reviewed by reference to studies in the UK. The paper argues that local measures should relate to a functional geography of HMAs rather than simply local authority boundaries. This approach is shown to be more theoretically sound but faces data constraints. An empirical case study of the North West of England then follows as a demonstration based on a tiered geography of HMAs. It addresses the constraints on local income data by measuring affordability by reference to a particular household type and associated income.

Findings

Local UK affordability indicators are shown to be primarily about access to home ownership rather than a wider view of local house price structures on affordability. The paper also draws out the importance of affordability measures linked to functional market areas. The results of the analysis presented highlight that there are local differences in house price structures and hence associated differential affordability of house types between local HMAs.

Originality/value

This is the first study that examines affordability at the local level based on functional areas rather than local authority administrative boundaries. This approach gives a truer picture of the variability in local affordability. The applied analysis tackles the data constraints of functional areas and has the potential to be adapted and extended.

Details

International Journal of Housing Markets and Analysis, vol. 4 no. 4
Type: Research Article
ISSN: 1753-8270

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Article
Publication date: 1 June 2015

Chukwuma Christopher Nwuba, Iche U. Kalu and John A. Umeh

This paper aims to investigate homeownership affordability in Nigeria’s urban housing market to establish the determinants of households’ affordability outcomes, and the…

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1006

Abstract

Purpose

This paper aims to investigate homeownership affordability in Nigeria’s urban housing market to establish the determinants of households’ affordability outcomes, and the nature of their impact.

Design/methodology/approach

The cross-sectional survey design was adopted. Semi-structured questionnaire was used to collect data from a sample of households selected through a stratified random technique across Kaduna State, the study area. The binary logistic regression was used to model the probability of homeownership affordability as a function of specified explanatory variables.

Findings

Household income, savings, construction period and education are determinants of homeownership affordability with positive impact. Conversely, household size, cost of land, building cost inflation, current rental housing expenditures, non-housing expenditures and building cost relative to income are determinants of affordability with negative impact.

Practical implications

The findings have the potential to provide a framework for formulation of policy measures to improve access to homeownership.

Social implications

Delayed access to homeownership places pressure on the rented sector with the potential for rental housing affordability problems. It is a deferment of the actualisation of a strong aspiration which is detrimental to individual and family well-being and stability.

Originality/value

The study extends the housing affordability debate to housing markets operating on informal financing where households build rather than buy their homes, an area hitherto not deeply explored. It provides empirical basis for problem-solving on housing affordability and can be a framework for housing policy reforms in Nigeria.

Details

International Journal of Housing Markets and Analysis, vol. 8 no. 2
Type: Research Article
ISSN: 1753-8270

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Article
Publication date: 27 July 2012

Joanna Poon and Dean Garratt

The purpose of this paper is to present an analytical summary of UK housing policies. It aims to evaluate UK government's housing policies, before and after the…

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4629

Abstract

Purpose

The purpose of this paper is to present an analytical summary of UK housing policies. It aims to evaluate UK government's housing policies, before and after the publication of the Barker Review, to tackle affordability issues in the owner‐occupied sector. It examines the extent to which housing policy contributes to or alleviates the problem of the affordability of owner‐occupied housing.

Design/methodology/approach

This paper evaluates the impact of UK government housing policies since 2000 on housing affordability by analysing their impact on the dynamics of housing demand and supply.

Findings

The Barker Review, which applied simple economic ideas and techniques in analysing the owner‐occupied UK housing market, argued that increases in new housing supply would help to improve housing affordability. The second Barker Review suggested that changes to the planning system were needed in order not only to increase new housing supply, but to make housing supply more sensitive to changing demands. The Barker Reviews brought about a major re‐think in government policy towards housing, particularly relating to new build and the planning system. However, the heavy reliance on the private sector to provide additional housing has reduced the effectiveness of policy changes. In addition, the adoption by the government of “demand‐side” housing policies has done little to negate the volatility of UK house prices or to raise the overall affordability of owner‐occupied housing.

Originality/value

This paper reflects on government failures in UK housing policy in addressing the affordability of owner‐occupied housing. The findings will be of interest to policy makers and housing researchers.

Details

International Journal of Housing Markets and Analysis, vol. 5 no. 3
Type: Research Article
ISSN: 1753-8270

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Article
Publication date: 31 May 2013

Angelika Kallakmaa‐Kapsta and Ene Kolbre

The purpose of this study was – first, to find out how to evaluate affordability of housing in the Estonian market and, second, to assess the regulatory framework…

Abstract

Purpose

The purpose of this study was – first, to find out how to evaluate affordability of housing in the Estonian market and, second, to assess the regulatory framework decisions' impact on the housing market in Estonia.

Design/methodology/approach

This article seeks answers to how to define housing affordability for the Estonian housing market. It also describes the regulatory framework and policy decisions made by the government.

Findings

Calculations show that there is an affordability problem, and political decisions have helped to make housing loans affordable for households, but at the same time the high debt burden has weakened households' financial position.

Research limitations/implications

It could be possible to research the market using the databases of credit institutions, but the given data is under the protection of banking confidentiality.

Practical implications

The HAI index, proposed by the authors, could be calculated regularly and it could be used as a possible indicator to evaluate the capability of the population to take on household loans in the Estonian household market as a whole.

Social implications

The problem of housing affordability is very important for all households, and there is a need to continue with research in this field. Some households cannot buy a house, some have loan repayment problems.

Originality/value

No research has been done in trying to find an answer for the affordability problem in the housing market in Estonia. Also there are no analyses about the impact of the regulatory framework on the housing market – whether the government goals are achieved or not.

Details

International Journal of Housing Markets and Analysis, vol. 6 no. 2
Type: Research Article
ISSN: 1753-8270

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Article
Publication date: 15 May 2018

Jeffrey Boon Hui Yap and Xin Hua Ng

The purpose of this paper is to explore the affordability of Malaysian housing market, sufficiency of affordable housing and factors influencing the housing affordability

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7182

Abstract

Purpose

The purpose of this paper is to explore the affordability of Malaysian housing market, sufficiency of affordable housing and factors influencing the housing affordability in Malaysia.

Design/methodology/approach

In this study, qualitative research approach was adopted. Semi-structured interviews were conducted with ten industry practitioners from developers and real estate agencies and further validation with three industry experts.

Findings

The findings reveal that housing affordability is a grave concern to average Malaysians, and the supply of affordable housing is insufficient in the current residential property market. Income, property price, land cost and demand and supply are identified as significant factors affecting housing affordability.

Research limitations/implications

The research findings provide an insight rather than definitive information, as the small sample size could limit the generalizability of the findings. Future research can include participants from the public sector and focus on the policy options.

Practical implications

This paper provided numerous policies to ensure successful deliverability of affordable housing which eases government to partner with private sector to formulate a systematic framework for implementation of affordable housing programs and schemes.

Social implications

There is a need for government to pay more attention to housing needs of middle-income groups. Also, the government is urged to ensure transparent balloting process in every implementation of affordable housing programs.

Originality/value

The paper emphasised the issues of undersupply of affordable housing and mismatch of property price and income. The paper also highlights the key reasons behind high housing affordability index. Hence, it is hoped that this paper will encourage positive debate and gain some attention from the policymakers, practitioners and researchers in Malaysia and beyond.

Details

International Journal of Housing Markets and Analysis, vol. 11 no. 3
Type: Research Article
ISSN: 1753-8270

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Article
Publication date: 2 January 2018

Tsun Se Cheong and Jing Li

The main purpose of this paper is to explore the transitional dynamics of housing affordability indicators of major cities in three developed countries: the USA, Canada…

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615

Abstract

Purpose

The main purpose of this paper is to explore the transitional dynamics of housing affordability indicators of major cities in three developed countries: the USA, Canada and Australia, in the period after the global financial crisis. As the global housing markets are more interconnected today, it is essential to investigate the demographic movement pattern and their impacts on housing market dynamics.

Design/methodology/approach

Based on the Markov transition matrix approach and the stochastic kernel technique, a newly established framework named the mobility probability plot (MPP) is adopted to investigate the city-level trends of housing affordability in the three countries during the period 2008-2015.

Findings

The results suggest that the transitional dynamics of the USA’s housing affordability trend saliently differs from those of Canada and Australia: in the USA, MPP results reveal that when the price-to-income (P/I) ratio is higher than 3.5 times, it has a high tendency of moving downward in the next period. In Australia, housing affordability tends to continue deteriorating when the P/I ratios are in the range from 8.0 to 8.6. In Canada, the MPP analysis indicates that the P/I ratios tend to increase further when the ratios are between 5.7 and 7.0, and within the range of 8.3-9.5.

Originality/value

This paper adopts an innovative approach to explore the city-level trends of housing affordability in the three developed countries during the period 2008-2015. The distribution dynamics approach has several virtues: first, this approach does not merely focus on the issue of housing affordability but also includes an analysis of the underlying housing affordability distribution. Second, it can clearly show the mobility of the city-level units in terms of the P/I change. Third, it can predict the proportion of the entities in different P/I ratio bands in a number of years ahead and even in the long run.

Details

International Journal of Housing Markets and Analysis, vol. 11 no. 1
Type: Research Article
ISSN: 1753-8270

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Article
Publication date: 27 July 2012

Andrew C. Worthington

The purpose of this paper is to analyse the record on housing affordability in Australia over the period 1985 to 2010, conceptually link this with the purported demand and…

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3493

Abstract

Purpose

The purpose of this paper is to analyse the record on housing affordability in Australia over the period 1985 to 2010, conceptually link this with the purported demand and supply drivers given in the literature, and comment on government policy responses. The paper also provides a suggested framework for future research on housing affordability.

Design/methodology/approach

The paper employs descriptive analysis of measures of affordability using commercial and other information. In addition, the paper undertakes analysis of the affordability drivers and government responses using recent governmental inquiries and other research into housing affordability.

Findings

Housing affordability in Australia has worsened significantly in the past quarter century, including in both urban and regional areas, and is now among the world's most unaffordable. The main contributor at the national level has been the escalation of housing prices because of continuing strong demand arising from strong economic and population growth, the availability of cheaper and more accessible finance, and tax and other incentives for home and investor housing ownership. An additional contributor is unresponsive housing supply resulting from an extensive governmental role in land release and zoning, infrastructure charges, and building and environmental regulation.

Research limitations/implications

As an analytical paper, the central aim is to summarise the findings and conclusions of other work and provide a suggested framework for future research. Accordingly, no attempt made to model directly the relationship between housing affordability, its demand and supply drivers and government policy responses.

Practical implications

There is a need to reassess government policy at all levels as it relates to population, economic, urban, and environmental planning and government regulation and taxation and housing affordability. Need for future empirical work to quantify the causes and consequences of housing affordability.

Originality/value

This study provides a complete account of housing affordability and policy and the literature on housing affordability in Australia over the past 25 years.

Details

International Journal of Housing Markets and Analysis, vol. 5 no. 3
Type: Research Article
ISSN: 1753-8270

Keywords

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