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Article
Publication date: 28 June 2022

Mario A. Fernandez, Jennifer L.R. Joynt, Chad Hu and Shane L. Martin

This paper aims to explore the impact of the joint operation of affordability policies and whether their impact is meaningful relative to the size of the affordability

Abstract

Purpose

This paper aims to explore the impact of the joint operation of affordability policies and whether their impact is meaningful relative to the size of the affordability crisis. Its purpose is to construct the features of a comprehensive policy package linked to a measurable outcome: solving the affordability crisis in Auckland. This study investigates the scale and nature of an affordability package that responds to three research and policy questions: What should the rate of annual growth of affordable housing be to solve the affordability crisis? Consequently, how long would it take to solve it? And how much would that policy package cost?

Design/methodology/approach

In this paper, the authors argue that the disjoint operation of affordability policies is one of the reasons why their impacts relative to the size of the affordability crisis has been small or negligible. Furthermore, this study demonstrates that affordability is as much about raising households’ incomes as it is about lowering housing prices. This study uses a modelling-based framework to simulate some of the levers that local and central governments have to affect housing prices and affordability: direct intervention on the supply-side and subsidies. Specifically, this simulates retention-and-targeting (RT) programs and subsidies to raise deposits via shared ownership (SO) schemes.

Findings

This study finds that solving the affordability crisis would take a decade if the supply of affordable housing increases by at least 45% annually. With the introduction of RT and SO programs, it could still be solved within a decade, where the required growth rate decreases to 35%. However, for growth rates between 5% and 10%, the policy goal is met in approximately 40 years, and the SO program becomes exceedingly expensive.

Originality/value

Housing affordability is one of the hottest policy issues in New Zealand and the developed world. In the past decade, a number of affordability policies have been introduced with limited success due to their lack of interoperability and siloed efforts. Results in this paper should be interpreted as the boundaries of what is feasible and realistic in the realm of affordability policies. Therefore, its contribution relies on investigating the multiple effects if the financial, administrative and political barriers to RT and SO programs could be overcome. Its scope is a blueprint for the design of policies in other cities where unaffordability has become extreme.

Details

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

Keywords

Article
Publication date: 14 April 2022

Yener Coskun

The purpose of this study is to analyze short- and long-run market-sensitive drivers of housing affordability. The study highlights an ongoing housing affordability crisis…

Abstract

Purpose

The purpose of this study is to analyze short- and long-run market-sensitive drivers of housing affordability. The study highlights an ongoing housing affordability crisis in an emerging market context by also providing an empirical tool to combat the crisis.

Design/methodology/approach

To investigate determinants of uniquely constructed effective housing affordability index and house price to income ratio index, the author uses a bound testing approach to cointegration and error correction models, besides causality tests, variance decompositions and impulse response functions. This study uses Turkish data for the period of 2007 M06 and 2017 M12.

Findings

The evidence suggests that the housing affordability crisis is mainly driven by credit expansion, rent and construction costs. A sensible housing policy response would target these variables. This evidence suggests that housing affordability mostly depends on housing market dynamics rather than policies because of the exogeneous/cyclical natures of the drivers.

Research limitations/implications

Data constraints shape the study. A regional or an aggregate-level panel study cannot be developed because of a lack of data. This limitation inevitably results in the exclusion of relevant socio-economic/political factors and is also the main reason for the lack of comparative analysis in a cross-country setting.

Practical implications

This study argues that dependency on neoliberal housing market practices seems the underlying reason for the lack of efficient policy answers and the ongoing affordability crisis. From a policymaking perspective, the study suggests that necessary policy measures to resolve the housing affordability crisis may give a specific emphasis on housing rent, housing credit volume and construction costs as the major components of the crisis.

Originality/value

This study develops a novel measure and presents a new conceptual framework by combining quantitative research methods and policymaking in housing affordability. In this respect, to the best of the author’s knowledge, this is the first work to comparatively investigate the determinants of uniquely developed monthly housing affordability measurements.

Details

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

Keywords

Article
Publication date: 21 June 2022

Yener Coskun

This paper investigates the housing affordability crisis from the perspective of vulnerable social groups (VSG) in Turkey and Turkey's megacities, Istanbul, Ankara, and…

Abstract

Purpose

This paper investigates the housing affordability crisis from the perspective of vulnerable social groups (VSG) in Turkey and Turkey's megacities, Istanbul, Ankara, and Izmir, over the period of 2010 and 2019.

Design/methodology/approach

The author employ house cost and multiple income variables, involving residual income, to construct socially informative house cost-to-income (HCI) ratios. To measure the country/urban level socio-economic dimensions of the affordability crisis, the author develop 12 main and 76 specific housing affordability criteria.

Findings

The author find that housing is not affordable in Turkey and low/unequal distribution of income is a contributive factor for the affordability crisis of VSG. The evidence suggests that housing unaffordability for VSG is deeply rooted in the socio-economic/demographic disparities that eventually result in income and homeownership inequalities.

Social implications

Constructed HCI ratios provide precise information for the targeted housing affordability policies for the VSG defined by education level, age, location, income distribution, employment status/condition and gender. The author' socially targeted modeling approach briefly suggests that housing affordability policies should focus on low-educated groups, young generations, some elementary occupations, employees in low-income industries, and casual/regular-small firms' employees.

Originality/value

This is the first study that provides nuanced information on housing affordability for Turkey by employing HCI ratios for the targeted VSG. This socially targeted empirical analysis is the first analysis for developing housing markets as well. From the methodological perspective, the author contribute information quality of the housing affordability ratio by using income data of various aggregate-level socio-economic/demographic groups.

Details

Open House International, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0168-2601

Keywords

Article
Publication date: 14 April 2022

Abdullah Alfalah, Simon Stevenson, Steffen Heinig and Eamonn D’Arcy

This paper aims to improve the housing affordability by measuring the housing affordability in a resource-rich economy and studying the impact of implementing new policies .

Abstract

Purpose

This paper aims to improve the housing affordability by measuring the housing affordability in a resource-rich economy and studying the impact of implementing new policies .

Design/methodology/approach

This paper seeks to test the impact of new policies introduced to the Kuwaiti housing market to improve affordability. In 2008, the Kuwaiti parliament introduced two policies: a tax on empty lands and, forbidding companies to own or develop residential lands or houses.

Findings

By constructing the housing affordability index and the price-to-income multiplier using observations from 2004 until 2017, it has been found that affordability has worsened over time regardless of the new policies introduced in 2008. Housing in Kuwait became “severely unaffordable” (equivalent to London in the UK, San Diego in USA and Toronto in Canada).

Originality/value

Even with its unique condition, as a rich country, small population and availability of white land and other resources, the affordability worsened over time. Introducing new policies without solving the central issue of housing supply challenges seems not worth it. This paper is the first of its kind on the Kuwait housing market, and it provides a valuable foundation for future research on this market and similar markets in the region.

Details

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

Keywords

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. 15 no. 3
Type: Research Article
ISSN: 1753-8270

Keywords

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).

1659

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

Keywords

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…

1062

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

Keywords

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…

5002

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

Keywords

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

Keywords

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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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

Keywords

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