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Article
Publication date: 31 May 2011

Mingchen Duan

With the rapid increase in both household discretionary income and housing price, how to improve housing affordability is the vital challenge for China, especially for the…

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1012

Abstract

Purpose

With the rapid increase in both household discretionary income and housing price, how to improve housing affordability is the vital challenge for China, especially for the northwestern region where the household income is lower than that in the eastern region. This paper aims to provide an insight into the housing affordability by analyzing the influence factors of purchasing standard housing in Lanzhou, which is the second largest city in Northwest China.

Design/methodology/approach

Price to income ratio (PIR) and housing affordability index (HAI) approaches were applied in this study to measure housing affordability for Lanzhou.

Findings

The results show that the PIR values for Lanzhou range from 6.02 to 7.23 between 2001 and 2008. The value exhibits an increasing trend before 2004 and a decreasing trend after 2004. The HAI values vary between 62.0 and 83.2 and are higher from 2001 to 2003 than those from 2004 to 2008. It was observed that the level of influence of the household discretionary income, housing price and the mortgage interest rate on these two values differs significantly in the different studied periods. This indicates that housing affordability in Lanzhou is lower than the acceptable level.

Originality/value

The paper establishes an understanding of the level of housing affordability in Northwest China, and provides the basis for the formulation of the new government's housing policy for this region.

Details

International Journal of Housing Markets and Analysis, vol. 4 no. 2
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: 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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1001

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: 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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6988

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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611

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: 20 February 2017

Charalambos Pitros and Yusuf Arayici

The study looks at the characteristics of upswings and downswings for UK housing cycles. Specifically, the purpose of this paper is to empirically analyse cycles in house

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1647

Abstract

Purpose

The study looks at the characteristics of upswings and downswings for UK housing cycles. Specifically, the purpose of this paper is to empirically analyse cycles in house prices and housing affordability on the characteristics of persistence, magnitude and severity.

Design/methodology/approach

The paper draws upon the triangular methodology of cycles and utilises housing data from the last three decades.

Findings

From an empirical perspective, the study obtained four main results. First, the graphical trajectory of cycles in house price and housing affordability is highly synchronized. Second, upturns in both cycles tend to be longer than downturns on average. Third, the recent upturn in house prices and housing affordability is characterised by larger duration, magnitude and severity than the earlier case. Fourth, the latest downturn in both cycles is highly synchronised in terms of time occurrence, persistence, magnitude and severity; in addition, in both cases, the latest downturn is considerably smaller than the previous one. The study additionally indicates that on average the length of a complete house price and housing affordability cycle is 19 years on a peak-to-peak basis.

Research limitations/implications

This paper is essentially exploratory and raises a number of questions for further investigation. Future research should, first, arrive at a more nuanced definition of affordability and, second, examine causality. The fact that two phenomena appear to have some significant synchronicity is not an indication that they are interdependent, although logic would suggest they might be.

Originality/value

This is among the few papers that analyses cycles in UK house prices. It is the first study that draws attention to the housing affordability cycle and the first to compare cycles in house prices with cycles in housing affordability.

Details

Property Management, vol. 35 no. 1
Type: Research Article
ISSN: 0263-7472

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Article
Publication date: 18 July 2019

Gary John Rangel, Jason Wei Jian Ng, Thangarajah Thiyagarajan Murugasu and Wai Ching Poon

The purpose of this paper is to measure the long-run housing affordability of Malaysia over time for households at various income levels and to demonstrate how short- and…

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711

Abstract

Purpose

The purpose of this paper is to measure the long-run housing affordability of Malaysia over time for households at various income levels and to demonstrate how short- and long-run affordability measures can reach contradicting conclusions.

Design/methodology/approach

In this study, a long-run housing affordability index (HAI) for Malaysia was constructed for the sample period 1995 to 2014, using data from house prices and household incomes. The HAI was also modified to compute a mortgage affordability index (MAI) to account for intergenerational transfers.

Findings

The results show that households at the 25th income percentile cannot afford any of the four dwelling types in Malaysia. For households at the 40th income percentile and the median income levels, high-rise and terrace housing are affordable. However, significant downward trends in HAI and MAI are documented beginning 2009, which indicates increasing housing stress for households at or below the median income. The short-run affordability measure represented by the median multiple (MM) indicator showed bleaker conclusion for housing affordability, with all dwelling types considered unaffordable over the entire sample period

Practical implications

On the basis of the empirical results, this paper provided several long-term proposals to ameliorate the housing affordability problem in Malaysia.

Originality/value

With the MM ratio being the official affordability measure reported for Malaysia, this study introduces the nation’s first long-run housing affordability measure. It is hoped that this long-run measure will achieve widespread adoption in Malaysia. Given the deteriorating long-term affordability, this study offers several possible long-term solutions.

Details

International Journal of Housing Markets and Analysis, vol. 12 no. 5
Type: Research Article
ISSN: 1753-8270

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Article
Publication date: 30 September 2013

Andrew Worthington and Helen Higgs

– Model the drivers of Australian housing affordability and forecast equilibrium affordability. The paper aims to discuss these issues.

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1580

Abstract

Purpose

Model the drivers of Australian housing affordability and forecast equilibrium affordability. The paper aims to discuss these issues.

Design/methodology/approach

Uses autoregressive distributed lag (ARDL) approach to model housing affordability measured by the Housing Industry Association's Housing Affordability Index (HAI) and the housing price-earnings multiplier (HPE). Six sets of explanatory variables, including housing finance, housing construction activity and costs, economic growth, population, alternative investments and taxation.

Findings

Primary long-run drivers are housing finance, dwelling approvals and financial assets. Economic and population growth only have a short-run influence, while housing taxation has limited impact in long run. Forecasts indicate long-run HAI equilibrium values of 109 (above the historical minimum of 107) and a HPE of seven (below the recent historical maximum of 8.2).

Research limitations/implications

Reduced form model encompassing both demand and supply factors involves complicated interpretation given direct and indirect effects on affordability. Analysis at national level ignores regional impacts that may also affect housing affordability.

Practical implications

The impact of the low rate of new dwelling approvals (public and private sector in the long run and public sector in the short run) points to a persistent structural gap between the demand and supply of housing. Strong economic and population growth often blamed for the worsening of housing affordability, at least in the 2000s, has no impact at the aggregate national level.

Originality/value

Only known paper to provide quantitative estimates of macro drivers of Australian housing affordability over a long period using alternative measures of relative housing affordability.

Details

Studies in Economics and Finance, vol. 30 no. 4
Type: Research Article
ISSN: 1086-7376

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Article
Publication date: 3 October 2016

Michael James McCord, Peadar T. Davis, Martin Haran and John McCord

The purpose of this research is to examine the nature of housing market affordability. Although the problem of housing affordability has been widely discussed, the…

Abstract

Purpose

The purpose of this research is to examine the nature of housing market affordability. Although the problem of housing affordability has been widely discussed, the theoretical underpinnings of the concept have received less attention. It has become increasingly evident that more holistic insights and integrated approaches are needed to provide a platform to define affordability to influence research and policy discourse.

Design/methodology/approach

Given the increasing importance of affordability within housing policy reform, this paper seeks to “unearth” the most important prognosticators of affordability. The paper uses principal component analysis to determine how affordability, as a key policy tool, should be analysed. In addition, co integration techniques, Granger causality and impulse response analysis are applied to test the movement and shocks of the key affordability indicators and the two common affordability metrics.

Findings

The principal conclusions stemming from this paper demonstrate that affordability is a multifaceted policy concept influenced by financial access (purchase) costs and the repayment costs of housing services which are correlated and interchangeable but significantly were found not to be co integrated.

Originality/value

Understanding the nature of housing market affordability remains problem for policy-makers. This paper adds to the debate and empirical understanding of the cyclic nature of affordability and how it is defined. It shows that there are intricate causal short-term relationships between the key affordability indicators. This is problematic for contemporary housing policy and the key directions in which policy must turn.

Details

International Journal of Housing Markets and Analysis, vol. 9 no. 4
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

Keywords

1 – 10 of over 2000