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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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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

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

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: 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: 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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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: 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

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…

682

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

Keywords

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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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

Keywords

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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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

Keywords

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

Keywords

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