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Article
Publication date: 1 March 2016

Yonghua Zou

Over the past three decade, China has established a housing finance system that borrows from the collective experiences of advanced economies. After examining the…

Abstract

Over the past three decade, China has established a housing finance system that borrows from the collective experiences of advanced economies. After examining the evolution of China’s housing finance system, the paper focuses on analyzing its challenges and recent changes. The paper argues that China’s highly-centralized financial system prefers financial stability but neglects financial liberalization, and then resulted in severe financial repression, which hurts the efficiency and equality of the housing finance service. After recovering from the 2008 financial crisis via high-cost financial intervention, China took some policy innovations to promote a decentralized finance mechanism, expand finance resources, and support affordable housing financing, through which China hopes to provide a more stable, affordable, and equal housing finance service to help more households own homes.

Details

Open House International, vol. 41 no. 1
Type: Research Article
ISSN: 0168-2601

Keywords

Article
Publication date: 29 July 2014

Hamza Gülter and Eyup Basti

The purpose of this paper is to review the housing sector of Turkey and present the housing development strategies developed by government enterprises for the urban poor…

1167

Abstract

Purpose

The purpose of this paper is to review the housing sector of Turkey and present the housing development strategies developed by government enterprises for the urban poor in Turkey as successful examples.

Design/methodology/approach

The methodology of the paper is descriptive. First of all, the literature on housing finance systems and sources of housing finance are stated. Then, the paper reviews housing finance systems applied in Turkey in the past to solve housing problems. Later, it describes current housing strategy to solve housing problems of low- and middle-income groups and also presents this strategy as a successful model to other countries. Moreover, mortgage law and the current situation of the Turkish housing sector are discussed within the study.

Findings

As a result of economic normalization achieved after 2002, mortgage loans extended by commercial banks have increased in Turkey. Besides, governmental institutions, such as Housing Development Administration of Turkey (HDAT) and Istanbul Public Housing Corporation (KIPTAS), apply very extensive projects to allow low- and middle-income groups to have their dwellings. In 2007, the Turkish Parliament enacted mortgage law and defined rules and actors of the mortgage sector. However, as a consequence of economic deterioration in the world economy, mortgage loan receivables-backed securities could not be issued to public yet. Public issuance of mortgage loan receivables-backed securities in the future are expected to direct more long-term funds to the housing sector and also to provide an additional investment instrument for the individual and institutional investors.

Originality/value

The housing production and finance models developed by the HDAT and KIPTAS can be good models for the solution of housing problems of urban poor in other countries.

Details

International Journal of Housing Markets and Analysis, vol. 7 no. 3
Type: Research Article
ISSN: 1753-8270

Keywords

Article
Publication date: 12 April 2022

Levent Sümer

This study aims to determine the relationship between the banking industry and home financing by conducting a regression analysis between the mortgage loan interest rates…

Abstract

Purpose

This study aims to determine the relationship between the banking industry and home financing by conducting a regression analysis between the mortgage loan interest rates and the number of housing sales, and based on the results of the analysis, this paper proposes a new and alternative interest-free home financing model by directing the savings of the people in pension funds into real estate investment funds (housing fund), specifically established to provide a bank loan-free home financing solution. Diminishing Musharakah (partnership) is also integrated into the model from an interest-free and saving economy perspective. The model developed also provides opportunities to increase the size of the real estate investment funds and provide alternative investment tools to pension funds.

Design/methodology/approach

While the global financial crisis resulted from the mortgage crisis in the USA in very recent history, the world has been experiencing the evolution of a new health crisis, COVID-19, a pandemic that has been heavily affecting the global economy in the past two years. The housing sector is among one of the major industries that may be affected by this new global crisis because of the high dependency of the current home financing models on the banking industry, which is carrying the burden of the pandemic. The rapid increase in global debt volume, housing prices, inflation and interest rates are observed as bad signs that may increase the risks of the housing industry. A potential decrease in purchasing power because of high inflation rates may decrease the welfare of people and reduce the income level. While the total debt keeps increasing worldwide, and central banks are considering increasing the interest rates, any potential default in the repayment of the mortgage loans may trigger a new mortgage crisis as the bank loan-dependent financing system of the housing industry lacks alternatives. Thus, a relationship analysis between the banking and housing sectors is required to figure out the dependency of home financing on the banking industry, and a new sustainable home financing model is needed to protect the housing industry and the homebuyers from a negative effect of a new possible financial crisis.

Findings

The results of the analysis exhibit that there is a strong negative relationship between the mortgage loan interest rates and the total home sales. As a result, the new model is suggested and this new model is tested in an emerging country, Turkey, with the real housing sector and economic data where the interest rates are high and the home prices are booming. The results exhibit that the new interest-free home financing model provides a more economic financing solution compared with the high financing costs of bank loans.

Research limitations/implications

The model proposed in this study is unique, and there is no such system that has integrated the pension funds, the real estate investment funds and diminishing partnership in one ecosystem. It is expected that the model may decrease the dependency of home financing on the banking industry and decrease the risks of the housing sector in the case a new financial crisis occurs.

Social implications

While providing a sustainable and alternative interest-free home financing tool, the model also provides individuals who do not prefer to use any bank loan because of religious or other concerns an opportunity to purchase their houses.

Originality/value

The model proposed in this study is a unique and original model that aims to provide a bank loan-free, sustainable home financing solution by integrating the pension funds, real estate investment funds and diminishing partnership in one ecosystem.

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: 5 June 2017

Bashir Olanrewaju Ganiyu, Julius Ayodeji Fapohunda and Rainer Haldenwang

This study aims to identify and establish effective housing financing concepts to be adopted by government in achieving its mandate of providing sustainable affordable…

1424

Abstract

Purpose

This study aims to identify and establish effective housing financing concepts to be adopted by government in achieving its mandate of providing sustainable affordable housing for the poor to decrease the building of shacks, as well as proposing solutions to the housing deficit in South Africa. A rise in demand and shortage in supply of housing calls for the need to address issues of affordable housing in South Africa, and developing countries in general, to ensure a stable and promising future for poor families.

Design/methodology/approach

Literature has revealed that the South African government, at all levels, accorded high priority to the provision of low-cost housing. Thus, government has adopted subsidy payment as a method of financing affordable housing to ensure that houses are allocated free to the beneficiaries. This also addresses the historically race-based inequalities of the past, but unfortunately, this has not been fully realised. This study uses a sequential mixed method approach, where private housing developers and general building contractors were the research participants. The qualitative data were analysed using a case-by-case analysis, and quantitative data were analysed using a descriptive statistical technique on SPSS.

Findings

The results of the qualitative analysis reveal a gross abuse of the housing subsidies system by the beneficiaries of government-funded housing in South Africa. This is evident from illegal sale of the houses below market value. This has led to a continual building of shacks and an increased number of people on the housing waiting list instead of a decrease in the housing deficit. The results from quantitative analysis affirm the use of “Mortgage Payment Subsidies, Mortgage Payment Deductions, Down-Payment Grant and Mortgage Interest Deductions” as viable alternatives to subsidy payment currently in use to finance affordable housing projects by the South African Government.

Practical implications

At the moment, the focus of the South African National Government is continual provision of free housing to the historically disadvantage citizens, but the housing financing method being used encourages unapproved transfer of ownership in the affordable housing sector. This study thus recommends the use of an all-inclusive housing financing method that requires a monetary contribution from the beneficiaries to enable them take control of the process.

Originality/value

The relational interface model proposed in this study will reduce pressure on government budgetary provision for housing and guarantee quick return of private developers’ investment in housing. Government must, as a matter of urgency, launch a continuous awareness programme to educate the low-income population on the value and the long-term benefits of the housing.

Details

International Journal of Housing Markets and Analysis, vol. 10 no. 3
Type: Research Article
ISSN: 1753-8270

Keywords

Article
Publication date: 7 March 2016

Kenneth Appiah Donkor-Hyiaman and DeGraft Owusu-Manu

Most households in Sub-Saharan African cannot afford adequate housing. Most often, their pension benefits are also meagre, usually resulting from low contribution levels…

2714

Abstract

Purpose

Most households in Sub-Saharan African cannot afford adequate housing. Most often, their pension benefits are also meagre, usually resulting from low contribution levels and mismanagement. Coupled with low life expectancies, most would not live to enjoy the benefits of pensions, thus validating the need to utilize their hitherto deferred pension benefits for immediate housing investment and consumption.

Design/methodology/approach

Quantitative research methodology via the present value technique was used in valuing pension benefits to demonstrate the potential of pension schemes as savings mobilization mechanisms for long-term pension-backed housing financing in Ghana.

Findings

Policy wise, the paper provides some evidence to support proposals for the development of pension-backed housing finance systems in Ghana with lessons for Sub-Saharan Africa. The authors demonstrate that the Tier 2 defined contribution mandatory occupational pension scheme could serve the purpose of a savings mobilization mechanism for long-term housing financing. The authors observe that by increasing the Tier 2 contribution rate to 30 per cent, the majority of the sample, mainly of the middle-income class, could accumulate between US$11,000 and US$17,000 over their working life. At the same rate, between US$5,783 and US$9,550 could have been raised as savings between 2010 (when implementation began) and 2014. This could form a substantial equity contribution in a mortgage investment and or borrowed on a housing microfinance basis.

Originality/value

The paper contributes to the ongoing debate on the need to develop alternate savings mechanisms and collateral assets using pension assets, other than property, for mortgage financing. The proposals made are aimed at influencing policy by way of advocating for the use of latent pension equity to improve the housing conditions of members while they are alive, and also to suggest pension-backed housing financing as an alternative investment option. A comprehensive study would be required to settle issues of scalability, pricing and model design.

Details

International Journal of Housing Markets and Analysis, vol. 9 no. 1
Type: Research Article
ISSN: 1753-8270

Keywords

Article
Publication date: 13 February 2007

Kahilu Kajimo‐Shakantu and Kathy Evans

The purpose of this research is to explore the possibility of integrating women‐centred savings schemes into formal finance systems in order to help such schemes to…

2103

Abstract

Purpose

The purpose of this research is to explore the possibility of integrating women‐centred savings schemes into formal finance systems in order to help such schemes to leverage finance for housing purposes.

Design/methodology/approach

The research adopts a case study approach that uses mainly semi‐structured interviews. The case studies involve two savings schemes with their respective supporting organisations and five commercial banks in South Africa.

Findings

The case studies show that, if savings systems are flexible and suitable to their needs, women are capable of saving and repaying housing loans. The results also suggest that the accumulated group savings and the savings schemes themselves act as good collateral. However, despite showing interest in involvement in the low‐income sector, banks do not have a financially viable and workable business model to exploit this potential market.

Research limitations/implications

Integrated community housing is essential. Future research is required to determine how good repayment rates could be achieved while maintaining risks at acceptable levels.

Practical implications

For practical purposes, collaboration with intermediary organisations working with women‐centred savings schemes would be a beneficial starting point in linking the savings schemes with formal finance systems.

Originality/value

The paper provides valuable reference material for understanding the gap that exists between what banks currently offer and what poor households require in meeting their housing needs. It may also be useful to researchers and practitioners as a basis for exploring innovative finance models for banks.

Details

Property Management, vol. 25 no. 1
Type: Research Article
ISSN: 0263-7472

Keywords

Article
Publication date: 18 October 2011

Nicholas Addai Boamah

The housing finance market in Ghana is highly underdeveloped. This may be as a result of unfriendly or poor regulatory environment. This paper seeks to examine the…

1517

Abstract

Purpose

The housing finance market in Ghana is highly underdeveloped. This may be as a result of unfriendly or poor regulatory environment. This paper seeks to examine the regulatory environment and to determine its impact on the development of the formal housing finance market in the country.

Design/methodology/approach

The paper executes this by surveying the housing finance literature. It also carries out a review of the legal framework of the country's mortgage market.

Findings

It is found that inadequate foreclosure rights of lenders before December 2008 constrained the development of the formal housing finance market in Ghana. The research notes that the enactment of the Home Mortgage Finance Act, 2008 (Act 770) in December 2008 has created a conducive legal environment for collateralised lending in the country. This has improved the prospects of developing the housing finance market in the country.

Practical implications

It is noted that a credit bureau industry and mortgage refinancing mechanisms must be put in place if the Act 770, 2008 is to facilitate mortgage market development in the country. It recommends additional policy and institutional reforms.

Originality/value

The paper identifies the legal and institutional constraints on housing finance market development in Ghana.

Details

Property Management, vol. 29 no. 5
Type: Research Article
ISSN: 0263-7472

Keywords

Book part
Publication date: 19 October 2016

Alan Walks and Dylan Simone

The precise relationships between neoliberalization, financialization, and rising risk are still being debated in the literature. This paper examines, and challenges, the…

Abstract

The precise relationships between neoliberalization, financialization, and rising risk are still being debated in the literature. This paper examines, and challenges, the Financial Instability Hypothesis (FIH) developed by Hyman Minsky and his adherents. In this perspective, the level of financial risk builds over time as participants orient their behavior in relation to assessments of past levels of risk performance, leading them to overly optimistic valuation estimates and increasingly risky behavior with each subsequent cycle. However, there are problems with this approach, and many questions remain, including how participants modify their exposure to risk over time, how risk is scaled, and who benefits from changes in exposure to risk. This paper examines such questions and proposes an alternate perspective on financial instability and risk, in light of the history of risk management within Canada’s housing finance sector. The rise of financialization in Canada has been accompanied by shifts in the sectoral and scalar locus of risk within the housing sector, from the federal state, to lower levels of government, third-sector organizations, and finally, private households. In each case, the transfer of risk has occurred as participants in each stage sought to reduce their own risk exposure in light of realistic and even pessimistic (not optimistic) expectations deriving from past exposure, contradicting basic assumptions of Minsky’s FIH. This is the process that has driven the neoliberalization of housing finance in Canada, characterized by the socialization of lender risk while households increasingly take on the financial and social risks relating to shelter.

Details

Risking Capitalism
Type: Book
ISBN: 978-1-78635-235-4

Keywords

Article
Publication date: 6 May 2021

Mohammad Kamal Abuamsha

The study aims to identify the reality of the role of the banking sector in financing the Palestinian real estate and construction sector. The study demonstrated the…

Abstract

Purpose

The study aims to identify the reality of the role of the banking sector in financing the Palestinian real estate and construction sector. The study demonstrated the importance of this issue by highlighting the role that Palestinian banks play in treating the problem of the increasing demand for housing because of the natural increase in population numbers and their various needs, and through knowledge of historical development for banks and the facilities they provided, especially to the real estate and construction sector.

Design/methodology/approach

This study carried out data from (2000–2019). The descriptive analytical method and regression method was used for analyzing the measurement model. Holt’s method was used to estimate the size of housing units needed in the Palestinian territories over the next seven years.

Findings

The study concluded that there is a need to build about (200,000) residential units in the next seven years, and the study recommended the necessity of increasing the pooled contribution of banks and directing part of it to the real estate and construction sector, amending legislative laws for the real estate market and construction, reducing taxes on building supplies and encouraging the private sector with stimulus policies or share.

Practical implications

The study provided results and data regarding the state of the housing sector and how its financed by Palestinian banks; it clarified the limitations and difficulties that face this sector and provides a clear path for what needs to be done to develop this sector and overcome its barriers.

Originality/value

This current study contributes to focusing on the reality of the banking sector and its role in financing the real estate and construction sector, in addition to the appropriate period of time for the study, which ranges between 2000 and 2019, which is a period sufficient to identify the reality of Palestinian real estate and construction and banks and the relationship between them.

The researcher believes that the study differed from its predecessors through an in-depth analysis of the existing relationship between cash assets and real assets, given that the priority of real assets over cash assets, as cash assets are considered as real over cash assets, but they do not constitute a substitute for them in economic development, the study contains a vision that recommends linking the activities of the banking sector with economic and social problems and the national issue, i.e. independence and self-determination.

Details

International Journal of Housing Markets and Analysis, vol. 15 no. 2
Type: Research Article
ISSN: 1753-8270

Keywords

Article
Publication date: 29 May 2018

Chukwuma C. Nwuba and Eunice Oluwakemi Chukwuma-Nwuba

The purpose of this study is to investigate barriers to accessing mortgages in Nigeria’s urban housing markets with the main focus on Kaduna State. The objective was to…

Abstract

Purpose

The purpose of this study is to investigate barriers to accessing mortgages in Nigeria’s urban housing markets with the main focus on Kaduna State. The objective was to establish the diverse factors that constitute barriers to urban households’ access to mortgages for homeownership from the perceptions of households, mortgage lenders and the Federal Mortgage Bank of Nigeria.

Design/methodology/approach

The study used cross-sectional survey with triangulation of results. To enable the triangulation, three new samples were developed from 450 surveys with households and 10 completed by lenders, both in Kaduna State and one survey undertaken by the Federal Mortgage Bank of Nigeria. Data were collected with questionnaires designed on five-point Likert model. Data analysis utilized descriptive statistics and one-sample t-test. Triangulation enabled cross-validation of the results.

Findings

The barriers include low incomes and savings which constrain households’ ability to pay mortgage instalments and deposits, respectively, high interest rates, poor access to land, inability of potential borrowers to provide certificates of occupancy on their land, inadequate loanable funds and inadequate number of mortgage lending institutions.

Practical implications

The study has the potential to provide a basis for mortgage market reforms. Mortgage market reforms should be encompassing because it requires action in some other sectors.

Social implications

The social implication of the study is the possibility of motivating actions to deal with the diverse barriers to accessing mortgages which have constituted deterrents to households from realizing their homeownership aspirations and enjoying the benefits of homeownership and consequently contributing to inadequate housing and poor living conditions.

Originality/value

The study provides distinctive insight into Nigeria’s mortgage market by integrating the views of various stakeholders on a subject of social and economic significance. It contributes to the evidence-base around mortgage market reforms in Nigeria.

Details

International Journal of Housing Markets and Analysis, vol. 11 no. 4
Type: Research Article
ISSN: 1753-8270

Keywords

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