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Article
Publication date: 10 August 2010

Alphonce Kyessi and Germain Furaha

Any attempt to improve housing quality goes concurrently with improvement of income level and with economic development. The purpose of this paper is to assess the…

Abstract

Purpose

Any attempt to improve housing quality goes concurrently with improvement of income level and with economic development. The purpose of this paper is to assess the viability of microfinance institutions (MFIs) in financing housing improvement for the urban poor.

Design/methodology/approach

In order to understand in great depth the viability of MFIs in housing finance for the urban poor in Tanzania, the case study strategy was applied, with five sub‐cases, which form the smallest unit of analysis.

Findings

Most housing financing initiatives carried out by governments and large financial institutions often end up benefiting the high/middle income segment. Administrative procedures, terms and conditions set up by the government and banking institutions exclude the poor due to their low affordability levels. As the poor cannot meet the set stringent conditions; the MFIs that are growing in numbers in Tanzania and other developing countries have been their alternative strategy for housing finance.

Research limitations/implications

Close linkage exists between the housing loans, housing improvement and poverty alleviation among the urban poor in informal housing settlement.

Practical implications

WAT‐SACCOS, a housing MFI, has devised a repayment schedule, which is viable, compatible and affordable for the poor. These types of institutions can be used as intermediaries between large financial institutions, including commercial banks and the poor, to make it easier for the latter to access housing loans. Public‐private and popular partnerships facilitate the availability of financial services for the urban poor.

Originality/value

The paper adds to the literature in that, whilst housing issues should continue to be at the top of development and political agenda, housing MFI assists in ensuring that the poor get access to housing, which is regarded as a poverty reduction asset.

Details

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

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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…

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

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Article
Publication date: 21 November 2008

T.S. Anand Kumar, V. Praseeda Sanu and Jeyanth K. Newport

Housing micro‐finance is emerging globally as an important financial activity to help alleviate the housing needs of economically vulnerable people. Micro‐finance…

Abstract

Purpose

Housing micro‐finance is emerging globally as an important financial activity to help alleviate the housing needs of economically vulnerable people. Micro‐finance institutions (MFIs) planning to include housing product must carefully assess whether they have the management and technical capacity to do so. The purpose of this paper is to give practical guidance to MFIs in adopting the housing programme, in addition to their existing line of micro‐finance services.

Design/methodology/approach

The paper gives practical guidance to MFIs adopting the housing programme in addition to the existing line of micro‐finance services and inputs about any market study, profiling the customers, product design, pricing of the product, affordability of the clients, income assessment, loan assessment, operational procedures, risk coping mechanisms and technical backup guidance.

Findings

The paper finds that MFIs should also ensure that housing micro‐finance suits their strategy from institutional and financial perspectives.

Originality/value

This paper provides valuable practical guidance to MFIs.

Details

International Journal of Housing Markets and Analysis, vol. 1 no. 4
Type: Research Article
ISSN: 1753-8270

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Article
Publication date: 10 August 2010

Matthew Oluwole Oyewole

The purpose of this paper is to investigate the contribution of cooperative societies to housing finance for the urban low income group in Ogbomoso, Oyo state of Nigeria…

Abstract

Purpose

The purpose of this paper is to investigate the contribution of cooperative societies to housing finance for the urban low income group in Ogbomoso, Oyo state of Nigeria. This is with a view to determine the effectiveness of the societies' lending as a means of solving the housing problem among the low income group in Nigeria.

Design/methodology/approach

Questionnaires were administered to 120 members of eight societies of four cooperative unions selected through a random sampling technique. In total, 15 members who had benefited from the loan were surveyed in each of the societies. Data were analysed with the use of frequency distribution, percentage and measure of cooperators satisfaction index (CSI).

Findings

The results showed that 52 per cent of responding members had financed the development of their houses to completion stage, while 28 per cent had their houses still under construction. The index of satisfaction (CSI) on each attribute of “affordability”, “transaction cost” and “collateral” is higher than the aggregate satisfaction on the loan. In addition, the level of satisfaction on a cooperative loan with a CSI of 3.77 is far above average (2.50) and greater than the level of satisfaction on National Housing Fund (CSI of 2.07), which is far below average. It was also discovered that membership of cooperative societies cuts across all occupations and is open to all interested members of the community irrespective of sexual or academic status.

Practical implications

The paper concludes that, with the popularity and effectiveness of cooperative loans in the study area, the government should encourage and integrate the initiative to evolve an efficient and effective national housing policy.

Originality/value

This is one of the few studies on housing development finance conducted through a non‐institutional source, particularly in the Nigerian context.

Details

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

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Article
Publication date: 1 December 2002

Marsha J. Courchane and Judith A. Giles

As financial markets move toward increased globalization, it becomes worth considering whether inherent differences in financial markets across different countries will…

Abstract

As financial markets move toward increased globalization, it becomes worth considering whether inherent differences in financial markets across different countries will diminish. For two countries more similar than different in terms of geography, location, government and culture, Canada and the USA remain strikingly different in terms of housing finance. Public policy objectives toward housing followed quite different paths over the past 70 years and fundamental differences in banking practices have led to considerably different outcomes in terms of mortgage finance instruments in the two countries. Examines some of the differences in policy and in competitive practices between Canada and the USA in an attempt to illuminate why differences in rates and terms across the two countries still exist. While a part of the difference remains due to legal constraints concerning the finance of the domestic housing sector, focuses on the economics and public policy choices that have led to the observed differences rather than on an analysis of the legal structure.

Details

Property Management, vol. 20 no. 5
Type: Research Article
ISSN: 0263-7472

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Article
Publication date: 1 January 2014

Christopher Gan, Baiding Hu, Cindy Gao, Betty Kao and David A. Cohen

This paper seeks to investigate the impact of socioeconomic factors of homebuyers such as gender, age, marital status, education, economic status and race on home…

Abstract

Purpose

This paper seeks to investigate the impact of socioeconomic factors of homebuyers such as gender, age, marital status, education, economic status and race on home ownership and loan decisions in urban China.

Design/methodology/approach

This paper employs logistic regression to investigate the socioeconomic factors affecting the consumers' house purchase decision in urban China and the factors affecting the housing loan application.

Findings

Using a structured questionnaire to collect relevant data from household residents (both homeowners and non-home owners) in Nanjing in 2010, the findings document that male respondents who are non-minorities and have higher levels of education are more likely to purchase a house. The results also show that race, educational attainment, size of household and credit card ownership are significantly related to rejection for a housing loan.

Research limitations/implications

The findings in this paper provide homebuyers with a better understanding of factors affecting the housing loans and their decision to purchase a house. Homebuyers can accurately assess their financial ability and improve the use of their credit to purchase a house. In addition, Chinese homebuyers should be encouraged to save since savings serve as a step in building their credit worthiness; therefore, their accessibility to housing loans can be improved and the rate of homeownership will be increased as well.

Originality/value

This research would benefit both lender and borrowers. The research findings provide banks with a better understanding of homebuyers' characteristics that influence their accessibilities to housing loans. Homeownership requires affordable housing financing. Banks should consider repackaging their home loan products to make them more attractive to those with limited means. Such products should focus on making loans more affordable in real terms. First-time homebuyers are almost always young and earn low incomes.

Details

Journal of Asia Business Studies, vol. 8 no. 1
Type: Research Article
ISSN: 1558-7894

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Article
Publication date: 31 May 2013

Angelika Kallakmaa‐Kapsta and Ene Kolbre

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

Abstract

Purpose

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

Design/methodology/approach

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

Findings

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

Research limitations/implications

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

Practical implications

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

Social implications

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

Originality/value

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

Details

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

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Article
Publication date: 1 November 2011

Arindam Bandyopadhyay and Asish Saha

The primary objective of the paper is to demonstrate the importance of borrower‐specific characteristics as well as local situation factors in determining the demand…

Abstract

Purpose

The primary objective of the paper is to demonstrate the importance of borrower‐specific characteristics as well as local situation factors in determining the demand prospect as well as the risk of credit loss on residential housing loan repayment behavior in India.

Design/methodology/approach

Using 13,487 housing loan accounts (sanctioned from 1993‐2007) data from Banks and Housing Finance Cos (HFCs) in India, this paper attempts to find out the crucial factors that drive demand for housing and its correlation with borrower characteristics using a panel regression method. Next, using logistic regression, housing loan defaults and the major causative factors of the same are examined.

Findings

In analyzing the housing demand pattern, some special characteristics of the Indian residential housing market (demographic and social features) and the housing loan facility structure (loan process, loan margin, loan rate, collateral structure etc.), that have contributed to the safety and soundness of the Indian housing market have been deciphered. The empirical results suggest that borrower defaults on housing loan payments is mainly driven by change in the market value of the property vis‐à‐vis the loan amount and EMI to income ratio. A 10 percent decrease in the market value of the property vis‐à‐vis the loan amount raises the odds of default by 1.55 percent. Similarly, a 10 percent increase in EMI to income ratio raises the delinquency chance by 4.50 percent. However, one cannot ignore borrower characteristics like marital status, employment situation, regional locations, city locations, age profile and house preference which otherwise may inhibit the lender to properly assess credit risk in home loan business, as the results show that these parameters also act as default triggers.

Originality/value

This study contributes on the micro side of the housing market in India, since it uses unique and robust loan information data from banks and HFCs. The empirical results obtained in this paper are useful to regulators, policy makers, market players as well as the researchers to understand housing market demand and risk characteristics in an emerging market economy such as India.

Details

Journal of Economic Studies, vol. 38 no. 6
Type: Research Article
ISSN: 0144-3585

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Article
Publication date: 6 August 2018

Weizhuo Wang, Christopher Gan, Zhiyou Chang, David A. Cohen and Zhaohua Li

This paper aims to develop and estimate a logit model of whether homeownership could be promoted by participation in and use of the Housing Provident Fund (HPF) program…

Abstract

Purpose

This paper aims to develop and estimate a logit model of whether homeownership could be promoted by participation in and use of the Housing Provident Fund (HPF) program, with a focus on factors that influence the use of HPF loans.

Design/methodology/approach

This paper develops and estimates a logit model of whether homeownership could be promoted by participation in and use of the HPF program, with a focus on factors that influence the use of HPF loans.

Findings

The results show that coefficients of marital status, educational level, age, duration of employment and employer are significantly related to the use of HPF loan for homeownership.

Research limitations/implications

Because of the chosen research approach, the research results may lack generalizability.

Practical implications

The research findings provide a better understanding of homeowners’ characteristics.

Originality/value

To manage the HPF program effectively, it is important for government to have a better understanding of the underlying demand for homeownership, especially with respect to the different demographic variables and accessibility to HPF loans and the HPF.

Details

Journal of Asia Business Studies, vol. 12 no. 3
Type: Research Article
ISSN: 1558-7894

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Article
Publication date: 27 April 2020

Dario Pontiggia and Petros Stavrou Sivitanides

The purpose of this paper is to assess whether the rapid accumulation of bank deposits before the global financial crisis and their subsequent drastic reduction was the…

Abstract

Purpose

The purpose of this paper is to assess whether the rapid accumulation of bank deposits before the global financial crisis and their subsequent drastic reduction was the main driving force of the Cyprus house price cycle over the period 2006–2015.

Design/methodology/approach

To this aim we estimate a three-equation model in which house prices are determined by housing loans, among other factors, and housing loans are determined by bank deposits. All equations are estimated using partial adjustment model specifications.

Findings

Our findings indicate that housing loans, which capture the effect of credit availability on housing demand, had the smallest effect on house prices, thus providing little support to our proposition of a deposits-driven cycle in house prices.

Research limitations/implications

The main limitation of the study is the use of the housing loan stock instead of the actual volume of housing loans in each period due to lack of such data. As a result our econometric estimates may not accurately capture the magnitude of the effect of housing loans on house prices.

Practical implications

The study has important practical implications for policy makers as it highlights the importance of availability of credit in supporting effective demand for housing during periods of economic growth. Furthermore, it highlights the key role of house price increases in combination with the collateral effect in driving the house price cycle.

Originality/value

This is among the few studies internationally and the first study in Cyprus that attempts to link econometrically the credit and house price cycles that were caused by the global financial crisis.

Details

Journal of Property Investment & Finance, vol. 38 no. 6
Type: Research Article
ISSN: 1463-578X

Keywords

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