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Article

Essi Eerola

The global financial crisis has led to increased attention on the relationship of household indebtedness and systemic risks. As a result, macroprudential measures aimed at…

Abstract

Purpose

The global financial crisis has led to increased attention on the relationship of household indebtedness and systemic risks. As a result, macroprudential measures aimed at reducing the risks have been introduced in many countries. The purpose of this paper is to review the recent empirical literature on the measures targeted at households in the housing markets.

Design/methodology/approach

This note reviews and discusses the recent empirical literature on macroprudential measures targeted at households in the housing market as well as housing-related tax policy measures.

Findings

To date, the literature mostly consists of cross-country studies using aggregate data and looking at a large set of different measures. The studies typically report associations between the measures and the outcome variables of interest (often credit growth and house price appreciation), but do not assess the causal effects of the different measures or the underlying mechanisms.

Originality/value

Exploiting household data together with policy reforms should be a useful step forward in understanding the effects of the measures and uncovering the mechanisms through which they operate. This would also allow studying the distributional effects of the measures. Understanding the distributional effects is important in its own right, but it is also required because the ultimate goals of the macroprudential policies are related not only to the aggregate level of credit but also to the distribution of leverage.

Details

The Journal of Risk Finance, vol. 18 no. 3
Type: Research Article
ISSN: 1526-5943

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Article

Diarmaid Addison Smyth and Kieran McQuinn

The Irish fiscal position was significantly affected by the recent financial crisis. Budgetary surpluses quickly gave way to significant deficits post 2007, culminating…

Abstract

Purpose

The Irish fiscal position was significantly affected by the recent financial crisis. Budgetary surpluses quickly gave way to significant deficits post 2007, culminating into a lengthy excessive deficit procedure and entry into a formal EU/IMF assistance programme in 2010. Much of the deterioration in the public finances was caused by a sharp decline in property-related taxes because the Irish housing market rapidly contracted. In this paper, the authors quantify the extent to which disequilibria in the housing market can affect the tax take, finding significant implications over an extended period.

Design/methodology/approach

The authors attempt to quantify the extent of housing-related tax windfall gains and losses in Ireland over a 30-year period as a result of disequilibrium in the housing market. This involves a three-step modelling approach where we relate property-dependent taxes to the housing market while estimating equilibrium in the latter before solving for the tax take consistent with that equilibrium. In so doing, the authors find that the fiscal position compatible with equilibrium in the housing market has at times diverged greatly from actual outturns.

Findings

This paper confirms the significant role played by the housing market in influencing both the tax-take and the overall fiscal position. The authors find that there have been a number of instances where excesses in the housing market have spilled over into fiscal aggregates, notably in the housing bubble period between 2003 and 2008. However, with the on-going adjustments in the housing market, it would appear that prices and volumes have overcorrected in recent years. Overall, much greater emphasis should be given to the role of the housing market in forecasting key taxation aggregates.

Originality/value

The recent crisis highlighted how domestic policy mistakes (both in terms of budgetary planning and financial market regulation) can greatly amplify economic shocks. Irish budgetary policy in the run up to the financial crisis of 2008/2009 was clearly based on unsustainable levels of housing-related tax receipts. This paper highlights the need for a much more granular approach in framing tax forecasts and in assessing the public finances by more explicitly factoring in housing market developments.

Details

Journal of European Real Estate Research, vol. 9 no. 2
Type: Research Article
ISSN: 1753-9269

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Article

Cedric Pugh

It was not until the late 1960s that housing attracted much attention from academic social scientists. Since that time the literature has expanded widely and diversified…

Abstract

It was not until the late 1960s that housing attracted much attention from academic social scientists. Since that time the literature has expanded widely and diversified, establishing housing with a specialised status in economics, sociology, politics, and in related subjects. As we would expect, the new literature covers a technical, statistical, theoretical, ideological, and historical range. Housing studies have not been conceived and interpreted in a monolithic way, with generally accepted concepts and principles, or with uniformly fixed and precise methodological approaches. Instead, some studies have been derived selectively from diverse bases in conventional theories in economics or sociology, or politics. Others have their origins in less conventional social theory, including neo‐Marxist theory which has had a wider intellectual following in the modern democracies since the mid‐1970s. With all this diversity, and in a context where ideological positions compete, housing studies have consequently left in their wake some significant controversies and some gaps in evaluative perspective. In short, the new housing intellectuals have written from personal commitments to particular cognitive, theoretical, ideological, and national positions and experiences. This present piece of writing takes up the two main themes which have emerged in the recent literature. These themes are first, questions relating to building and developing housing theory, and, second, the issue of how we are to conceptualise housing and relate it to policy studies. We shall be arguing that the two themes are closely related: in order to create a useful housing theory we must have awareness and understanding of housing practice and the nature of housing.

Details

International Journal of Social Economics, vol. 13 no. 4/5
Type: Research Article
ISSN: 0306-8293

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Article

Emily Bird

This article considers the effects of UK government cuts across the housing, care and support sector on vulnerable people. The article urges that the human and financial…

Abstract

This article considers the effects of UK government cuts across the housing, care and support sector on vulnerable people. The article urges that the human and financial costs of savings are fully considered, as these could outweigh the short‐term financial savings. The article also sets out what the National Housing Federation is doing to urge the government to consider the impact of the cuts on vulnerable people in particular.

Details

Housing, Care and Support, vol. 13 no. 4
Type: Research Article
ISSN: 1460-8790

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Book part

Adrienne Roberts

The proliferation of homelessness and housing precariousness, along with a dramatic growth in food banks, are two signs that while parts of the UK economy may be…

Abstract

The proliferation of homelessness and housing precariousness, along with a dramatic growth in food banks, are two signs that while parts of the UK economy may be recovering from the 2008 financial crisis and recession, the same cannot be said for the living conditions of much of the poor and working class population. Much of the media discussion has centered on the ways in which these social ills have been caused by government policy, particularly cuts to social and welfare services introduced under the banner of “austerity.” I argue in this paper, however, that a narrow focus on austerity risks obscuring some of the longer-term structural transformations that have taken place under neoliberal capitalism, namely: (1) financialization and (2) the privatization of social reproduction. Situating these two trends within a longer history of capitalism, I argue, allows us to understand the contemporary housing and food crises as specific (and highly gendered) manifestations of a more fundamental contradiction between capital accumulation and progressive and sustainable forms of social reproduction. Doing so further helps to locate the dramatic proliferation of household debt, which has been supported by both processes, as both cause and consequence of the crisis in social reproduction faced by many UK households.

Details

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

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Article

John M. Kagochi and Lesley M. Mace

The purpose of this paper is to analyze factors that determine the demand for single family houses in Alabama urbanized areas, commonly referred to as metropolitan…

Abstract

Purpose

The purpose of this paper is to analyze factors that determine the demand for single family houses in Alabama urbanized areas, commonly referred to as metropolitan statistical areas (MSAs).

Design/methodology/approach

This paper builds and estimates a housing demand model that incorporates both macroeconomic and housing‐related variables using a panel time series data for 1988‐2007. The study is different from past research, which mainly focuses on housing demand at the state or national level, by looking at the factors influencing demand for housing at the MSAs level.

Findings

The study finds that demand for new single family houses in Alabama MSAs is influenced by both national economic factors and local factors. Population growth and increased sale of existing houses increase demand for new single family houses in the MSAs. On the contrary, increased cost of building a new house, higher real mortgage interest rates and unemployment rates are found to reduce the demand for new houses.

Originality/value

This study is one of the few studies that focus on housing demand at the local level, particularly in the US housing market. Since demand for housing will always be local and therefore influenced mostly by local conditions, the result reveal unique dynamics that are specific to the MSAs.

Details

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

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Article

Mark William Massyn, Robert McGaffin, Francois Viruly and Nicole Hopkins

The purpose of this paper is to provide an overview of the economics of providing well-located housing in the inner city of Cape Town. The paper emphasises the need to…

Abstract

Purpose

The purpose of this paper is to provide an overview of the economics of providing well-located housing in the inner city of Cape Town. The paper emphasises the need to maintain an appropriate balance between the viability and affordability of the product offered to the market and overcoming the value versus cost challenges. While developers have limited influence over value, they do have influence over cost structures through the development approach that is chosen. Moreover, local authorities influence the viability of projects through standards and regulations. The conclusion drawn from the research has considerable implications for the formulation of market-driven housing policy interventions.

Design/methodology/approach

In addition to the review of urban economics theory and the literature on the drivers and costs of inner-city, higher-density residential development, a series of interviews with inner-city residential developers was conducted to access current property development cost data and to identify the parameters that determine the viability of inner-city, high-density residential development.

Findings

Cape Town, like other South African cities, suffers from being inefficient and inequitable largely due to its low density and sprawling nature. As a result, most planning- and housing-related policy interventions advocate the provision the higher-density, more affordable residential housing in well-located areas such as the inner city. However, to date, these policies have, on the whole, been unsuccessful in achieving these outcomes. This paper argues that this is because these policies largely do not take urban economics into account and fail to address the value versus cost tension that needs to be overcome to allow for the provision of such accommodation. Based on the viability calculations provided, the research illustrates the main cost drivers associated with higher-density, inner-city residential development and makes certain recommendations as to how these cost barriers can be reduced.

Research limitations/implications

Financing arrangements and taxation implications have not been accounted for as these are often specific to the developer and thus cannot be generalised.

Practical implications

The solutions put forward by the paper offer lower-income households the ability to successfully compete with higher-income households and other land uses for well-located space in Cape Town’s inner city.

Social implications

The findings of this research illustrate the type of interventions that the public and private sectors can consider to improve the viability and affordability of affordable housing units in city centres located in emerging countries.

Originality/value

While traditional urban economic concepts are drawn upon, the paper contributes to addressing the challenge of providing higher-density, more affordable accommodation in South African inner cities. It does this by applying these well-known concepts to the inner city of Cape Town and draws on current data and developer views to accurately diagnose the problem and, in turn, to offer pragmatic solutions.

Details

International Journal of Housing Markets and Analysis, vol. 8 no. 3
Type: Research Article
ISSN: 1753-8270

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Article

M.H. Karamujic

The global financial crisis (GFC) of 2008‐2009 has highlighted the need for understanding fluctuations in housing variables and how, as such, they contribute to…

Abstract

Purpose

The global financial crisis (GFC) of 2008‐2009 has highlighted the need for understanding fluctuations in housing variables and how, as such, they contribute to understanding how housing markets work. The contention of this paper is to present a univariate structural time series analysis of the Australian Housing Finance Commitments (HFCs) covering the period 1988:6‐2009:5. The empirical analysis aims to focus on establishing whether monthly HFCs exhibit the expected cyclical and seasonal variations. The presence of a monthly seasonal pattern in HFCs is to be ascertained by way of testing possible hypotheses that explain such a pattern.

Design/methodology/approach

A structural time series framework approach, used in this paper, is in line with that promulgated by Harvey. Such models can be interpreted as regressions on functions of time in which the parameters are time‐varying. This makes them a natural vehicle for handling changing seasonality of a complex form. The structural time series model is applied to seasonally unadjusted monthly HFCs, between 1988:6 and 2009:5. The data have been sourced from the ABS. For consistency, the sample for each variable is standardised to start with the first available July observation and end with the latest available June observation.

Findings

The modelling results confirm the presence of cyclicality in HFCs. The magnitude of the observed cycle‐related changes is A$817m. A structural time series model incorporating trigonometric specification reveals that seasonality is also present and that it is stochastic (as implied by the inconsistency of the monthly seasonal factors over the sample period). The magnitude of monthly seasonal changes is A$435.8m. The results show the presence of statistically significant factors for January, February, March, April, May, September, October and November, which are attributed to “spring”, “summer” and “autumn” seasonal effects.

Originality/value

Empirical evidence of variations in housing‐related variables is relatively limited. A study of the literature uncovered that most studies focus on house prices and found no empirical research focusing on fluctuations in HFCs. Consequently, this research aims to be the first to explain the presence of seasonal and cyclical fluctuations in such an important housing variable as HFCs. Moreover, the paper aims to enhance the practice of modelling seasonal influences on housing variables.

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Article

Robert Wieser and Alexis Mundt

This paper aims to examine the main characteristics of the housing taxation and subsidy systems in six European Union countries. The structure of this support over the…

Abstract

Purpose

This paper aims to examine the main characteristics of the housing taxation and subsidy systems in six European Union countries. The structure of this support over the past two decades, before and after the global financial crisis has been investigated and its total effective dimensions have been approximated.

Design/methodology/approach

Official national data and existing literature on housing policy expenses have been analysed and the authors add their own estimations of missing data, where possible. Latest changes in housing policy guidelines and expenses were interpreted.

Findings

It was found that state support for housing is heavily underestimated by official data in most countries, mainly due to missing estimates for the value of imputed rents tax relief, reduced VAT rates and low real estate and capital gains taxation. Our estimates suggest that total public support for the housing sector reaches more than 3 per cent of the gross domestic product in three of the six countries, and about 2 per cent in the others. State support to the housing sector has developed quite differently in the investigated countries over the past decades. In particular, there was no universal downward trend.

Originality/value

This is the first attempt to provide a more comprehensive analysis of national housing policy expenses applying a very broad definition of state support for housing. In particular, we consider indirect tax advantages to the housing sector that are generally not taken into account. Furthermore, we apply a discounted present value approach of current housing policy expenses to facilitate international comparison.

Details

Journal of European Real Estate Research, vol. 7 no. 3
Type: Research Article
ISSN: 1753-9269

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Article

Beser Oktay Vehbi, Ercan Hoskara and Sebnem Önal Hoskara

This study1 seeks to identify and propose a model for measuring and assessing the level of sustainability in housing environments based on a range of indicators. With this…

Abstract

This study1 seeks to identify and propose a model for measuring and assessing the level of sustainability in housing environments based on a range of indicators. With this intention, the article is composed of four main parts. In the first part, the relationship between sustainability and housing is presented based on previous research; in the second part, a theoretical framework is put forward for sustainable housing. Then in the third part, sustainability indicators are discussed thoroughly within the context of indicator frameworks. In this section, the development, selection and measuring processes of indicators are also introduced. Finally in the fourth part, the model for measuring and assessing the level of sustainability in housing environments is presented. It is believed that this model will be used as a tool in the decision-making processes for the future development of existing housing settlements and their environments.

Details

Open House International, vol. 35 no. 1
Type: Research Article
ISSN: 0168-2601

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