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Concepts of Housing Affordability Measurements

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  • David Mazáček

Abstract

This study investigates the challenges of affordable housing, delving into its concept and the diverse metrics used for measuring housing affordability, which influences the formulation of relevant affordable housing policies. The primary focus of this paper centers on defining the concept of affordable housing, exploring its implications for enhancing quality of life, and addressing the complexities involved in measuring its affordability accurately. Building upon the research, the paper proposes a possible optimal methodology for measuring housing affordability. This method suggests employing a price/rent-to-income ratio, encompassing a comprehensive assessment of housing-related expenses and a refined calculation of household income. Importantly, the study highlights the need for policymakers to differentiate between home-renters and homeowners when discussing housing affordability as well as between the immediate and structural lack of affordability.

Suggested Citation

  • David Mazáček, 2023. "Concepts of Housing Affordability Measurements," FFA Working Papers 5.008, Prague University of Economics and Business, revised 13 Sep 2023.
    • Handle: RePEc:prg:jnlwps:v:5:y:2023:id:5.008
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    References listed on IDEAS

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    1. Matteo Benetton & Philippe Bracke & João F Cocco & Nicola Garbarinoifo, 2022. "Housing Consumption and Investment: Evidence from Shared Equity Mortgages," The Review of Financial Studies, Society for Financial Studies, vol. 35(8), pages 3525-3573.
    2. Peter Abelson, 2009. "Affordable Housing: Concepts and Policies," Economic Papers, The Economic Society of Australia, vol. 28(1), pages 27-38, March.
    3. Alois Stutzer & Bruno S. Frey, 2008. "Stress that Doesn't Pay: The Commuting Paradox," Scandinavian Journal of Economics, Wiley Blackwell, vol. 110(2), pages 339-366, June.
    4. Raul Berto & Giovanni Cechet & Carlo Antonio Stival & Paolo Rosato, 2020. "Affordable Housing vs. Urban Land Rent in Widespread Settlement Areas," Sustainability, MDPI, vol. 12(8), pages 1-21, April.
    5. Lawrence Kenny & Adam Reinke, 2011. "The role of income in the formation of new cities," Public Choice, Springer, vol. 149(1), pages 75-88, October.
    6. David Mazáček & Jiří Panoš, 2022. "Key determinants of new residential real estate prices in Prague," FFA Working Papers 5.002, Prague University of Economics and Business, revised 11 Apr 2023.
    7. Ali Anari & James Kolari, 2002. "House Prices and Inflation," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 30(1), pages 67-84.
    8. AbdulLateef Olanrewaju & Seong Yeow Tan & Abdul‐Rashid Abdul‐Aziz, 2018. "Housing providers' insights on the benefits of sustainable affordable housing," Sustainable Development, John Wiley & Sons, Ltd., vol. 26(6), pages 847-858, November.
    9. Jack Favilukis & Pierre Mabille & Stijn Van Nieuwerburgh, 2023. "Affordable Housing and City Welfare," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 90(1), pages 293-330.
    10. Gabriel Metcalf, 2018. "Sand Castles before the Tide? Affordable Housing in Expensive Cities," Journal of Economic Perspectives, American Economic Association, vol. 32(1), pages 59-80, Winter.
    11. Gan, Quan & Hill, Robert J., 2009. "Measuring housing affordability: Looking beyond the median," Journal of Housing Economics, Elsevier, vol. 18(2), pages 115-125, June.
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    More about this item

    Keywords

    Affordable housing concept; Housing policy; Affordable housing measurements; Actual affordability; Long-term affordability;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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