Towards a More Nuanced Approach to Measuring Housing Affordability: Evidence from Pakistan
Catherine Lynch,
Ashna Singh and
Yan F. Zhang
No 10450, Policy Research Working Paper Series from The World Bank
Abstract:
The inability to afford a decent shelter has a detrimental effect on people’s lives, their well-being and productivity, and the broader economy. Given the pervasiveness of the problem on a global scale, housing affordability is increasingly taking center stage in public discourse. Yet, there is little agreement on the definition of housing affordability and how to measure it. This paper draws on academic literature and lessons from government housing programs to evaluate how accurately conventional measures differentiate affordability levels by income segment, household composition, and tenure. With the objective of more accurately measuring the affordability of housing at the household and aggregate levels, the paper recommends testing (i) a progressive housing Expenditure-to-Income ratio, calibrated by income segment, and (ii) a modified Residual Income Method that uses household expenditure instead of income as well as a simplified budget standard for non-housing expenses. Application of the latter methodology in urban Pakistan highlights a significant underestimation of housing unaffordability using conventional approaches, especially for the lowest income groups. Moreover, the case study indicates that conventional approaches to the measurement of affordability may not adequately reveal the differences in affordability across income segments and household compositions.
Date: 2023-05-22
New Economics Papers: this item is included in nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations:
Downloads: (external link)
http://documents.worldbank.org/curated/en/09975230 ... 7890a3a1fdba8845.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://documents.worldbank.org/curated/en/099752305222329176/pdf/IDU0b84da3cc0e83b046d5097890a3a1fdba8845.pdf [301 Moved Permanently]--> https://documents.worldbank.org/curated/en/099752305222329176/pdf/IDU0b84da3cc0e83b046d5097890a3a1fdba8845.pdf [302 Moved Temporarily]--> http://documents1.worldbank.org/curated/en/099752305222329176/pdf/IDU0b84da3cc0e83b046d5097890a3a1fdba8845.pdf [301 Moved Permanently]--> https://documents1.worldbank.org/curated/en/099752305222329176/pdf/IDU0b84da3cc0e83b046d5097890a3a1fdba8845.pdf)
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:10450
Access Statistics for this paper
More papers in Policy Research Working Paper Series from The World Bank 1818 H Street, N.W., Washington, DC 20433. Contact information at EDIRC.
Bibliographic data for series maintained by Roula I. Yazigi ().