House Price Inflation: Consequences and solutions for housing affordability and wealth inequality

2018 ◽  
Author(s):  
Oluwaseun Fajana
Keyword(s):  
House Price ◽  
Wealth Inequality ◽  
Housing Affordability ◽  
Price Inflation

Housing

2021 ◽  
pp. 660-678
Author(s):  
Tony Fahey ◽  
Michelle Norris
Keyword(s):  
Social Housing ◽  
Social Inequalities ◽  
Home Ownership ◽  
House Price ◽  
Wealth Inequality ◽  
Safety Net ◽  
Housing Affordability ◽  
Welfare States ◽  
Housing Provision ◽  
Price Inflation

This chapter identifies the provision of affordable housing as a key challenge for contemporary welfare states. Rising house prices have undermined many of the mechanisms governments traditionally used to promote housing affordability and have made the challenge of affordability more urgent and more difficult. These forces have also intensified long-standing tensions regarding the role of housing in welfare states, particularly its contribution to achieving two primary distributional aims of social policies: providing a social safety net for the economically vulnerable and mitigating broader social inequalities. Much research on the first aim has focused on policy inputs—particularly social housing provision—rather than on the outcomes they achieve. Consequently, we know less about the affordability benefits generated by social housing than we should. However, in many countries, reductions in exchequer capital subsidies for social housing provision mean that the sector is now largely self-funded from tenants’ rents. Therefore, the large social housing sectors in Western Europe are no longer a guarantee of affordable rents. Subsidies for home ownership are often criticized as a regressive measure, which conflicts with social policy’s equality aim. However, homeowner housing remains the most widely and progressively distributed form of wealth and its contraction in the face of strong house price inflation in recent decades will precipitate increased wealth inequality. Policy responses to this inflation have concentrated on regulating home buyers’ access to mortgage credit, which may impede their ability to buy. Therefore, policies are also needed to improve the supply side of housing and make it more responsive to demand.

scholarly journals International Real Estate Review

2017 ◽  
Vol 20 (3) ◽  
pp. 251-286
Author(s):  
Steven C. Bourassa ◽  
◽  
Donald Haurin ◽  
Keyword(s):  
Housing Market ◽  
House Price ◽  
Housing Affordability ◽  
Property Taxes ◽  
Metropolitan Statistical Area ◽  
User Cost ◽  
Price Inflation ◽  
Property Insurance ◽  
Mortgage Interest ◽  
Tax Deductions

This paper outlines an approach to constructing a Dynamic Housing Affordability Index (DHAI) that reflects the anticipated cost of owner-occupied housing and performs well in tracking changes in the demand for homeownership and other aspects of the housing market. Our index is grounded in the user cost theory and influenced by variations in the price of housing, mortgage interest and property tax rates, property insurance, transaction costs, and depreciation and maintenance. It takes into account the benefits from U.S. income tax deductions for mortgage interest and property taxes, and considers the role of expected house price inflation in reducing the cost of housing. We show that the DHAI is correlated with national and regional consumer sentiment which reflects the demand for owner-occupied housing, regional and metropolitan statistical area (MSA) homeownership rates, housing market characteristics including housing starts, and sales of new and existing housing. There is evidence that the DHAI performs better than other popular measures of affordability.

scholarly journals The Increasing Inequality of Wealth in China

2020 ◽  
pp. 109-144
Author(s):  
John Knight ◽  
Shi Li ◽  
Haiyuan Wan
Keyword(s):  
Income Distribution ◽  
Capital Accumulation ◽  
House Price ◽  
Wealth Inequality ◽  
Economic Reforms ◽  
Household Wealth ◽  
Price Inflation ◽  
Using Data

The inequality of wealth in China has increased rapidly in recent years. Prior to 1978 all Chinese households possessed negligible wealth. China therefore presents a fascinating case study of how inequality of household wealth increases with economic reforms, marketization, and capital accumulation. Wealth inequality and its growth are measured and decomposed by using data from the CHIP 2002 and 2013 survey datasets. Techniques for estimating the top tail of the income distribution by using a Pareto approximation are applied to measure the sensitivity of wealth inequality to plausible assumptions about the underrepresentation of the wealthy and underreporting by the wealthy. The rising wealth inequality is explained in terms of the relationships between income and wealth, house price inflation, and differential savings.

scholarly journals The role and significance of planning in the determination of house prices in Australia: Recent policy debates

2021 ◽  
pp. 0308518X2198894
Author(s):  
Peter Phibbs ◽  
Nicole Gurran
Keyword(s):  
Land Use ◽  
Housing Market ◽  
Land Use Planning ◽  
House Prices ◽  
Housing Prices ◽  
House Price ◽  
Evidence Base ◽  
Urban Housing ◽  
Price Inflation ◽  
Depth Analysis

On the world stage, Australian cities have been punching above their weight in global indexes of housing prices, sparking heated debates about the causes of and remedies for, sustained house price inflation. This paper examines the evidence base underpinning such debates, and the policy claims made by key commentators and stakeholders. With reference to the wider context of Australia’s housing market over a 20 year period, as well as an in depth analysis of a research paper by Australia’s central Reserve Bank, we show how economic theories commonly position land use planning as a primary driver of new supply constraints but overlook other explanations for housing market behavior. In doing so, we offer an alternative understanding of urban housing markets and land use planning interventions as a basis for more effective policy intervention in Australian and other world cities.

scholarly journals Housing Prices in Unregulated Markets: Study on Verticalised Dwellings in Santiago de Chile

Buildings ◽  
2019 ◽  
Vol 10 (1) ◽  
pp. 6 ◽  
Author(s):  
José Francisco Vergara-Perucich ◽  
Carlos Aguirre-Nuñez
Keyword(s):  
Housing Market ◽  
Affordable Housing ◽  
Housing Prices ◽  
House Price ◽  
Housing Price ◽  
Housing Affordability ◽  
Price Formation ◽  
Land Values ◽  
Santiago De Chile ◽  
Data Transparency

Chile faces a housing affordability crisis, given that most of the population is unable to secure a house. While housing prices between 2008 and 2019 increased by 63.96%, wages only increased by 21.85%. This article presented an analysis of the housing price configuration for the main borough in the country—Santiago. The assessment focused on verticalised housing constructed between 2015 and 2019. The article developed an exploratory study on the price of housing in Santiago to generate a diagnosis to identify the role played by expectations of profitability when configuring price. Based on the information generated, we sought to contribute to the discussion on public policies that advance the development of affordable housing in central boroughs with high urban value, as is the case for Santiago’s borough of Greater Santiago. We hypothesised that profit expectation of real estate developers plays a key role in the housing prices, and an adjustment in the profit ratios might increase the affordability while keeping the housing market above profitable rates. This research addressed the lack of data transparency in the Chilean housing market with archival research, reconstructing costs and earnings from projects based on official registrations of transactions at the borough level. In Chile, the access to investment costs, land values, yields, and house price formation are not publicly available, even though these factors imply that many households are facing severe difficulties in paying for and accessing decent housing.

scholarly journals Are Private Markets and Filtering a Viable Source of Low-Income Housing? Estimates from a “Repeat Income” Model

2014 ◽  
Vol 104 (2) ◽  
pp. 687-706 ◽  
Author(s):  
Stuart S. Rosenthal
Keyword(s):  
Low Income ◽  
Income Elasticity ◽  
Rental Housing ◽  
House Price ◽  
Price Inflation ◽  
Elasticity Of Demand ◽  
Income Model ◽  
Filtering Rates ◽  
Income Elasticity Of Demand ◽  
Low Income Housing

While filtering has long been considered the primary mechanism by which markets supply low-income housing, direct estimates of that process have been absent. This has contributed to doubts about the viability of markets and to misplaced policy. I fill this gap by estimating a “repeat income” model using 1985–2011 panel data. Real annual filtering rates are faster for rental housing (2.5 percent) than owner-occupied (0.5 percent), vary inversely with the income elasticity of demand and house price inflation, and are sensitive to tenure transitions as homes age. For most locations, filtering is robust which lends support for housing voucher programs. (JEL R21, R31, R38)

The Interpretation of House Price Statistics for the United Kingdom

1981 ◽  
Vol 13 (9) ◽  
pp. 1109-1124 ◽  
Author(s):  
M C Fleming ◽  
J G Nellis
Keyword(s):  
United Kingdom ◽  
Critical Appraisal ◽  
House Prices ◽  
House Price ◽  
Price Inflation ◽  
The United Kingdom ◽  
Price Levels ◽  
Incomplete Coverage ◽  
The Uk

A survey is made of all official and unofficial sources of statistics on house prices in the UK. This is followed by a critical appraisal of the evidence they provide about national and regional price levels and about house price inflation. Attention is focused on two crucial factors: the representativeness of the data and the heterogeneity of houses. It is concluded that incomplete coverage of all house transactions means that most series tend to overstate price levels and that intertemporal and interregional comparisons are sensitive to the composition by type of houses traded.

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