Home Ownership Rates & Affordability - Global Comparisons

Brazilian Institute of Cost Engineering (IBEC)
Publication Type:
Conference Proceeding
Annals 10th ICEC World Congress, 2016, pp. 1089 - 1103
Issue Date:
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Purpose This paper provides a comparative analysis of the rates of home ownership and the affordability of this home ownership around the world. In many countries home ownership has traditionally been a fundamental aspect of their societal fabric and is thus reflected in high rates of home ownership whilst in other countries home ownership is not considered as important with other housing tenure forms more widely used. The varying rates of home ownership amongst countries and the reasons for these differences will be explored. The paper will then examine trends and differences in home ownership affordability in various countries. This will start with an examination of the various methods used to measure housing affordability. These methods can be broadly categorized as Accessibility/Deposit Gap Methods, Housing Costs – Income Ratio Methods, Median Income Multiplier Methods, Residual Income Methods, and Aggregate Economic Indicators/Indexes. It will then explore and compare the main global home ownership affordability measures used around the world.? Research Methodology The research methodology is based on a review of global literature and data on home ownership rates and home ownership affordability measures and a comparative analysis of this literature/data. Findings and Value The research reveals that there are wide differences in home ownership rates and affordability around the world. In many developed countries where home ownership has traditionally been the preferred tenure form, the affordability of owning a home has declined markedly in recent years and is resulting in a generational change of reduced home ownership rates and moves to other tenure forms. For many of these countries, this is causing significant problems as these other tenure forms have not been well developed due to housing policies that have traditionally favoured home ownership. Conversely, the research found that home ownership rates in many developing countries are increasing as these countries experience considerable economic growth and increasing individual wealth providing the enabler for people to move into home ownership. A key finding was the importance of coordinated and strategic long term government housing policies to support these changes. Research Limitations/Implications Research into the link between home ownership, affordability levels and capital gains (profit) derived from home ownership would further compliment this study. In many countries, home ownership provides the main source of personal wealth. Accordingly, affordability issues may be offset, particularly for long term owners, through the financial returns on their home. This aspect was considered beyond the scope of the study as this would have required extensive research and analysis of residential property price movements.
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