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Towards a More Nuanced Approach to Measuring Housing Affordability: Evidence from Pakistan

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dc.contributor.authorLynch, Catherine
dc.contributor.authorSingh, Ashna
dc.contributor.authorZhang, Yan F.
dc.date.accessioned2023-05-24T14:46:49Z
dc.date.available2023-05-24T14:46:49Z
dc.date.issued2023-05-24
dc.description.abstractThe 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.en
dc.identifierhttp://documents.worldbank.org/curated/en/099752305222329176/IDU0b84da3cc0e83b046d5097890a3a1fdba8845
dc.identifier.doi10.1596/1813-9450-10450
dc.identifier.urihttps://openknowledge.worldbank.org/handle/10986/39837
dc.languageEnglish
dc.language.isoen
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Papers; 10450
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttps://creativecommons.org/licenses/by/3.0/igo/
dc.subjectHOUSING
dc.subjectAFFORDABLE HOUSING
dc.subjectHOUSING FINANCE
dc.subjectHOUSING MORTGAGE
dc.subjectHOUSING SUBSIDIES
dc.subjectRESIDENTIAL INCOME MODEL
dc.titleTowards a More Nuanced Approach to Measuring Housing Affordabilityen
dc.title.subtitleEvidence from Pakistanen
dc.typeWorking Paper
dspace.entity.typePublication
okr.crossref.titleTowards a More Nuanced Approach to Measuring Housing Affordability: Evidence from Pakistan
okr.date.disclosure2023-05-22
okr.date.lastmodified2023-05-22T00:00:00Zen
okr.doctypePolicy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/099752305222329176/IDU0b84da3cc0e83b046d5097890a3a1fdba8845
okr.guid099752305222329176
okr.identifier.docmidIDU-b84da3cc-e83b-46d5-9789-a3a1fdba8845
okr.identifier.doi10.1596/1813-9450-10450
okr.identifier.doihttp://dx.doi.org/10.1596/1813-9450-10450
okr.identifier.externaldocumentum34066431
okr.identifier.internaldocumentum34066431
okr.identifier.reportWPS10450
okr.import.id752
okr.importedtrueen
okr.language.supporteden
okr.pdfurlhttp://documents.worldbank.org/curated/en/099752305222329176/pdf/IDU0b84da3cc0e83b046d5097890a3a1fdba8845.pdfen
okr.region.countryPakistan
okr.topicFinance and Financial Sector Development::Housing Finance
okr.topicUrban Development::Urban Housing
okr.topicUrban Development::Municipal Housing and Land
okr.topicCommunities and Human Settlements::Urban Housing and Land Settlements
okr.topicFinance and Financial Sector Development::Access to Finance
okr.unitUrban DRM AFR 2 (SAWU1)
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