Housing Affordability: A New Dataset

By Nina Biljanovska, Chenxu Fu, Deniz O Igan

December 1, 2023

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Nina Biljanovska, Chenxu Fu, and Deniz O Igan. Housing Affordability: A New Dataset, (USA: International Monetary Fund, 2023) accessed November 7, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

The rapid increase in house prices in the past few years, including during the COVID-19 pandemic, raises concerns about housing affordability. The price-to-income ratio is a widely-used indicator of affordability, but does not take into account important factors such as the cost of financing. The aim of this paper is to construct a measure of housing affordability that takes these factors into account for a large set of countries and long period of time. The resulting dataset covers an unbalanced panel of 40 countries over the period from 1970Q1 to 2021Q4. For each country, the index measures the extent to which a median-income household can qualify for a mortgage loan to purchase an average-priced home. To gauge the performance of the constructed indices, we compare them to other readily-available mesures of affordability and examine the evolution of the indices over time to understand the relevant drivers, including in a regression analysis to assess the extent to which government housing programs could contribute to improving affordability.

Subject: Expenditure, Financial institutions, Housing, Housing prices, Income, Mortgages, National accounts, Prices

Keywords: Affordability index, Baltics, Eastern Europe, Global, Government housing program, Household income, Housing, Housing affordability, Housing prices, Income, Indices in selected country, Mortgages, Real estate markets

Publication Details

Pages:

36
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2023/247
Stock No:

WPIEA2023247
ISBN:

9798400259746
ISSN:

1018-5941

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