International Journal of Housing Markets and Analysis

Christine Whitehead; Sarah Monk

2011 International Journal of Housing Markets and Analysis

doi: 10.1108/17538271111172139

Purpose – The purpose of this paper is to explore the role of affordable home ownership in the light of the recent global financial crisis. Design/methodology/approach – The paper draws on recent research conducted by the authors and others which included analysis of secondary data and policy documents and interviews with key stakeholders including housing associations and developers. The theoretical scope of the paper is outlined in the first section which looks at the principles behind the two main approaches to providing affordable home ownership: shared equity and shared ownership. Given continuing aspirations on the part of most households in England to become home owners, the key comparison is with the attributes of full ownership. Findings – The paper finds that the main products share many of the attributes of full home ownership while remaining more affordable. The economic situation post‐2007 made both shared ownership and shared equity more difficult. The crisis and its aftermath also suggest that there is a need to develop a more robust and longer term market in equity sharing. This could be of real significance into the longer term, especially if the availability of mortgage finance remains constrained for many years to come. The paper concludes that in the longer term, developing a range of partial tenures which provide most of the benefits of owner‐occupation but which reduce risks to individual households and improve affordability in the early years is a desirable strategy. Practical implications – There are clear implications for policy makers in other countries, notably the benefits from developing an intermediate tenure market which includes institutional equity and risk taking rather than continued large‐scale reliance on debt finance. Originality/value – Given stated governmental ambitions to meet housing aspirations, this paper clarifies how it is possible to meet an identified need for affordable home ownership products to fill the growing “gap” between first‐time buyers who can purchase with parental help and those who have no means of achieving home ownership, even though they have the income to support such a choice.

Colin Jones; Craig Watkins; David Watkins

2011 International Journal of Housing Markets and Analysis

doi: 10.1108/17538271111172148

Purpose – The purpose of this paper is to address both the measurement of affordability and variations in affordability between local housing market areas (HMAs). Design/methodology/approach – The practical data issues that arise from measuring local affordability are reviewed by reference to studies in the UK. The paper argues that local measures should relate to a functional geography of HMAs rather than simply local authority boundaries. This approach is shown to be more theoretically sound but faces data constraints. An empirical case study of the North West of England then follows as a demonstration based on a tiered geography of HMAs. It addresses the constraints on local income data by measuring affordability by reference to a particular household type and associated income. Findings – Local UK affordability indicators are shown to be primarily about access to home ownership rather than a wider view of local house price structures on affordability. The paper also draws out the importance of affordability measures linked to functional market areas. The results of the analysis presented highlight that there are local differences in house price structures and hence associated differential affordability of house types between local HMAs. Originality/value – This is the first study that examines affordability at the local level based on functional areas rather than local authority administrative boundaries. This approach gives a truer picture of the variability in local affordability. The applied analysis tackles the data constraints of functional areas and has the potential to be adapted and extended.

Kenneth Gibb

2011 International Journal of Housing Markets and Analysis

doi: 10.1108/17538271111172157

Purpose – The purpose of this paper is to assess new and often innovative models that aim to fund and deliver affordable housing in Scotland within a context of fiscal crisis. These models and their setting have implications for other countries with limited funds to support their housing systems. Design/methodology/approach – This paper is a policy analysis, drawing on ideas from public policy and applied economics. It derives a set of criteria with which to provide an interim assessment of both key proposals and the policy programme as a whole. Findings – The new models and the government's approach are pragmatic and have elements of genuine innovation. Other elements are only aspirations at this point and considerable uncertainties remain. The new environment will be difficult for housing associations but also in terms of wider knock‐on effects between the market‐rented sector and intermediate housing. Major concerns remain about rent levels and there is a lack of clarity about government's long‐term objectives for social housing. Originality/value – The paper provides a first critical overview and initial assessment of radical new policies for affordable housing in Scotland. The paper's subject matter is of direct relevance to all national housing systems confronting shortages of public resources, a demonstrable need for more affordable housing, and also those contemplating radical reform to tried and tested funding and delivery models.

Luisa Ingaramo; Stefania Sabatino

2011 International Journal of Housing Markets and Analysis

doi: 10.1108/17538271111172166

Purpose – In light of growing concerns on the scale of the housing affordability problem in Italy, and of the government's response in the form of a new Housing Plan, the purpose of this paper is to ask whether such new policy is a coherent and adequate strategy to address the alleged housing problems. In order to answer this core question, the paper first discusses whether Italy is indeed facing an affordability problem; it then analyses the evolving housing policy and the emerging solutions for its implementation to identify its core innovative features. Design/methodology/approach – This paper highlights the emerging role of social housing in Italy by presenting secondary evidence of the performance of real estate markets and of the demand for rented housing for 12 Italian metropolitan areas. The paper focuses on renters in an intermediate income bracket, which represents a core emerging social housing target group. Relying on existing evidence and international literature, the paper then discusses the implications of the new legislative framework for the delivery of social housing in Italy, with a focus on discussing the system of local real estate ethical funds, setting it against the evolving European context. Findings – The recently introduced changes to the delivery and funding model in the Italian social housing system offer an opportunity to overcome the traditional Italian approach to social housing. First, the new model serves a new target group to avoid it drifting into relative poverty, and second it allows new subjects, and primarily banking foundations, to actively pursue an ethical return on their investment in new housing. The complexity of the local real estate ethical funds, however, constitutes a source of risk in the new delivery model, and the short time for which existing funds have been operational only leaves room for some preliminary considerations. Nonetheless, the analysis conducted in this paper indicates the core areas that will need to be monitored in the medium to long term to ensure a meaningful understanding of the implications of the Plan. Research limitations/implications – A conclusive assessment of the Housing Plan and its impacts on the Italian economy requires a longer timeframe. Originality/value – The paper offers an insight in the Italian rented housing market, with a focus on large metropolitan areas. It presents a review of evidence of housing affordability problems facing midium‐ to low‐income groups, and therefore adds to growing body of social housing international literature. It also provides a review of the emerging system of local real estate ethical funds, and therefore useful reference for national and international social housing and real estate funds practitioners and researchers.

Michael McCord; Stanley McGreal; Jim Berry; Martin Haran; Peadar Davis

2011 International Journal of Housing Markets and Analysis

doi: 10.1108/17538271111172175

Purpose – The downturn in the residential housing market in Northern Ireland (NI) has been the most pronounced of any UK region, with house prices contracting circa 40 per cent between 2007Q3 and 2009Q4. The downturn at first glance appears to have increased the “ability to afford” however this is nonetheless a “false dawn”. Significant deposit levels coupled with a more prudent lending culture has ensured that housing affordability remains a primary policy concern. The purpose of this paper is to empirically analyse the interrelationships between mortgage liquidity and housing affordability in NI during the boom‐bust cycle in the residential property market. Design/methodology/approach – The paper analyses mortgage‐lending statistics for NI in the period 1993‐2009, using time series panel data. House price data are drawn from the University of Ulster House Price Index over the same time series. To facilitate analytical interpretation and outcome analysis, quantitative evaluation is applied within a first‐time buyer (FTB) affordability framework. Findings – This study finds that the relationship between mortgage finance and affordability has been driven by deregulation of the mortgage market contributing to the rise in house prices and affordability pressures during the market up cycle. More recently, ongoing liquidity constraints within the financial sector are impairing recovery in the residential property market culminating in heightened concerns of both purchase and “deposit gap” affordability. The key findings suggest that the new significant capital requirement needed to access the housing market will inevitably prolong affordability pressures for the foreseeable future. Originality/value – This paper contributes to affordability debate in two ways. First, it examines the effect of both liberalised and contracted patterns of mortgage finance on affordability and argues that conventional approaches appear to present a “false dawn” for FTBs in NI. Second, the paper demonstrates that affordability post‐financial crisis has shifted in genre towards a purchase and deposit gap (lag time) issue.

Anna Clarke; Sarah Monk

2011 International Journal of Housing Markets and Analysis

doi: 10.1108/17538271111172184

Purpose – The purpose of this paper is to present new evidence on the reasons for and consequences of residualisation of the social rented sector in the UK. Design/methodology/approach – The paper uses a new analysis of data from the 2001 Census at a small spatial scale (lower level super output areas) to produce estimates of the proportion of social housing in each area. The second piece of evidence is an analysis of who enters and leaves the social sector in England, drawing on survey data and an exit survey of tenants leaving social housing which asked their reasons for moving. The survey included people not normally captured by the main household surveys because they do not remain a reference person. Findings – The analysis shows that very few places are still dominated by social renting. It suggests that in so far as the sector is becoming more residualised, this is caused by the differing profiles of those moving into and out of social housing. Research limitations/implications – While the small numbers in the exit survey mean that it is not statistically significant, it nevertheless suggests that leaving the social sector is largely a result of positive choices, whereas entering social housing is much more the result of constrained choices. Social implications – The paper concludes that it is poverty rather than tenure residualisation that needs to be addressed. Originality/value – This paper presents two new pieces of evidence that together contribute to the residualisation debate in the UK and more widely in countries with a shrinking or small social rented sector.