An Analysis Of Factors That Affect Housing Affordability In Developing, Emerging And Developed Countries

Research in housing affordability is increasing worldwide. Housing affordability is viewed as severe housing problem which affect household’s ability to meet housing costs without imposing excessive constraints on non-housing consumption. Housing affordability problem has become acute in a large number of housing markets across the nations. Housing expenditures have caused many households, both renters and owner-occupants, to reduce their expenditures for food, clothing, health care, education, and other human capital investments. The disparity between housing expenditures and income has led some households to incur additional debt to pay for essential housing expenses and it is quite troubling when housing costs reduce non- housing consumption to a level lower than the minimum subsistence level, as widely accepted. This paper seeks to analyse the factors affecting housing affordability in developed, emerging and developing countries. Thirteen (13) journals papers on housing affordability and finance are reviewed to provides an overview of the factors affecting housing affordability.The findings reveal that there are three major factors affecting housing affordability including household attributes 57%, housing attributes 10% and macroeconomic variables 33%. Each major factor consists of several individual elements with different scores and weights. Household attributes consisting of income scoring 62%, household size 62%, age 62%, occupation 54%, stage in life cycle 46% and migration status scoring 15%. Housing attributes consisting of location 8%, house type 23%, quality of house 8%, cost of land 8% and size of house 8%. Macroeconomic variables consisting of mortgage rates scored 62%, subsidies 54%, inflation rate 38%. This suggest that households attribute (57%) is the most important major factor while income 62%, age 62%, household size 62% and mortgage rates 62% are important individual elements.This paper contributes to housing affordability debates by generating knowledge on important factors affecting housing affordability and influence policy changes in housing and macroeconomic policies.