IDEAS home Printed from https://ideas.repec.org/p/col/000123/009067.html
   My bibliography  Save this paper

Housing tenure and housing demand in Colombia

Author

Listed:
  • María Angélica Arbeláez

    ()

  • Roberto Steiner

    ()

  • Alejandro Becerra

    ()

  • Daniel Wills

    ()

Abstract

Using the 2003 and 2008 Quality of Life Surveys, we identify the factors that affect housing tenure decisions in Colombia and explore the determinants of the demand for rentals and purchases. Variables affecting the choice between buying and renting include civil status, education, age of the household head, size of the household and whether the household resides in an urban area. Households with higher income are more likely to purchase than to rent and the choice of formal housing is positively associated to wealth. Interestingly, households eligible for social housing subsidies are more likely to purchase than to rent and those working in the informal sector are more likely to purchase informal dwellings. Demand is quite responsive to price changes as well as to changes in the price of rental (its closest substitute). The elasticity to permanent income for both buying and renting is similar to that observed in other developing countries, and is higher for those working in the informal sector. This suggests that subsidies and other interventions aimed at fostering demand should not exclude those holding informal sector jobs. Demand is highly responsive to positive shocks to income, a fact probably associated with credit constraints being binding. Subsidies have a large positive impact on demand. Likewise, access to mortgage credit is an important determinant of demand. Finally, savings have a positive effect on demand in 2008, not in 2003. A plausible explanation is that a policy intervention that began in 2000 -i.e, a tax exemption for households that established savings accounts destined for housing purchases-only had an effect in the upper part of the business cycle. In both cases (i.e. subsidies and credit) the positive effect on demand is entirely explained by demand for social housing. "This paper is part of a cross-country project sponsored by the IADBs Research Network".

Suggested Citation

  • María Angélica Arbeláez & Roberto Steiner & Alejandro Becerra & Daniel Wills, 2011. "Housing tenure and housing demand in Colombia," Working Papers Series. Documentos de Trabajo 009067, Fedesarrollo.
  • Handle: RePEc:col:000123:009067
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/11445/241
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Malpezzi, Stephen, 1999. "Economic analysis of housing markets in developing and transition economies," Handbook of Regional and Urban Economics, in: P. C. Cheshire & E. S. Mills (ed.), Handbook of Regional and Urban Economics, edition 1, volume 3, chapter 44, pages 1791-1864, Elsevier.
    2. Jacobs, Michael & Savedoff, William D., 2011. "There's More Than One Way to Get a House: Housing Strategies in Panama," IDB Publications (Working Papers) 1890, Inter-American Development Bank.
    3. Andrés Murcia Pabón, 2007. "Determinantes del acceso al crédito de los hogares colombianos," Revista ESPE - Ensayos sobre Política Económica, Banco de la Republica de Colombia, vol. 25(55), pages 40-83, December.
    4. Goodman, Allen C., 1988. "An econometric model of housing price, permanent income, tenure choice, and housing demand," Journal of Urban Economics, Elsevier, vol. 23(3), pages 327-353, May.
    5. Sergio Clavijo & Michel Janna & Santiago Munoz, 2005. "The Housing Market in Colombia: Socioeconomic and Financial Determinants," Research Department Publications 4389, Inter-American Development Bank, Research Department.
    6. Michael Jacobs & William D. Savedoff, 1999. "There's More Than One Way to Get a House: Housing Strategies in Panama," IDB Publications (Working Papers) 6811, Inter-American Development Bank.
    7. Koizumi, Naoru & McCann, Philip, 2006. "Living on a plot of land as a tenure choice: The case of Panama," Journal of Housing Economics, Elsevier, vol. 15(4), pages 349-371, December.
    8. Chou, W L & Shih, Y C, 1995. "Hong Kong Housing Markets: Overview, Tenure Choice, and Housing Demand," The Journal of Real Estate Finance and Economics, Springer, vol. 10(1), pages 7-21, January.
    9. Rosen, Harvey S., 1979. "Housing decisions and the U.S. income tax : An econometric analysis," Journal of Public Economics, Elsevier, vol. 11(1), pages 1-23, February.
    10. Ricardo Rocha & Fabio Sánchez Torres & Jorge Tovar, 2007. "Informalidad del mercado de crédito para la vivienda de interés social," Documentos CEDE 003883, Universidad de los Andes - CEDE.
    11. Ermisch, J. F. & Findlay, J. & Gibb, K., 1996. "The Price Elasticity of Housing Demand in Britain: Issues of Sample Selection," Journal of Housing Economics, Elsevier, vol. 5(1), pages 64-86, March.
    12. Follain, James & Lim, Gill-Chin & Renaud, Bertrand, 1980. "The demand for housing in developing countries: The case of Korea," Journal of Urban Economics, Elsevier, vol. 7(3), pages 315-336, May.
    13. Samuel Jaramillo, 2004. "Precios Inmobiliarios En El Mercado De Vivienda En Bogotã 1970-2004," Documentos CEDE 003363, Universidad de los Andes - CEDE.
    14. Michael Jacobs & William D. Savedoff, 1999. "There's More Than One Way to Get a House: Housing Strategies in Panama," Research Department Publications 4156, Inter-American Development Bank, Research Department.
    15. Stanislav Kolenikov & Gustavo Angeles, 2009. "Socioeconomic Status Measurement With Discrete Proxy Variables: Is Principal Component Analysis A Reliable Answer?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 55(1), pages 128-165, March.
    16. Fontenla, Matas & Gonzalez, Fidel, 2009. "Housing demand in Mexico," Journal of Housing Economics, Elsevier, vol. 18(1), pages 1-12, March.
    17. repec:idb:brikps:79340 is not listed on IDEAS
    18. Clavijo, Sergio & Janna, Michel & Muñoz, Santiago, 2011. "The Housing Market in Colombia: Socioeconomic and Financial Determinants," IDB Publications (Working Papers) 1548, Inter-American Development Bank.
    19. Miguel A. Kiguel & Eduardo Levy Yeyati & Arturo Galindo & Ugo Panizza & Margaret Miller & Liliana Rojas-Suárez & Ricardo N. Bebczuk & Florencio López-de-Silanes & Olver Bernal & Paula Auerbach & Alber, 2005. "Unlocking Credit: The Quest for Deep and Stable Bank Lending," IDB Publications (Books), Inter-American Development Bank, number 79340, February.
    20. Gillingham, Robert & Hagemann, Robert, 1983. "Cross-sectional estimation of a simultaneous model of tenure choice and housing services demand," Journal of Urban Economics, Elsevier, vol. 14(1), pages 16-39, July.
    21. Kiguel, Miguel A. & Levy Yeyati, Eduardo & Galindo, Arturo & Panizza, Ugo & Miller, Margaret & Rojas-Suárez, Liliana & Bebczuk, Ricardo N. & López-de-Silanes, Florencio & Bernal, Olver & Auerbach, Pau, 2018. "Unlocking Credit: The Quest for Deep and Stable Bank Lending," IDB Publications (Books), Inter-American Development Bank, number 416, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Depetris-Chauvin, Emilio & Santos, Rafael J., 2018. "Unexpected guests: The impact of internal displacement inflows on rental prices in Colombian host cities," Journal of Development Economics, Elsevier, vol. 134(C), pages 289-309.
    2. Juan Carlos Rodríguez Marín & Pedro Delgado Jaimes & Taide Botello Velasco, 2017. "Determinantes del precio de la vivienda en Bucaramanga," Revista Equidad y Desarrollo, Universidad de la Salle, issue 30, pages 39-59, December.
    3. Luis Galvis & Bladimir Carrillo, 2013. "Índice de precios espacial para la vivienda urbana en Colombia: una aplicación con métodos de emparejamiento," Revista de Economía del Rosario, Universidad del Rosario, June.
    4. Natalia Salazar & Roberto Steiner & Alejandro Becerra & Jaime Ramírez, 2013. "Los efectos del precio del suelo sobre el precio de la vivienda para Colombia," Revista ESPE - Ensayos Sobre Política Económica, Banco de la República - ESPE, vol. 31(70), pages 18-66, July.
    5. Jessica Castaño & Mariana Laverde & Miguel Ángel Morales Mosquera & Ana María Yaruro, 2013. "Índice de Precios de la Vivienda Nueva para Bogotá: Metodología de Precios Hedónicos," Temas de Estabilidad Financiera 078, Banco de la Republica de Colombia.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Arbeláez, María Angélica & Camacho, Carolina & Fajardo, Johanna, 2011. "Low-Income Housing Finance in Colombia," IDB Publications (Working Papers) 3427, Inter-American Development Bank.
    2. Dusansky, Richard & Koc, Cagatay, 2007. "The capital gains effect in the demand for housing," Journal of Urban Economics, Elsevier, vol. 61(2), pages 287-298, March.
    3. Fontenla, Matas & Gonzalez, Fidel, 2009. "Housing demand in Mexico," Journal of Housing Economics, Elsevier, vol. 18(1), pages 1-12, March.
    4. Barrios García, Javier A. & Rodríguez Hernández, José E., 2008. "Housing demand in Spain according to dwelling type: Microeconometric evidence," Regional Science and Urban Economics, Elsevier, vol. 38(4), pages 363-377, July.
    5. Carol Rapaport, 1996. "Housing demand and community choice: an empirical analysis," Staff Reports 16, Federal Reserve Bank of New York.
    6. Hansen, Julia L. & Formby, John P. & Smith, W. James, 1998. "Estimating the Income Elasticity of Demand for Housing: A Comparison of Traditional and Lorenz-Concentration Curve Methodologies," Journal of Housing Economics, Elsevier, vol. 7(4), pages 328-342, December.
    7. Maria da Piedade Morais & Bruno de Oliveir Cruz, 2007. "Demanda Habitacional, Escolha Das Condições De Ocupação Da Moradia E Política Habitacional No Brasil," LARES lares_2007_t065-morais_cr, Latin American Real Estate Society (LARES).
    8. Rapaport, Carol, 1997. "Housing Demand and Community Choice: An Empirical Analysis," Journal of Urban Economics, Elsevier, vol. 42(2), pages 243-260, September.
    9. Edwin Van Gameren & Michiel Ras & Evelien Eggink & Ingrid Ooms, 2005. "The demand for housing services in the Netherlands," ERSA conference papers ersa05p327, European Regional Science Association.
    10. Chien-Wen Peng & Jerry T. Yang & Tyler T. Yang, 2020. "Determinant of Allocation of Housing Inventory: Competition between Households and Investors," International Real Estate Review, Global Social Science Institute, vol. 23(3), pages 963-991.
    11. Rappaport, Jordan, 2008. "Consumption amenities and city population density," Regional Science and Urban Economics, Elsevier, vol. 38(6), pages 533-552, November.
    12. M. Colom & M. Molés, 2013. "Housing and labor decisions of households," Review of Economics of the Household, Springer, vol. 11(1), pages 55-82, March.
    13. David Albouy, 2009. "The Unequal Geographic Burden of Federal Taxation," Journal of Political Economy, University of Chicago Press, vol. 117(4), pages 635-667, August.
    14. Hussain Mohammed A. Al Obaid, 2020. "Factors Determining Housing Demand in Saudi Arabia," International Journal of Economics and Financial Issues, Econjournals, vol. 10(5), pages 150-157.
    15. Jonathan Halket & Lars Nesheim & Florian Oswald, 2020. "The Housing Stock, Housing Prices, And User Costs: The Roles Of Location, Structure, And Unobserved Quality," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 61(4), pages 1777-1814, November.
    16. Zabel, Jeffrey E., 2004. "The demand for housing services," Journal of Housing Economics, Elsevier, vol. 13(1), pages 16-35, March.
    17. Jordan Rappaport, 2006. "Consumption amenities and city crowdedness," Research Working Paper RWP 06-10, Federal Reserve Bank of Kansas City.
    18. David Albouy, 2008. "Are Big Cities Bad Places to Live? Estimating Quality of Life across Metropolitan Areas," NBER Working Papers 14472, National Bureau of Economic Research, Inc.
    19. James K. Hammitt & Eric S. Belsky & Jonathan I. Levy & John D. Graham, 1999. "Residential Building Codes, Affordability, and Health Protection: A Risk‐Tradeoff Approach," Risk Analysis, John Wiley & Sons, vol. 19(6), pages 1037-1058, December.
    20. Natalia Garabato & Magdalena Ramada-Sarasola, 2011. "Housing Markets in Uruguay: Determinants of Housing Demand and its Interaction with Public Policies," Research Department Publications 4737, Inter-American Development Bank, Research Department.

    More about this item

    Keywords

    Housing demand; tenure choices; housing market policies; Colombia.;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R28 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Government Policy
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy
    • R5 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:col:000123:009067. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Lucía Fenney Pérez). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.