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Affordability

Area: Design, planning and building

Affordability is defined as the state of being cheap enough for people to be able to buy (Combley, 2011). Applied to housing, affordability, housing unaffordability and the mounting housing affordability crisis, are concepts that have come to the fore, especially in the contexts of free-market economies and housing systems led by private initiatives, due to the spiralling house prices that residents of major urban agglomerations across the world have experienced in recent years (Galster & Ok Lee, 2021). Notwithstanding, the seeming simplicity of the concept, the definition of housing affordability can vary depending on the context and approach to the issue, rendering its applicability in practice difficult. Likewise, its measurement implies a multidimensional and multi-disciplinary lens (Haffner & Hulse, 2021).

One definition widely referred to of housing affordability is the one provided by Maclennan and Williams (1990, p.9): “‘Affordability’ is concerned with securing some given standard of housing (or different standards) at a price or a rent which does not impose, in the eyes of some third party (usually government) an unreasonable burden on household incomes”. Hence, the maximum expenditure a household should pay for housing is no more than 30% of its income (Paris, 2006). Otherwise, housing is deemed unaffordable. This measure of affordability reduces a complex issue to a simple calculation of the rent-to-income ratio or house-price-to-income ratio. In reality, a plethora of variables can affect affordability and should be considered when assessing it holistically, especially when judging what is acceptable or not in the context of specific individual and societal norms (see Haffner & Hulse, 2021; Hancock, 1993). Other approaches to measure housing affordability consider how much ‘non-housing’ expenditures are unattended after paying for housing. Whether this residual income is not sufficient to adequately cover other household’s needs, then there is an affordability problem (Stone, 2006). These approaches also distinguish between “purchase affordability” (the ability to borrow funds to purchase a house) and “repayment affordability” (the ability to afford housing finance repayments) (Bieri, 2014).

Furthermore, housing production and, ultimately affordability, rely upon demand and supply factors that affect both the developers and home buyers. On the supply side, aspects such as the cost of land, high construction costs, stiff land-use regulations, and zoning codes have a crucial role in determining the ultimate price of housing (Paris, 2006). Likewise, on the policy side, insufficient government subsidies and lengthy approval processes may deter smaller developers from embarking on new projects. On the other hand, the demand for affordable housing keeps increasing alongside the prices, which remain high, as a consequence of the, sometimes deliberate incapacity of the construction

 sector to meet the consumers' needs (Halligan, 2021). Similarly, the difficulty of decreasing household expenditures while increasing incomes exacerbates the unaffordability of housing (Anacker, 2019). In the end, as more recent scholarship has pointed out (see Haffner & Hulse, 2021; Mulliner & Maliene, 2014), the issue of housing affordability has complex implications that go beyond the purely economic or financial ones. The authors argue that it has a direct impact on the quality of life and well-being of the affected and their relationship with the city, and thus, it requires a multidimensional assessment. Urban and spatial inequalities in the access to city services and resources, gentrification, segregation, fuel and commuting poverty, and suburbanisation are amongst its most notorious consequences.

Brysch and Czischke, for example, found through a comparative analysis of 16 collaborative housing projects in Europe that affordability was increased by “strategic design decisions and self-organised activities aiming to reduce building costs” (2021, p.18). This demonstrates that there is a great potential for design and urban planning tools and mechanisms to contribute to the generation of innovative solutions to enable housing affordability considering all the dimensions involved, i.e., spatial, urban, social and economic. Examples range from public-private partnerships, new materials and building techniques, alternative housing schemes and tenure models (e.g., cohousing, housing cooperatives, Community Land Trusts, ‘Baugruppen’), to efficient interior design, (e.g., flexible design, design by layers[1]). Considering affordability from a design point of view can activate different levers to catalyse and bring forward housing solutions for cities; and stakeholders such as socially engaged real estate developers, policymakers, and municipal authorities have a decisive stake in creating an adequate environment for fostering, producing and delivering sustainable and affordable housing.

 

[1] (see Brand, 1995; Schneider & Till, 2007)

References

Anacker, K. B. (2019). Introduction: housing affordability and affordable housing. International Journal of Housing Policy, 19(1), 1–16. https://doi.org/10.1080/19491247.2018.1560544

Bieri, D.S. (2014). Housing Affordability. Encyclopedia of Quality of Life and Well-Being Research, pp.2971–2975.

Brand, S. (1995). How buildings learn: What happens after they’re built. Penguin.

Brysch, S. L., & Czischke, D. (2021). Affordability through design: the role of building costs in collaborative housing. Housing Studies. https://doi.org/10.1080/02673037.2021.2009778

Galster, G., & Ok Lee, K. (2021). Introduction to the special issue of the Global crisis in housing affordability. International Journal of Urban Sciences, 25(S1), 1–6. https://doi.org/10.1080/12265934.2020.1847433

Habitat for Humanity. (2019). What is housing affordability? [online] Available at: https://www.habitat.org/costofhome/what-is-housing-affordability [Accessed 14 Jul. 2021].

Haffner, M. E. A., & Hulse, K. (2021). A fresh look at contemporary perspectives on urban housing affordability. International Journal of Urban Sciences, 25(S1), 59–79. https://doi.org/10.1080/12265934.2019.1687320

Halligan, L. (2021). Home Truths: The UK’s chronic housing shortage – how it happened, why it matters and the way to solve it. Biteback Publishing.

Hancock, K. E. (1993). “Can Pay? Won’t Pay?” or Economic Principles of “Affordability.” Urban Studies, 30(1), 127–145. http://www.jstor.org/stable/43195877

Maclennan, D., & Williams, R. (1990). Affordable housing in Britain and the United States. York: Joseph Rowntree Foundation.

Mulliner, E., & Maliene, V. (2015). An Analysis of Professional Perceptions of Criteria  Contributing to Sustainable Housing Affordability. Sustainability, 7(1), 248–270. https://doi.org/10.3390/SU7010248

Paris, C. (2006). International Perspectives on Planning and Affordable Housing. Housing Studies, 22(1), 1–9. https://doi.org/10.1080/02673030601024531

Schneider, T., & Till, J. (2007). Flexible housing. Architectural press.

Sidewalk Labs, 2019. 6: Affordability by Design. [podcast] City of the Future. Available at: https://cityofthefuture.libsyn.com/6-affordability-by-design [Accessed 14 July 2021].

Stone, M. E. (2006). A Housing Affordability Standard for the UK. Housing Studies, 21(4), 453–476. https://doi.org/10.1080/02673030600708886

Created on 03-06-2022 | Update on 03-07-2022

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