MODELLING AFFORDABILITY IN HOUSING MARKETS
||Mccord, Michael; Mcgreal, Stanley; Berry, Jim
||MODELLING AFFORDABILITY IN HOUSING MARKETS
||17th Annual European Real Estate Society Conference in Milan, Italy
||Recent euphoria surrounding housing markets has aroused a vast outpouring of learned and popular literature. The boom and bust cycle which characterised housing markets in most advanced economies over the last decade has had a profound and significant effect on the operational mechanics of housing provision. Indeed, this evident dysfunctionality within housing systems has resulted in affordability issues surfacing as a fundamental intrametropolitan issue. Affordability materialises in many forms and guises, fuelling the debate of how to best conceptualise and measure housing affordability. Accelerating house prices nurtured the affordability debate during the boom years, however, in more recent times, the events of the sub prime mortgage market and subsequent subsidence in the housing market has dominated affordability concerns. Indeed, this malignant financial environment has emerged as the primary barrier, deteriorating affordability for those on lower incomes or in marginalised positions. This paper examines the salient drivers which serve to contextualise the disequilibrium within the residential housing market in Northern Ireland. It further proceeds to conceptualise and measure affordability. In order to achieve this, the paper presents a hierarchical framework which disseminates the indicators identified as most important for modelling affordability. The paper applies a Delphi-based methodological paradigm to rank salient indicators identified in the framework, using an eclectic range of key property market experts. An upper quartile method is subsequently applied culminating in the production of a leading catalogue of indicators specific to affordability. Indeed, this composite approach is employed as it captures a host of demand and supply side variables and offers an enhanced analytical platform for modelling affordability than other traditional ratio techniques. The upper quartile set of indicators are applied at the Northern Ireland level using regional and national data-sets which are firstly analysed for key trends, and secondly analysed using correlation analysis to capture the synergies residing between the indicators. Indeed, this in an attempt to drill down and distill the associated relationships and movement of the significant indicators of affordability. Principal component analysis is applied to establish whether the indicators can be reduced down to an underlying dimension of affordability. From this, the extracted components serve as predictors in a multiple regression analysis, which culminates in the formulation of a weighted affordability index for the Northern Ireland jurisdiction. Conclusions are then drawn, which advocate for a reform in monetary and housing policy and discourse.
||AFFORDABILITYHOUSING MARKETMORTGAGE FINANCEFIRST TIME BUYERSHOUSE PRICE
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