Portion Two Housing Statistics and Housing Market.ppt

Ethiopian Civil Service University
College of Urban Development & Engineering
Housing Statistics and Housing Market
By : Goitom Abraha Baraki(PhD)
Portion Two

Contents to be Covered in the session
 Housing Preference
 Housing Statistics
 Housing Indicators
 Housing Market

Housing Preference
 The issue of housing choice and preferences has been and still is
the subject of much academic attention from researchers in many
different disciplines.
 Housing preference studies have been used to help researchers and
developers understand the current trends in housing and predict
market changes for the near future.
 Housing Preference is concept used to understand consumers’
behaviors; related to housing choice.
 Housing preferences can be defined as the expression of the
quantity and quality of housing features that residents would like to
have.
 Under the political economy analysis is that households have a
certain perception of quality housing and their preferences.

Housing Preference…Cont’d
 More often, individuals associate quality housing to the regular
“brick-and-mortar” housing structure.
 But, there are a number of elements required for a sense of “home”
that are inherent in this sense of well being and which go beyond
bricks and mortar. These elements of home reflect our need for
security, safety, privacy, quality of space, connectedness and
affordability.
 To develop a housing unit that satisfies its residents, it is important
to understand characteristics of existing and prospective residents.
 It includes some demographic and socioeconomic characteristics of
the households.
 Maintain that housing preference studies are important because
attainment of a person’s housing preferences is related to his/her
perception of quality of life.

 The individual or societal preferences of home ownership, also
influence government policies a steady increase in the home
ownership rate.
 People may choose to rent for reasons and the rental housing market
could be housing option for people looking for affordability and
flexibility.
 A housing preference study is a consumer-oriented approach to
understanding the housing situation from the consumers’ view as
compared to other market-oriented approaches which focus on the
investigation of physical features and the condition of housing.
 Past housing preference studies have identified several concepts
influencing housing choice and these include housing values,
economic status, cultural norms, stages in the family life cycle, and
housing needs.

 The influence of housing norms and personal characteristics on
housing preferences an be investigated by asking respondents to
indicate the first and second most preferred housing situation from a
list of possible choices.
 A family is continuously evaluating and changing its housing situation
to improve housing satisfaction.
 In the case of home owners, this change includes replacing old
components and altering the house, such as remodeling.
 However, rental housing residents are not allowed to alter their
house.
 This long-standing cultural preference fuels the growth of both
formal and informal housing areas.
 Long-standing cultural preferences for freestanding homes and the
lack of formal high-density housing developments have accelerated
urban sprawl patterns and the growth of informal settlements across
many countries.

 By understanding characteristics of residents in the current housing
market, it will become easier to determine the characteristics of
future residents.
 The demographic and socioeconomic characteristics of the
households include sex, age, marital status, educational status,
household size, income and others.
 Cost and location are the major reason residents chose their current
home, and nice surroundings and convenience are top in their
housing preferences.
 New services to facilitate housing condition emerged and preferences
changed over time.The upgraded interior design features that are
expected in single-family and multifamily housing have been popular
in the housing market in the recent past.
 Therefore, housing preferences are dictated by personal taste,
culture, income, education and many other factors .

 There are a number of housing residents’ preferences. For example
the top ten amenities that are favored by residents’ of high income
households are:
 (1) indoor and outdoor sport court ;
 (2) clubhouse;
 (3) media/movie room;
 (4) business center and conference room;
 (5) custom home features;
 (6)concierge/social services director;
 (7) fitness center;
 (8) resort-style swimming pool;
 (9) covered parking; and
 (10) landscaping.

Housing Statistics
 Evidence-based decision-making is a universally recognized
paradigm of efficient housing management of economic and social
affairs and of overall effective governing of societies today.
 A housing statistics is the total process of collecting, compiling,
evaluating, analyzing and publishing or disseminating statistical data
pertaining, at a specified time, to all living quarters and occupants.
 The survey included a wide variety of housing features in detail,
including construction materials and interior features.
 The role of the housing statistics is to collect, process and
disseminate detailed statistics on housing condition.
 The data derived from a housing census are important for making
an analysis or diagnosis of the housing situation.
 The housing census produces benchmark statistics on the current
housing situation and is vital for developing national housing and
human settlements programs.

Housing Statistics…Cont’d
 The Housing Statistics provides comprehensive information on
residential properties and their owners.
 It provides information on the properties owned, as well as
characteristics of the owners and their residency status.
 Information is collected about certain characteristics of households,
including access to electricity, source of drinking water, time to water
source, type of sanitation facilities, construction and flooring
materials of housing, possession of various durable goods, and
distance between the well and the nearest septic tank.
 The stock of housing in the includes privately owned and occupied
houses and apartments, privately rented and local authority rented
accommodation, and property managed by housing associations.
 They can also be used as indicators of household socioeconomic
status. The housing statistics provide information living conditions
such as housing quality, housing price statistics and income poverty
statistics.

 Housing benchmark statistics are also critical for emergency
planning for response to natural hazards (such as destructive
storms, earthquakes, and fires), or post-conflict situations.
 Following such situations, these statistics can be used to estimate
the numbers of people and structures affected, the need for
emergency response, and reconstruction requirements.
 They reflect the number of dwellings constructed and certain
related information such as value, number of rooms, floor space,
and so forth, as well as number of dwellings destroyed or
demolished.
 The census must provide information on the supply of housing units
together with information on the structural characteristics and
facilities that have a bearing upon the maintenance of privacy and
health and the development of normal family living conditions.

 Sufficient demographic, social and economic data concerning the
occupants must be collected to furnish a description of housing
conditions and also to provide basic data for analyzing the causes
of housing deficiencies and for studying possibilities for remedial
action.
 In this connection, data obtained as part of the population census,
including data on homeless persons, are often used in the
presentation and analysis of the results of the housing census.
 Commercial users also study housing census data.
 Those engaged by the construction industry as well as financing
institutions and manufacturers of housing fixtures and equipment
and household appliances assess the possible demand for housing
and perceive the scope of their activities within the overall
program.

 By studying the housing condition, financial and economic status of
the residents; optimal methods of managing housing may be
achieved as well as improved.
 Compiled monthly or quarterly, current housing statistics reflect
changes in the housing inventory and, although they may serve
other purposes, they are also used to update the data obtained
from housing censuses.
 Housing policy is normally influenced by social and economic as
well as political considerations and available factual data
concerning the housing situation provide objective criteria, which it
is important for policymakers to take into account.
 Therefore, the formulation of housing policy and programs
represents one of the principal uses of housing census data.

Housing Indicators
 These housing indicators are a significant pointer to the quality of life
in different parts of a country.
 Housing conditions are analyzed in quantitative and qualitative terms
of housing indicators.
 All properties in a housing segment have similar attributes on one or
more measurable dimensions: location, size, size, number of
bedrooms, neighborhood, proximity to public transportation, age,
floor, and more.
 These include indicators on tenure forms, rehabilitation and
demolition activities, energy consumption, building costs, subsidies,
the social rented sector, household structure, segregation, security of
tenure, and participation in planning.
 The housing indicators are useful provides a framework and tools to
monitor housing sector performance and improve policy-making in
the sector, as well as a way to diagnose specific housing problems and
identifying priorities for policy reform.

Housing Indicators….Cont’d
 By using the housing indicators governments develop their own
housing policies: for example, how to renew housing stocks, how to
plan and combat urban sprawl, how to promote sustainable
housing development , how to help young and disadvantage groups
to get into the housing market, or how to promote energy
efficiency.
 Housing conditions are analyzed in quantitative and qualitative
terms of housing indicators. These are type of dwelling, tenure
status, housing quality and housing affordability.
 Type of dwelling
 Housing types according to their physical composition such as
apartments, single-family (detached) houses, rowhouses etc.
 Tenure status
 Housing types according to their tenure status are basically
categorized an owner-occupied home and tenants with house rent.

 Housing quality
 One of the key dimensions in assessing the quality of housing is the
availability of infrastructure and sufficient space in a dwelling.
 An example of infrastructure including roads, schools, phone lines,
sewage treatment plants and power generation for a new housing
development.
 The overcrowding rate describes the proportion of people living in
an overcrowded dwelling, as defined by the number of rooms
available to the household , the household’s size, as well as its
members’ ages and their family situation.
 Housing affordability
 Housing affordability broadly refers to the cost of housing services
and shelter both for renters and owner occupiers relative to a
given individual’s or household’s disposable income.

• Furthermore, the housing indicators can be seen as housing demand
and housing supply side. These include: Availability Indicators,
Housing Condition Indicators, and Housing Cost Indicators. The
indicators may provide a useful tool in the evaluation and
implementation of housing policy.
 Availability Indicators:
 Number of homeless people
 Homeownership rate.
 Share of new housing units.
 Annual applicants for housing.
 Number of houses versus population.
 Condition Indicators:
 Floor area per person in housing.
 Physical condition and availability of infrastructure.
 Percent of dwellings in need of major repair.

Housing Condition Indicators..Cont’d
 Sizes of rooms : studio , one-bed room, two-bed rooms , three-bed
rooms ……with dining room, kitchen room
 Wall of the housing: Wood, mud , stone, bricks…..
 Roof material: corrugated iron sheet , concrete slab, wood with
mud …..etc
 Floor: mud, cement , tiles….…..etc
 Ceiling: concrete slab , chip wood/hard board, has no ceiling …..etc
 Toilet: flush toilet, pit latrine , open field …..etc
 Bathing facility: private shower, shared shower, no shower…..etc
 Kitchen: traditional, modern, no kitchen …..etc
 Water: private tap, shared tap, public standpipe , river..…..etc
 Electricity: private electric meter, shared electric meter, kerosene
lamp, firewood… ..…..etc
 Waste disposal collection: municipality, on street dumping…..etc

 Cost Indicators
 House price or rent to income ratio
 Distribution of affordable housing throughout city
 Median family income
 House mortgage payment
 Generally, all housing indicators can be split up in efficiency ,
distributive indicators and residual (other) indicators.
 The efficiency indicators deals with an efficient resource allocation of
housing production and consumption.
 The distributive variables indicating distributive issues, as e.g.
housing conditions and floor area.
 There is also a residual, labeled 'other’ variables that are determined
by the welfare level (e.g. building technology) or by cultural habits.

Efficiency Measures
 Housing Production , Housing Investment , Homelessness,
House-Price-to-income Ratio , Rent-to-income Ratio, House
Price Appreciation, Residential Mobility , The Vacancy Rate, The
Housing Credit Portfolio, The Credit-to- Value Ratio, The Land
Development Multiplier, Construction costs, Industrial
Concentration , The Skill, New Housing Credit , Mortgage-to-
Prime Difference, Mortgage-to-Deposit Difference, Mortgage
Arrears, Land Concentration, Rent Control Index, Institutional
Development Index, Public Land Ownership, Restrictiveness
Index, Developed Land Price, Raw Land Price , and
Reproduction Cost.

Distributive Measures
 New Household Formation , Floor Area Per Person,
Unauthorized Housing, Owner Occupancy, Housing Subsidies,
Targeted Subsidies, Persons Per Room, Squatter Housing, Urban
Growth Rate , Household Size, Median Annual Rent, and
Median House Price.
 Other (Residual) Measures
 Permanent Structure, Water Connection, Journey to Work,
Infrastructure Expenditures, Import Share of Construction, and
Construction Time.

 Furthermore, some home appraisal checklists are listed
as follows:
 Neighborhood characteristics.
 Local housing market trends.
 Sale prices of comparable homes recently sold in the area.
 Lot and home size.
 Age and design of the home.
 Types of interior and exterior materials.
 Condition of the home.
 Appliances.
 Amenities, such as fireplaces or decks.
 Home improvements and renovations.

• Generally, the housing indicators are important due to the
following reasons:
 To provide a conceptual and analytical tool for governments for
measuring the performance of the housing sector in a
comparative, consistent and policy-oriented perspective.
 To establish base-line data in for new national shelter strategies
and new housing sector loans.
 Create a framework for comparing housing sector performance
between cities, as well as between different time periods.
 Create different typology of housing.
 To contribute toward establishing a new institutional framework
for formulating and implementing sector-wide housing policies;
and
 To work toward the creation of network of experts and institutions
capable of overseeing the development of the housing sector.

Housing Market Search
 The housing market relies very heavily on supply and demand.
Effective housing demand is based on the ability and willingness to
pay for housing, affected by income and what households are
prepared to pay.
 Housing demand and supply interact to determine housing outcomes,
which in turn affect the macro economy.
 These housing demand and supply interactions can be modelled in
terms of a well-functioning housing sector.
 Well-functioning housing sector includes five key market participants
- consumers, producers, financial institutions, and central and local
governments. These norms in turn imply policy goals and the
indicators necessary to measure success or failure of housing
provision.
 Housing markets are prone to supply-demand imbalances.
 Housing markets are also closer to the achieving a better balance
between housing supply and demand.

Housing Market Search……Cont’d
 Over time, demand for housing has risen continuously while the
supply has remained stable, and this has contributed to the rising
level of average prices.
 The supply of private housing is partly determined by house prices,
together with a number of underlying determinants.
 In terms of house prices, the relationship between supply and
price is positive, with higher prices encouraging supply.
 Rising prices encourage house builders to construct more housing,
and existing owners are encouraged to sell.
 Too much housing provision , leading to high vacancy rates and
long-term price declines.
 But housing prices may increases, due to tight local land use
regulations and high housing demand.

 The supply of housing is positively related to house prices, and the
supply curve is upward sloping.

 The demand for private housing is determined by a number of
factors, including house prices.
 As expected, there tends to be an inverse relationship between
house prices and demand.
 At higher prices, real incomes will fall and individuals will reduce
their demand.
 When house prices are lower the reverse is true, with individuals
encouraged to buy house because of a rise in their real income.
 Additional housing demand reflects growth in the number of
households, such as young adults moving out of homes, or newly
arrived families.
 Total demand for property is determined by population size and
changes in the structure of the population caused by migration and
long-term changes in the birth and death rates.
 An aging population will increase the overall demand for property.

 The demand of housing is negatively related to house prices, and
the demand curve is downward sloping.

 Better balance between housing supply and demand may
yield insights into balanced regions.
 House price reflect both demand and supply, and, as in
all markets, equilibrium price will occur at the price that
matches current demand to available supply.
 At the equilibrium price, suppliers of the good can sell as
much as they wish, and demanders of the good can buy
as much of the good as they wish.
 There are no disappointed buyers or sellers.

 We speak of equilibrium because there is a balancing of the
supply and demand in the housing market.

 Changes in general interest rates may be one factor for housing
demand and supply, and this will also the amount of monthly
repayments for those on variable-rate mortgages.
 Higher rates make property less affordable, and low housing
demand.
 New house building depends upon the availability of land.
 An increase in the availability of land will increase the land supply.
 Availability of labour is also important. For example, a shortage of
Labor force would reduce the supply of new houses.
 In the case of new-builds, building costs may also have a significant
effect on supply. These costs include raw materials and labour
costs.
 Natural disasters, changing lifestyles, and the lack of available lots
affect supplies.

 Legislation can also affect the supply of housing in a number of ways.
 The strict requirement for planning permission for new house
building may deter house builders.
 Conversely, relaxation of regulations,, is likely to encourage building.
 Subsidies given to house builders are also likely to encourage supply,
such as the subsidies given to builders of ‘affordable’ homes for key
workers, including police, fire, and ambulance workers.
 Therefore, government can also tighten or relax restrictions on
building in urban areas .
 Generally, the housing market in the is extremely important for two
main reasons.
 Firstly, housing usually represents a household’s biggest single
purchase, and a house represents the largest single item of
consumer wealth.
 Secondly, changes in house prices can have considerable effects on
the rest of the economy.

Portion Two Housing Statistics and Housing Market.ppt

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