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A ratio or budget benchmark for comparing affordability across countries?

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Abstract

In this article, the methodological strengths and weaknesses of two common housing affordability indicators—the expenditure-to-income ratio and the residual income—are discussed, using data for the Belgian region of Flanders and the Netherlands. Affordability standards are used in order to distinguish the group facing affordability problems. In case of residual income, we use minimum budget standards—excluding housing—that allow for decent participation in society. For the expenditure-to-income ratio, we apply the internationally frequently used 30 % benchmark. Our comparison of the two methods results in a preference for the budget approach. Consequently, we explore the possibilities of applying the budget approach in a comparative context. We conclude by making recommendations for future research.

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Notes

  1. Bramley (2012) however concludes that the ratio is probably the better single measure and the residual income measures are to be used in a supporting role. This statement needs to be regarded in the context of predicting self-reported payment problems of households. Also, the residual income measures that are tested are measures that are expressed relative to income, instead of absolute budgets, as are relevant in this study.

  2. We realise that registration data on income are more reliable than surveyed data.

  3. Bradshaw and Mayhew (2010a, b) apply the Dutch NIBUD-norms to all EU-countries as an alternative to the Eurostat at risk-of-poverty measure.

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Acknowledgments

We would like to thank Gust Mariën (OTB-TU Delft) for calculating the results for the Netherlands.

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Authors and Affiliations

  1. Research Institute for Work and Society (HIVA), Catholic University of Leuven, Parkstraat 47, 3000, Leuven, Belgium

    Kristof Heylen

  2. OTB Research Institute for the Built Environment, TU Delft, Jaffalaan 9, 2628 BX, Delft, The Netherlands

    Marietta Haffner

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  1. Kristof Heylen
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  2. Marietta Haffner
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Correspondence to Kristof Heylen.

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Heylen, K., Haffner, M. A ratio or budget benchmark for comparing affordability across countries?. J Hous and the Built Environ 28, 547–565 (2013). https://doi.org/10.1007/s10901-012-9325-2

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