The Financial Dimension

Abstract

The demand for housing finance comes from purchasers of dwellings. Because of the long-term and expensive nature of housing, buyers usually are not in a position to pay cash and therefore require an annuity mortgage. Long-term finance is therefore a critical component of the price of housing, which makes it different from most other commodities in the economy. House buyers fall into two categories: owner-occupiers who purchase to live in the dwelling and landlords who purchase in order to rent the dwelling. The latter includes governments, which purchase dwellings — existing or new — in order to rent them, usually at a below-market rental.