TY - JOUR
T1 - Measuring affordability in public housing from economic principles
T2 - Case study of Hong Kong
AU - Hui, E. C.M.
N1 - Publication details (e.g. title, author(s), publication statuses and dates) are captured on an “AS IS” and “AS AVAILABLE” basis at the time of record harvesting from the data source. Suggestions for further amendments or supplementary information can be sent to [email protected].
PY - 2001/3
Y1 - 2001/3
N2 - Affordability is a dominant and controversial issue in housing policy all over the world. Hong Kong is no exception. In 1987, the government took a notable shift in its housing policy toward a more market-oriented system. As such, the notion of affordability overrode the notion of need. Like the United States and the United Kingdom, Hong Kong uses the median rent-to-income ratio as an affordability yardstick for rent setting. However, this approach suffers serious criticisms for its arbitrary benchmarking. This paper aims to examine the "affordability" issue among public rental housing tenants in Hong Kong. It takes a broader view by analyzing both their housing and nonhousing consumption patterns using economic first principles. It starts with an overview of conventional concepts of affordability and their shortcomings. It then applies the economic first principles to measure household affordability and test the "reasonableness" of using the median rent-to-income ratio as a benchmark. Rather interestingly, the findings suggest that the easy-to-use median rent-to-income ratio currently adopted by the Hong Kong Housing Authority cannot reflect the affordability of public rental housing tenants. This paper argues that household affordability could be gauged more correctly by adopting economic first principles, which render a better operational definition in housing resource allocation.
AB - Affordability is a dominant and controversial issue in housing policy all over the world. Hong Kong is no exception. In 1987, the government took a notable shift in its housing policy toward a more market-oriented system. As such, the notion of affordability overrode the notion of need. Like the United States and the United Kingdom, Hong Kong uses the median rent-to-income ratio as an affordability yardstick for rent setting. However, this approach suffers serious criticisms for its arbitrary benchmarking. This paper aims to examine the "affordability" issue among public rental housing tenants in Hong Kong. It takes a broader view by analyzing both their housing and nonhousing consumption patterns using economic first principles. It starts with an overview of conventional concepts of affordability and their shortcomings. It then applies the economic first principles to measure household affordability and test the "reasonableness" of using the median rent-to-income ratio as a benchmark. Rather interestingly, the findings suggest that the easy-to-use median rent-to-income ratio currently adopted by the Hong Kong Housing Authority cannot reflect the affordability of public rental housing tenants. This paper argues that household affordability could be gauged more correctly by adopting economic first principles, which render a better operational definition in housing resource allocation.
UR - http://www.scopus.com/inward/record.url?scp=0035274201&partnerID=8YFLogxK
UR - https://www.scopus.com/record/pubmetrics.uri?eid=2-s2.0-0035274201&origin=recordpage
U2 - 10.1061/(ASCE)0733-9488(2001)127:1(34)
DO - 10.1061/(ASCE)0733-9488(2001)127:1(34)
M3 - RGC 21 - Publication in refereed journal
SN - 0733-9488
VL - 127
SP - 34
EP - 49
JO - Journal of Urban Planning and Development
JF - Journal of Urban Planning and Development
IS - 1
ER -
