Housing Affordability in Metropolitan Areas
Introduction:
Housing affordability problems have become more serious over the course of the last few decades and are now also affecting the middle-class, despite the fall in prices in the housing market. This study proposes a methodology to assess threshold income as an index for measuring housing affordability by applying a combination of the ratio income and residual income approaches. The methodology is applied to two particular areas of Sicily in Italy as case studies consisting of medium-size metropolitan areas located in a less developed European region. The areas have been chosen on the basis of their different territorial structure: a polarized area that comprises a high-density city center and a polynuclear urban region.
Housing Affordability: Concept and Measure:
The debate in the literature is primarily focused on the very meaning of the term ‘housing affordability’ and on how to measure it. The term ‘housing affordability’ began to be used from the 1980s and may be defined in various ways, among which we can cite: housing affordability refers to the capacity of households to meet housing costs, while maintaining the ability to meet other basic costs of living; a rent is affordable when it leaves the consumer with a socially acceptable standard of both housing and non-housing consumption after rent is paid; a household is said to have a housing affordability problem when it pays more than a certain percentage of its income to obtain adequate and appropriate housing.
Methodology for the Assessment of Housing Affordability in Metropolitan Areas:
With regard to the aforementioned diverse uses of housing affordability, the aim of this study is to provide a methodology for assessing housing affordability in metropolitan areas and for mapping the territorial distribution of the resulting threshold-income, which may be incorporated into regional and urban planning, as well as into public decision-making processes for introducing specific targeted measures on housing.
Several studies and reports in the literature have measured housing affordability, mostly at a national or regional scale. The detailed quantification of income gaps and subsidies per household type was based on the housing cost of ‘adequate’ housing but did not take into account the particular urban zone in which the housing is located.
Housing Affordability in Two Sicilian Metropolitan Areas:
The case study consists of two areas of Sicily (Italy), which are medium-size metropolitan areas located in a less developed European region:, the metropolitan area of Palermo, in north-western Sicily (NWS), and the south-eastern Sicily (SES) area in which the major city is Siracusa. The metropolitan area of Palermo had 1,070,681 inhabitants in 2015 and comprises the city of Palermo (which is the political and administrative capital of the Sicilian Region) and 26 municipalities. The SES area comprises the city of Siracusa, which had 552,766 inhabitants in 2015 and is the capital city of the homonymous province, as well as 18 municipalities.
Conclusion:
This study has assessed the housing affordability in two metropolitan areas in a less developed European region with the aim of defining the spatial distribution of the income gap and the affordable zones, which may support metropolitan and urban planning.
The methodology has used a combined income approach, including ratio income and residual income, which was proposed in the literature. This has been applied with a particular emphasis on the analysis of the real estate market, which is considered a key factor. Consequently, the housing prices were collected for each town and urban zone. Nevertheless the ratio income approach has been applied by several national public institutions, and the results confirm its methodological weakness, which can be overcome by using the combined income approach.
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