Affordability is defined as the state of being cheap enough for people to be able to buy (Combley, 2011). Applied to housing, affordability is a term that has come to the fore, especially in contexts of free-market economies and housing systems led by private initiatives. Notwithstanding the seeming simplicity of the concept, the definition of housing affordability can vary depending on the context and approach to the issue, rendering as difficult its applicability in practice.

The most widespread idea is that the maximum expenditure a household should pay for housing is no more than 30% of its income (Paris, 2006). Otherwise, housing is labeled as unaffordable. This idea minimizes the issue to simple maths or a rent-to-income ratio or house-price-to-income ratio. In reality, a plethora of variables can affect affordability and should be considered when assessing this issue holistically. Other methods to measure housing affordability study how much ‘non-housing’ expenditures are unattended after paying for housing. Whether this residual income is not sufficient to adequately cover other household’s needs, then there is an affordability issue. Similarly, they distinguish between “purchase affordability” (the ability to borrow funds to purchase a house) and “repayment affordability” (the ability to afford housing finance repayments) (Bieri, 2014).

Likewise, housing production and, ultimately affordability, rely upon demand and supply factors that affect both the developers and consumers. On the supply spectrum, aspects such as the cost of land, cost of construction, land-use regulations, zoning codes, and restrictions have a crucial role in determining the ultimate price of housing (Paris, 2006).

Thus, stakeholders like real estate developers, policymakers, and municipal authorities have a decisive stake in creating an adequate environment for affordable housing production. There is a great potential for design and urban planning tools and mechanisms in fostering innovative solutions to this issue. Public-private partnerships, new materials, and building techniques, different housing types (e.g., Co-living, housing cooperatives, CLTs), and efficient interior design, all can enter into the category of affordability by design. A concept that can potentially activate different levers catalyzing and bringing forward sustainable and affordable housing solutions for cities.

References

Barnett, S., Ganzerla, S., Couti, P. and Molard, S. (2020). European Pillar of Social Rights Cities delivering social rights Access to affordable and social housing and support to homeless people. [online] Eurocities. Available at: https://eurocities.eu/wp-content/uploads/2020/11/EUROCITIES-report-EPSR-principle-19-on-housing-and-homelessness.pdf [Accessed 14 Jul. 2021].

Bieri, D.S. (2014). Housing Affordability. Encyclopedia of Quality of Life and Well-Being Research, pp.2971–2975.

Combley, R., 2011. Affordability. In: Cambridge business English dictionary. Cambridge University Press.

Habitat for Humanity. (2019). What is housing affordability? [online] Available at: https://www.habitat.org/costofhome/what-is-housing-affordability [Accessed 14 Jul. 2021].

Paris, C. (2006). International Perspectives on Planning and Affordable Housing. Housing Studies, 22(1), pp.1–9.

Pittini, A. (2012). HOUSING AFFORDABILITY IN THE EU Current situation and recent trends. [online] CECODHAS Housing Europe’s Observatory. Available at: http://www.portaldahabitacao.pt/opencms/export/sites/ihru/pt/ihru/docs/relacoes_internacionais/CECODHAS_ObservatoryBriefing_Housing_Affordability_2012_revised.pdf [Accessed 14 Jul. 2021].

Sidewalk Labs, 2019. 6: Affordability by Design. [podcast] City of the Future. Available at: https://cityofthefuture.libsyn.com/6-affordability-by-design [Accessed 14 July 2021].

Stone, M.E. (2006). A Housing Affordability Standard for the UK. Housing Studies, 21(4), pp.453–476.