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Area: Policy and financing

Housing affordability pertains to the capacity of a given household to pay their rent or mortgage in relation to their financial means. Considering the criticism of the concept when viewed as a strict ratio rule between income and housing expenses (Hulchanski, 1995), it may be useful to focus on the relational nature of the concept and as a way to analyze the relationship between different processes.

As Whitehead (2007, p. 30) contended, affordability is a composite of three main parameters: (1) housing cost, (2) household income and (3) direct state interventions (or third-actors) playing on the previous two factors, for instance by improving one’s capacity to pay through direct payments or by reducing housing costs through subsidized housing.

Considering the current trend towards unaffordability in European cities (Dijkstra and Maseland, 2016, p. 96), the concept is particularly useful to understand the interplay of factors that both favour rising housing costs—through financialization (Aalbers, 2016), gentrification (Lees, Shin and López Morales, 2016), and entrepreneurial urban policies (Harvey, 1989)—with those that enable the stagnation of low- and middle-incomes, namely Neoliberal globalization (Jessop, 2002) the precarization of work and welfare policy reforms (Palier, 2010).

The “hard reality” behind one’s home affordability can therefore be construed as the result of a complex interplay between large-scale processes such as those enumerated above, behind which lie the aggregated behaviours of a multitude of actors; from the small landlord to the large investment firm seeking to speculate in global real-estate markets, from the neighborhood association protecting tenants from evictions to national governments investing (or divesting) large sums of money into housing programs. The conceptual strength of affordability lies in its capacity to scrutinize a wide range of complexly interconnected phenomena, which ultimately affect greatly everyone’s quality of life.




Aalbers, M. (2016) The financialization of housing: A political economy approach. (Routledge studies in the modern world economy). London: Routledge.

Dijkstra, L. and Maseland, J. (2016) The state of European cities 2016: Cities leading the way to a better future. Luxembourg  (Accessed: 10 April 2018).

Harvey, D. (1989) ‘From Managerialism to Entrepreneurialism: The Transformation in Urban Governance in Late Capitalism’, Geografiska Annaler, 71(1), pp. 3–17.

Hulchanski, J.D. (1995) ‘The concept of housing affordability: Six contemporary uses of the housing expenditure‐to‐income ratio’, Housing Studies, 10(4), pp. 471–491.

Jessop, B. (2002) The Future of the Capitalist State. Cambridge, UK: Polity Press.

Lees, L., Shin, H.B. and López Morales, E. (2016) Planetary gentrification. (Urban futures). Cambridge: Polity.

Palier, B. (ed.) (2010) A Long Goodbye to Bismarck? : The Politics of Welfare Reforms in Continental Europe. Amsterdam: Amsterdam University Press.

Whitehead, C.M.E. (2007) ‘Planning Policies and Affordable Housing: England as a Successful Case Study?’ Housing Studies, 22(1), pp. 25–44.

Created on 27-08-2021 | Update on 20-04-2023

Related definitions

Area: Policy and financing

Housing is usually deemed unaffordable when it consumes more than a set percentage of a household's monthly income. The Eurostat (2022) and the OECD (Chung et al., 2018) follow this threshold approach and define households overburdened with housing costs as those that spend more than 40% of their disposable income on housing. However, this indicator fails to capture financial hardship, particularly among lower-income households. In fact, lower-income households may be spending less than 40% of their income on housing and yet failing to meet adequate consumption levels for other goods. As a response, the residual income approach ascertains housing (un)affordability by defining a minimum level of consumption for a set of goods according to particular household types. The residual income approach builds on consumption data to define the minimum level of income necessary for a household to survive after housing costs. The main shortcoming of this approach is that relies on subjective measures of what constitutes the necessary minimal expenses for a household. These two definitions of affordability navigate two tensions 1) between housing and other types of consumption and 2) between the individual conceptions of what is affordable and what the government considers to be affordable (Haffner & Hulse, 2021). More recently, scholars have emphasized the multi-faceted nature of affordability to include commuting and transport costs together with energy costs (Haffner & Boumeester, 2010). Other approaches focus on supply-side measures, for instance on the share of the housing stock that a household can afford (Chung et al., 2018). Evolutions in the measurement of affordability bear witness to the complexity of housing systems. Affordability is not only dependent on housing consumption but also on housing supply, particularly in inelastic markets where providers have considerable power, see for example Kunovac & Zilic (2021). At the same time, displacement pressures and rising energy costs in an older and inefficient stock add pressure on households to access affordable housing.

Created on 21-04-2023 | Update on 22-05-2023


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