Affordable housing

Affordable housing is housing deemed affordable to those with a median household income as rated by country, State (province), region or municipality by a recognized Housing Affordability Index. In Australia, the National Affordable Housing Summit Group developed their definition of affordable housing as housing that is, "...reasonably adequate in standard and location for lower or middle income households and does not cost so much that a household is unlikely to be able to meet other basic needs on a sustainable basis." In the United Kingdom affordable housing includes "social rented and intermediate housing, provided to specified eligible households whose needs are not met by the market." Most of the literature on affordable housing refers to mortgages and number of forms that exist along a continuum – from emergency shelters, to transitional housing, to non-market rental (also known as social or subsidized housing), to formal and informal rental, indigenous housing and ending with affordable home ownership.

The notion of housing affordability became widespread in the 1980s in Europe and North America. In the words of Alain Bertaud, of New York University and former principal planner at the World Bank,

"It is time for planners to abandon abstract objectives and to focus their efforts on two measurable outcomes that have always mattered since the growth of large cities during the 19th century’s industrial revolution: workers’ spatial mobility and housing affordability."

Housing choice is a response to an extremely complex set of economic, social, and psychological impulses. For example, some households may choose to spend more on housing because they feel they can afford to, while others may not have a choice.

The Median Multiple indicator, recommended by the World Bank and the United Nations, rates affordability of housing by dividing the median house price by gross [before tax] annual median household income).

"A common measure of community-wide affordability is the number of homes that a household with a certain percentage of median income can afford. For example, in a perfectly balanced housing market, the median household (the wealthier half of households) could officially afford the median housing option, while those poorer than the median income could not afford the median home. 50% affordability for the median home indicates a balanced market."

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