Methodology for Measuring Housing Affordability

Abstract

As the basis of many social institutions, family greatly contributes to regional and national development. Housing affordability is an indicator of the standard of living in a region, which ultimately determines its ranking. The paper proposes to use the housing affordability coefficient, based mainly on the stages of creation and development of a social unit (family), which considers the influence of life circumstances (obstacles) on purchasing a house by a particular family in a particular region. This indicator includes two components: a constant of the period of savings accumulation by the family from the beginning of pregnancy until the child reaches the age of 1.5 years and the mortgage period. The housing affordability coefficient was tested on data for the Russian Federation, as well as for two regions of the Central Federal District (with the lowest and highest housing costs). The paper emphasises that the index of real estate affordability should have a specific value that can be perceived and imagined. The article provides a comparative analysis of the author’s and generally accepted in Russia methods of analysis for the period 2006–2021. A significant improvement in housing affordability was observed at the end of the examined period due to the presence and increase in maternity capital, the permission to use it as a down payment, the reduction by banks of the down payment and the mortgage rate. The author’s methodology more clearly confirmed the hypothesis that life circumstances (obstacles) greatly affect housing affordability, significantly increasing the values of the housing affordability coefficient. The findings can be used to compile a regional ranking in general and to assess the regional housing sector in particular.