Lecture 1 And 2

Question 1

5 key interdependent components of housing markets that affect affordability and the 4 things that organize and shape them

Answer 1

A) Land, infrastructure, finance , labour, building materials
B) Legal, regulatory and institutional frameworks

Question 2

Problems with housing ( 4)

Answer 2

Affordability, poor location, mismatch between demand and supply and low densities

Question 3

Why do we have housing problems

Answer 3

1. Supply side: not enough and expensive well located land.infrastructure to sustain high densities is inadequate, high development costs
   2.intervention: pair government intervention in the form of tax breaks, subsidy’s and provision of land
2. Demand side: difficult accessing finance for low income, indebted groups
   ,

Question 4

How is housing a social asset

Answer 4

Shelter, security of tenure, self esteem, community support,access to municipal services and amenities, address, safety and security networks

Question 5

Housing as an economic asset

Answer 5

1.income generation: via rent, work from home, home based industries
2.access to employment

Question 6

Discuss housing in the economy

Answer 6

City’s are responsible for 70% of G dp due to urbanization
10-30% of consumption comes from housing
Source of government revenue (property tax)
Creates jobs
,efficient housing finance stimulates growth in financial sector
Contribute to labour supply and mobility

Question 7

Housing as a financial asset

Answer 7

1. Security of tenure
2. Leverage- access to finance, cost of finance, level of gearing
3. Investment return- capital appreciation, income return
4. Affordability
5. Market activity- level of turnover, transaction casts
6. Housing ladder

Question 8

Characteristics of the housing markets

Answer 8

1. Heterogenous, durable and immovable
2. Expensive thus slows adjustments to supply to changes in demand
3. Addictions are 1 to 2 % per year
4. Supply is fixed in short run
5. Supply responds to demand in long Run by building new places, renovations and maintaining used buildings to slow later of retirement I deterioration

Question 9

How is housing a critical part of the economy?

Answer 9

• 10 - 30% of consumption
• gross fixed capital formation 4.5 - 10%
• provides revenue to government through taxation
• good housing finance stimulates growth in finance sector
• creates jobs