Housing Demand and Affordability in India : Implications for Housing Policy
The focus of this paper is on the demand for housing in urban India. Using rental data, the paper finds that income elasticities of housing demand are high and elastic across time. Hedonic pricing regressions confirm that this high elasticity is driven by high demand for improved water and sanitation amenities that are attached to the consumption of housing. Further, the demand estimations show that rental markets in urban India and in megacities are becoming more efficient, emerging from the shadow of legacy rent control regulation and uncertainty from the past. All the results suggest that household subsidies or other demand-side interventions are less warranted, but rather investments to increase housing supply through better service infrastructure for water, sanitation, and connectivity are better uses of public resources. The analysis also provides guidelines to improve the targeting of housing programs by means testing against the income distribution. Using one such estimate of the income distribution, the paper shows that housing affordability is improving in India. In doing so, the paper highlights the methodological challenges in measuring housing affordability in developing countries.
| Main Authors: | , |
|---|---|
| Format: | Working Paper biblioteca |
| Language: | English |
| Published: |
World Bank, Washington, DC
2022-05
|
| Subjects: | HOUSING DEMAND, URBAN HOUSING DEMAND, HOUSING DEMAND ESTIMATES, HOUSEHOLD SUBSIDIES, PUBLIC INVESTMENT IN INFRASTRUCTURE, HOUSING COST INTERVENTION, RENTAL MARKET DATA, PUBLIC INVESTMENT POLICY, |
| Online Access: | http://documents.worldbank.org/curated/en/099342105022229388/IDU0ba4ed93c0c44a0485c09c6b046aabdec42dc http://hdl.handle.net/10986/37402 |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| Summary: | The focus of this paper is on the
demand for housing in urban India. Using rental data, the
paper finds that income elasticities of housing demand are
high and elastic across time. Hedonic pricing regressions
confirm that this high elasticity is driven by high demand
for improved water and sanitation amenities that are
attached to the consumption of housing. Further, the demand
estimations show that rental markets in urban India and in
megacities are becoming more efficient, emerging from the
shadow of legacy rent control regulation and uncertainty
from the past. All the results suggest that household
subsidies or other demand-side interventions are less
warranted, but rather investments to increase housing supply
through better service infrastructure for water, sanitation,
and connectivity are better uses of public resources. The
analysis also provides guidelines to improve the targeting
of housing programs by means testing against the income
distribution. Using one such estimate of the income
distribution, the paper shows that housing affordability is
improving in India. In doing so, the paper highlights the
methodological challenges in measuring housing affordability
in developing countries. |
|---|