Housing Choice as a Function of Risks Confronting Low-income Households. (April 2020)

• Record Type: Journal Article
• Authors: Sahasranaman, Anand; Prasad, Vishnu; Balachander, Aditi
• Is Part Of: Journal of emerging market finance. Volume 19:Number 1(2020:Jan./Apr.)
• Page Start: 100
• Page End: 118
• Publication Date: 2020-04
• Subjects: Emerging markets -- financial inclusion -- government policy and regulation -- housing -- simulation; Banks and banking -- Developing countries -- Periodicals; Financial institutions -- Developing countries -- Periodicals; Securities -- Developing countries -- Periodicals; 332.09172405
• DOI: 10.1177/0972652719877475
• Languages: English
• ISSNs: 0972-6527

Abstract

The design of housing solutions for low-income populations has been one of the most pressing policy concerns in developing countries like India. In this work, we explore the effect of risks confronting low-income households—unemployment, health and mortality—on their choice of housing arrangements. We use simulations to study the evolution of long-term wealth of a stylised low-income household faced with these risks and find that, on average, rental housing significantly reduces the risk of undesirable wealth fluctuations over time. From a policy perspective, this means greater focus and incentives for the development of low-income rental markets using strategies such as provision of rental vouchers, rent-to-own models or long-term leases, in addition to the traditional ownership-based housing strategies. The development of housing solutions encompassing a range of rental and ownership models will be critical to ensuring the availability of safe and affordable housing for all urban residents. JEL Codes: C63, O18