Research on Housing Affordability of Households with Different Income in Cities

Housing affordability is measured by either the ratio approach or the residual income approach. In the context of China's housing provision system, we develop methodological framework of residual income approach, conceptualizing the housing affordability, the down payment affordability, and the repayment(or rental) affordability. Based on the framework, taking the example of analysis on the housing affordability to households with different income in China city in 2005, findings indicate that housing provision between low income household and middle income households is short; the low income households are susceptible to economy shock, and are more risk arising from purchasing house than the high income households; income support and housing subsidy is the social security for households below low income level. Longer is the loan term, the more percentage of affordable homebuyers; decreasing the house areas can mitigate the tensions of land in city, increase the house coverage, and improve the housing affordability. This methodological framework of residual income approach is suitable for housing affordability to households with different income level in cities.