A housing affordability and tenure of choice quantum deliverable model in South Africa

The aim of this research was to develop a model that practically determines the tenure of choice and affordability of households in South Africa, which will thus help towards informed decision making by analysts and housing officials. Presently, there is no clear systematic means (except for simplistic ratios) of determining the degree of the effect of changes in the housing market (such as implemented policies) on the tenure of choice and affordability decisions of households. The research set out to improve upon the usage of ratios by basing its analysis on the theoretical underpinnings of both user costs of occupancy and an assumption of endogeneity between tenure of choice and affordability. The research used the general household survey data from Statistics South Africa for the analysis and validation. Generalized joint binary regression (on assumption of endogeneity between tenure of choice and affordability) was used as a check against the user costs of occupancy modelling. An independent market analysis carried out showed that South Africa has consistently faced increasing problems of acute housing shortages and housing affordability. Never the less, apart from subsidy programs, the option to promote renting, coupled with use of innovative building technologies showed promise of significantly alleviating these problems. More living space is especially more vital than ever, amid the current crisis of COVID-19 pademic. Statistical tests indicated strong evidence suggesting that the developed user costs of occupancy model (dynamic tenure model) is reliable at correctly recovering the tenure statuses of the households, with its recovery rates being better than those of the regression model. Both models provided useful unique, but different insights into the housing market and also correctly predicted the behavioural patterns of South African housing markets, such as significantly worsening affordability, and a market that is biased towards home ownership. The analysis also showed that affordability and tenure of choice were significantly affected by locational factors, household characteristics (such as race and age of household head), and most significantly, the age of the household head (which is a proxy to household income). The research successfully met its goal of model building but also recognized the need to merge these two models (dynamic tenure model and the regression model) into one model for more comprehensive housing related analysis. The research also recognized a need to fully operationalize the optimization, Monte Carlo and parallelization modules in order to improve the practical usefulness and effectiveness of the model. The significance of the study is that it it underpins the basis for proper tenure and affordability analysis, by assuming endogeneity between the two (2), and provides a modelling framework based on these criteria, that are useful for meaningful housing market analysis

A housing affordability and tenure of choice quantum deliverable model in South Africa

The aim of this research was to develop a model that practically determines the tenure of choice and affordability of households in South Africa, which will thus help towards informed decision making by analysts and housing officials. Presently, there is no clear systematic means (except for simplistic ratios) of determining the degree of the effect of changes in the housing market (such as implemented policies) on the tenure of choice and affordability decisions of households. The research set out to improve upon the usage of ratios by basing its analysis on the theoretical underpinnings of both user costs of occupancy and an assumption of endogeneity between tenure of choice and affordability. The research used the general household survey data from Statistics South Africa for the analysis and validation. Generalized joint binary regression (on assumption of endogeneity between tenure of choice and affordability) was used as a check against the user costs of occupancy modelling. An independent market analysis carried out showed that South Africa has consistently faced increasing problems of acute housing shortages and housing affordability. Never the less, apart from subsidy programs, the option to promote renting, coupled with use of innovative building technologies showed promise of significantly alleviating these problems. More living space is especially more vital than ever, amid the current crisis of COVID-19 pademic. Statistical tests indicated strong evidence suggesting that the developed user costs of occupancy model (dynamic tenure model) is reliable at correctly recovering the tenure statuses of the households, with its recovery rates being better than those of the regression model. Both models provided useful unique, but different insights into the housing market and also correctly predicted the behavioural patterns of South African housing markets, such as significantly worsening affordability, and a market that is biased towards home ownership. The analysis also showed that affordability and tenure of choice were significantly affected by locational factors, household characteristics (such as race and age of household head), and most significantly, the age of the household head (which is a proxy to household income). The research successfully met its goal of model building but also recognized the need to merge these two models (dynamic tenure model and the regression model) into one model for more comprehensive housing related analysis. The research also recognized a need to fully operationalize the optimization, Monte Carlo and parallelization modules in order to improve the practical usefulness and effectiveness of the model. The significance of the study is that it it underpins the basis for proper tenure and affordability analysis, by assuming endogeneity between the two (2), and provides a modelling framework based on these criteria, that are useful for meaningful housing market analysis