Measuring the housing gap: a novel approach to assessing housing affordability

Source abstract

This article introduces a novel composite measure of housing affordability: the housing gap. It combines normative assumptions with micro- and macro-level data, to assess both short- and long-term aspects of housing affordability. It is defined as the share of households that cannot satisfy their minimum housing needs because they do not have enough income to buy or rent a dwelling of adequate size and, at the same time, do not receive sufficient external support from the state or relatives. Our measure is useful for research and policy purposes as it allows, on the one hand, to obtain a bird-eye view of housing affordability and, on the other, thanks to an ease of decomposition to understand its root causes and structure. To present its utility, we calculate the housing gap for 27 European countries for the time period 2011–2022 and compare its information load with other commonly used indicators of housing affordability.