Abstract
Understanding household preferences for housing attributes is imperative for developing countries after years of housing policies that failed mostly due to the mismatch between housing solutions and needs. This paper provides income and price elasticity estimates of the demand for housing attributes as an indicator to measure how households perceive housing attributes (necessities or luxuries). These metrics are important because they allow evaluating previously national-level housing policies as well as suggesting new paths of action that are in accordance to households’ preferences. The study focuses on Chile because its influential role in designing housing policies in other developing countries (Gilbert, 2002). Using five cross-section household surveys from 2000–2011, our results suggest that Size and Location are perceived as basic necessities. Contrarily, Quality and Housing Features are considered luxury goods. Size and Location are more price-inelastic than other attributes. These results are consistent across regions, and suggest that households prefer larger and better-located houses.
Highlights
In Latin America Chile has established a reputation as a country with a consistent reduction in the housing deficit over the last twenty-years
This paper aims to alleviate the lack of information about the economic valuation of housing attributes by estimating a demand model that allows the calculation of price and income elasticities of housing attributes
Latin America and Chile have scarce scientific research regarding the economic valuation of housing attributes
Summary
In Latin America Chile has established a reputation as a country with a consistent reduction in the housing deficit over the last twenty-years This reputation has lately been disputed by the alarming lack of quality in the provision of public housing (Chamorro, 2013), which has opened the debate to the need of rethink the way public housing is provided. This paper aims to alleviate the lack of information about the economic valuation of housing attributes by estimating a demand model that allows the calculation of price and income elasticities of housing attributes These estimations are crucial inputs when it comes to designing future housing programs (Greene & Ortúzar, 2002). Income elasticities provide a measure of the sensitivity of consumers’ demand to income
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