Housing Finance Development Research Articles

On threshold effect of housing finance on shared prosperity: Evidence from sub‐Saharan Africa

AbstractApplying panel threshold regression technics along with alternative econometric investigation on a panel database of 48 sub‐Saharan African (SSA) countries over the period 2000–2012, this paper analyzes the structure of housing finance in SSA countries and mainly verifies if there is a threshold effect on shared prosperity. Independently of the method used, our findings offer strong evidence of an inverted U‐shaped relationship between housing finance and inequality. The current level of development of housing finance in SSA, which is at its very early stage, is not yet an effective tool for reducing economic inequality; however, beyond a given threshold, housing finance becomes effective in reducing inequality. Indeed, higher values of housing finance depth above a certain threshold of 6.35% reduce inequality, whereas values below 6.35% and very high values have no significant impact. In addition, there is a slightly positive relationship between housing finance and labor productivity growth in SSA. Results also show that the way housing finance impact inequality is highly dependent on their ability to implement effective crisis fight policies. Controlling for countries’ income levels, legal origin, and regional proximity revealed relative benchmarking, typology, and characteristics of SSA housing finance. These findings suggest some policies to stimulate the development of housing finance in SSA. As a bonus, this paper also highlights several other pillars that can be used to support shared prosperity in SSA.

FINANCIAL PERFORMANCE OF HOUSING FINANCE COMPANIES IN INDIA

Housing not only provides physical shelter but also has significant impact on the lives of the dwellers in terms of skills enhancement, income generation, increased security, health, self- confidence and human dignity. Housing finance development, therefore, plays a role in boosting equitable economic growth and reducing poverty through helping households build assets, improving living conditions, empowering the middle- and lower-income population, and strengthening communities. The House Building Finance Corporation (HBFC), which has traditionally dominated the housing finance sector, is now a declining player, in part because of decreasing government support, and in part because of its history of operational ineffectiveness. In its place, domestic and international commercial banks and a few new specialised institutions have entered the market, and have a significant potential for growth. This paper has examined the financial operations of Housing Finance Company in India from the year 2018 to 2022. Some selected parameters like liquidity, solvency, valuation and profitability ratios has been used for analysing the financial viability of some selected housing finance Companies listed in recognized stock exchanges for the period from 2018 to 2022. Keeping the focus on above points in mind, the researcher has made an effort to study the financial performance of selected housing finance companies and offer suggestions for the improvement of efficiency in the selected Housing Finance Companies.

Housing Finance and Inclusive Growth in Africa: Benchmarking, Determinants and Effects

Using a panel database of 48 Sub-Saharan African countries from 2000 to 2012 that we partially constructed, this paper analyses the structure of housing finance in Africa, its determinants, and its impact on inclusive growth. We find that market capitalization and urbanization are key positive determinants of housing finance, while a post-conflict environment is conducive to greater housing finance development. This result suggests that housing finance is driven by standard market forces of demand and supply. Besides, we find that housing finance development in Africa is not yet an effective tool for reducing economic inequality, at its current, very earlier stage. However, we show that above a given threshold, housing finance could be efficient at reducing inequality. Finally, there is a slightly positive relationship between housing finance and greater economic development in Africa. All these findings suggest that policies to boost housing finance development in Africa would be fruitful in the medium to long terms.

ISTANBUL HOUSING AND LAND APPRAISAL SYSTEM REFORM DEVELOPMENT PROCESS AND PROPERTY VALUES ANALYSIS

One of the main problems of developing countries is having difficulties in finding sources for housing finance. In order to solve housing finance problems of a country, institutional systems that have been structured according to its own economic and social conditions should be applied by the government. The main purpose of this study is to determine an appropriate housing finance development designed based on Turkey’s current conditions. In this study, the location of the construction sector in Turkey's economy, development of real estate sector in Turkey, the embryonic period of the housing market, development of criteria and indicators in the housing sector reform in the housing system were investigated. The construction sector is a so-called locomotive instruction of the economy. Turkey in the building industry as one of the economies in this category, especially after the 1980s and is growing constantly evolving. Today, the real estate sector has entered a rapid development process. Importance has been given to user needs in the projects produced and marketability has started to be seen as one of the most important factors of project success. For the solution of the housing problem, all the legal and operational measures taken by the state and the priorities determined are called housing policy. If the housing policy concept is to be examined, how the housing becomes a field of policy-making, how housing policies manifest in developed and underdeveloped countries or the problems encountered in its formation and performance can be studied and explored separately. Housing problems, housing policy and examine engagaments held in Turkey on a private housing finance field are reached some conclusions. The first one is the fact that the housing problem is a dynamic structure and may vary periodically in Turkey as it is in the world due to changes in demographic structure, stock depreciation and migration. Second, it is compulsory that the issue of housing as an economic asset increases with the globalization of the world, and that it is necessary to address this issue more carefully in countries that are in the process of transition to global economic integration. Third, the rapid population growth in Turkey (albeit with a relatively slow) will continue in the coming 20-year period together with urbanization, especially the aging of the stocks that make up the majority mania apartment blocks began in 1950-1960's year, worn with together will increase the destruction. A housing policy that is designed with these principles in mind; Financial Interventions to be carried out on housing investments, taxes, loans, housing purchase methods and similar areas, rent control and condominium applications, legal interventions to be carried out on various legal restrictions and incentives and housing standards, housing production types, construction methods and building materials technical interventions. At the end of this study, it is understood that housing finance model based on mortgage backed securities can be applied in the near future in Turkey. However, there are some requirements and regulatory needs must be fulfilled in many fields, such as in law of bankruptcy, tax regulations, law of banking and leasing, capital markets, and real- estate appraisal applications.
 Jel Codes: A10, B41, D40, K10, O20

Pension reforms, risk transfer and housing finance innovations

Weak housing creditor protection, accentuated by weak landed property rights and underdeveloped credit information systems constitute major constraints to housing finance development in many developing countries. Improving housing creditor protection require further institutional development and financial innovation. As a trigger of financial innovation, regulation has spawned pension reforms leading to the global shift from defined benefit to defined contribution pension schemes, which has created new opportunities to improve housing creditor protection and thus engender housing finance innovations. This paper considers how pension assets—accumulated benefits and associated personal, employment and contribution information—has provided a basis for collateralized lending and an additional avenue for credit information system development. The paper proposes a pension asset-backed creditor protection model that utilizes defined contribution pension assets to improve housing credit allocation, and thus, housing finance development. Pension assets represent alternative or complementary collateral assets for securing a housing credit (mortgage). And as depositories of information, the information content of pension assets and institutions could also be used alternatively and complementarily to assess the capacity, character and contribution (equity) of potential borrowers in the credit underwriting process. Future applied research may consider how the proposed model could be integrated in existing credit underwriting systems and the operational challenges that could emerge.

Mortgaging Europe's Periphery

This paper is concerned with the development of housing finance in peripheral European states. Interestingly, the biggest mortgage and housing booms and busts prior to the Global Financial Crisis (GFC) have occurred in these countries, rather than in the core. This is surprising, given the comparatively low level of mortgage debt and the unsophisticated financial sectors in the periphery. The mortgage and housing booms and busts have also made these countries highly vulnerable to the fallout from the GFC, and have often been associated with severe banking and even sovereign debt crises. The paper asks why peripheral countries have been particularly vulnerable to housing and mortgage booms and busts; how these have shaped their exposure to the GFC, and how the GFC has affected peripheral housing finance. Building on literature on housing financialization and varieties of residential capitalism, the paper traces trajectories of housing-induced financialization before and after the GFC in four European peripheral countries: Hungary, Latvia, Ireland and Iceland. The paper argues that their differences notwithstanding, Europe’s East and peripheral Northwest have been characterized by high homeownership rates and unsophisticated mortgage markets. The evolving EU framework for free movement of capital and provision of financial services as well as the availability of ample and cheap credit has induced a trajectory of financialization, which has taken two major but not mutually exclusive forms: domestic financial institutions’ reliance on funding from wholesale markets, and direct penetration of foreign financial institutions. These two forms of financialization attest to a core-periphery relationship in the recent episode of housing financialization, whose hierarchical character played out in the crisis. Peripheral European countries experienced sudden stops and reversals of capital flows, which badly affected their banking systems. Unable to solve the looming banking crises on their own, they had to turn to creditors to gain access to much needed capital inflows. Different combinations of international conditionality, domestic policy responses and the original level of mortgage debt result in different trajectories in housing finance after the crisis.

Mortgaging Europe's Periphery

This paper is concerned with the development of housing finance in peripheral European states. Interestingly, the biggest mortgage and housing booms and busts prior to the Global Financial Crisis (GFC) have occurred in these countries, rather than in the core. This is surprising, given the comparatively low level of mortgage debt and the unsophisticated financial sectors in the periphery. The mortgage and housing booms and busts have also made these countries highly vulnerable to the fallout from the GFC, and have often been associated with severe banking and even sovereign debt crises. The paper asks why peripheral countries have been particularly vulnerable to housing and mortgage booms and busts; how these have shaped their exposure to the GFC, and how the GFC has affected peripheral housing finance. Building on literature on housing financialization and varieties of residential capitalism, the paper traces trajectories of housing-induced financialization before and after the GFC in four European peripheral countries: Hungary, Latvia, Ireland and Iceland. The paper argues that their differences notwithstanding, Europe’s East and peripheral Northwest have been characterized by high homeownership rates and unsophisticated mortgage markets. The evolving EU framework for free movement of capital and provision of financial services as well as the availability of ample and cheap credit has induced a trajectory of financialization, which has taken two major but not mutually exclusive forms: domestic financial institutions’ reliance on funding from wholesale markets, and direct penetration of foreign financial institutions. These two forms of financialization attest to a core-periphery relationship in the recent episode of housing financialization, whose hierarchical character played out in the crisis. Peripheral European countries experienced sudden stops and reversals of capital flows, which badly affected their banking systems. Unable to solve the looming banking crises on their own, they had to turn to creditors to gain access to much needed capital inflows. Different combinations of international conditionality, domestic policy responses and the original level of mortgage debt result in different trajectories in housing finance after the crisis.

The development of a low-income housing finance sector in South Africa: Have we finally found a way forward?

Since the 1994 democratic elections, the South African government has been intent on encouraging the country's financial sector to extend finance to low-income households as a means of delivering an acceptable standard of housing through its housing subsidy scheme. This paper examines the history of lending to low-income black households beginning in the late 1980s and describes the problems encountered by the banks from the early 1990s onward. It also demonstrates how intertwined the development of housing finance has been with the formulation of the country's housing policy. As a means of understanding the development of the sector, the following issues are considered: the effort to mobilize mortgage finance via the banks; the shift in focus toward the use of micro-finance for housing purposes via non-bank lenders; the competition that has arisen between the banks and non-bank lenders; the recent attempt by government to compel the banks to lend through community reinvestment-type legislation and the banks’ response through the establishment of a Financial Sector Charter negotiation process aimed at transforming the entire financial sector. The paper concludes by offering some judgments as to whether this recent attempt by government and the banks to break through the decade-old housing finance logjam will be successful.

Development of housing finance and the global strategy for shelter

The development of finance capital markets, and their related housing finance systems, has become increasingly significant in developing countries in the post-1980 period. It relates functionally to the central theme of the post-1986 elaboration of the UN and World Bank Global Strategy for Shelter, that is to whole housing sector development. In historical context it also relates to the economic stabilization and structural adjustment policies of the 1980s, along with the increasing internationalization of finance capital. Notwithstanding the significance of housing finance in housing sector development, the subject remains little understood except among expert intellectuals and practitioners. The three articles which follow are integral and coordinated. They provide exposition and evaluation of the nature of housing finance in its development context, and they address the socially relevant issues of how finance can be extended to moderate- and low-income groups. Their themes revolve around the importance of ‘learning by doing’ within the processes and institutions of development.

The development of housing finance for the urban poor in the Philippines: The experience of the home development mutual fund

The Home Development Fund provides housing finance to low-income groups in the Philippines. Since its foundation in 1981 the Fund has developed from simply providing finance for end users to pursuing a more socially active role. The article describes the history of the fund and several recent initiatives, including community mortgages.