Urbanization and Housing Investment

This paper provides the first systematic empirical assessment of the pace at which housing investment has responded to rising demand from urbanization. The assessment used National Accounts Statistics to build a data set of residential housing inv...

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Bibliographic Details
Main Authors:	Dasgupta, Basab, Lall, Somik V., Lozano-Gracia, Nancy
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank Group, Washington, DC 2014
Subjects:	ACCOUNTING AFFILIATED ORGANIZATIONS AFFORDABLE HOUSING AGRICULTURE ASSET CLASS AVAILABILITY OF CREDIT BANKING SECTOR BINDING CONSTRAINTS BOND BONDS BUDGET CONSTRAINT CAPITAL ACCUMULATION CAPITAL FORMATION CAPITAL GAINS CAPITAL INVESTMENT CAPITAL INVESTMENTS CAPITAL MARKET CAPITAL MARKET DEVELOPMENT CAPITAL MARKETS CAPITAL OUTLAYS CD CENTRAL BANK CENTRAL BANK LENDING CENTRAL GOVERNMENT DEBT COMMODITIES COMPETITIVENESS CONSUMER PRICE INDEX CONSUMPTION EXPENDITURES COST OF FINANCE COUNTRY TO COUNTRY CREDIT MARKET CURRENT ACCOUNT BALANCE CURRENT ACCOUNT DEFICITS DEBT DEVELOPING COUNTRIES DEVELOPING ECONOMIES DEVELOPMENT POLICY DISPOSABLE INCOMES DOMESTIC BORROWING DOMESTIC CAPITAL DOMESTIC CAPITAL MARKET DOMESTIC CREDIT DURABLE DURABLES ECONOMETRIC ANALYSIS ECONOMETRICS ECONOMIC DEVELOPMENT ECONOMIC DOWNTURN ECONOMIC GEOGRAPHY ECONOMIC RESEARCH ECONOMICS ELASTICITY EMERGING ECONOMIES EMERGING MARKETS EQUIPMENT EXPENDITURES FINANCES FINANCIAL CRISIS FINANCIAL MARKET FINANCIAL MARKETS FINANCIAL PORTFOLIOS FINANCIAL SECTOR FINANCIAL SECTOR DEVELOPMENT FOREIGN INFLOWS FOREIGN INVESTMENT FOREIGN INVESTMENTS GDP GNP GOVERNMENT DEBT GOVERNMENT EXPENDITURE GROSS DOMESTIC PRODUCT GROWTH RATE HOME MORTGAGE HOME OWNERSHIP HOMEOWNERSHIP HOUSING HOUSING MARKETS HOUSING POLICIES HOUSING SUPPLY INCOME INCOME GROUP INCOME GROUPS INCOME LEVELS INFLATIONARY PRESSURES INFRASTRUCTURE DEVELOPMENTS INSTITUTIONAL CAPACITY INTEREST RATES INTERNATIONAL BANK INTERNATIONAL CAPITAL INTERNATIONAL CAPITAL FLOWS INTERNATIONAL CAPITAL MARKETS INTERNATIONAL CAPITAL MOBILITY INVENTORIES INVESTING INVESTMENT DECISIONS INVESTMENT GROWTH INVESTMENT IN BOND INVESTMENT OPPORTUNITIES INVESTMENT POLICIES JOB CREATION LIVING STANDARDS LOCAL INVESTORS LOCAL SAVINGS LOW-INCOME ECONOMIES MACROECONOMIC ADJUSTMENTS MACROECONOMIC PERFORMANCE MACROECONOMIC STABILITY MARKET INTEREST MARKET INTEREST RATES MARKET PERFORMANCE MARKET PRICES MIDDLE INCOME COUNTRIES MIDDLE INCOME COUNTRY MIDDLE-INCOME COUNTRIES MIDDLE-INCOME ECONOMIES MONETARY AUTHORITY MONETARY FUND MONETARY POLICIES MONETARY POLICY MONEY SUPPLY MORTGAGE MORTGAGE DEBT MORTGAGE LOANS NASCENT MARKETS NATIONAL DEVELOPMENT OPEN MARKET OPEN MARKET OPERATIONS PER CAPITA INCOMES POLITICAL ECONOMY PORTFOLIO PORTFOLIO INVESTMENTS PORTFOLIOS PRICE LEVELS PRIVATE INVESTMENT PROPERTY RIGHTS PUBLIC BORROWING PUBLIC INVESTMENT PUBLIC INVESTMENTS PUBLIC POLICY RAPID INDUSTRIALIZATION REAL ESTATE REAL ESTATE FINANCE REAL INTEREST REAL INTEREST RATE REAL INTEREST RATES REGRESSION ANALYSIS REGULATORY FRAMEWORKS RESERVE RESERVE REQUIREMENTS RETURN RETURNS SAVINGS SLUMS SMALL ECONOMIES STOCK MARKETS TAX TAX SUBSIDIES TOTAL OUTPUT URBAN DEVELOPMENT URBAN ECONOMICS URBANIZATION VALUE ADDED WEALTH WEALTH EFFECTS WORLD DEVELOPMENT INDICATORS
Online Access:	http://documents.worldbank.org/curated/en/2014/11/20378391/urbanization-housing-investment http://hdl.handle.net/10986/20655

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Summary:	This paper provides the first systematic empirical assessment of the pace at which housing investment has responded to rising demand from urbanization. The assessment used National Accounts Statistics to build a data set of residential housing investment for more than 90 countries. The data set explicitly accounts for investment by households, the government, and the private sector. The analysis finds that housing investment follows an S-shaped trajectory taking off around per capita GDP of about $3,000 (US$2005) and tapering down at per capita GDP around $36,000 (US$2005). The analysis also finds that between 2001 and 2011, housing investment in low-income economies averaged 4.56 percent of gross domestic product and 9.12 percent in upper-middle-income economies. An important finding is that countries in Sub-Saharan Africa have housing elasticities similar to comparable low-income and lower-middle-income economies. In financing housing investment, the paper finds that developing countries tend to rely much more on domestic savings and government debt, whereas high-income Organisation for Economic Co-operation and Development countries lever capital markets by tapping foreign savings. Not only does excessive reliance on domestic savings and government debt increase the sensitivity of housing investment to the cyclicality of growth of gross domestic product, it also can potentially crowd out investments in health and education.

Urbanization and Housing Investment

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