Housing and Housing Finance - A Review of the Links to Economic Development and Poverty Reduction

42 Pages Posted: 13 Aug 2013

See all articles by John Doling

John Doling

University of Birmingham

Paul Vandenberg

Asian Development Bank - Economic Research

Jade Tolentino

Institute for Development and Econometric Analysis Inc. (IDEA)

Date Written: August 2013

Abstract

The paper provides a review of the literature that links housing, housing finance, and economic development. The housing sector may support poverty reduction and inclusive growth in two general ways. First, housing construction contributes to economic output, creates employment, and generates a demand for materials and related services. Second, improved housing raises the standard of living of occupants. At the same time, housing purchases are costly for individuals, constituting the most valuable asset owned by most households and often requiring housing finance (mortgages) to allow for purchase. These links — between housing and the economy and between housing and housing finance — are explored in this review paper. It finds that the benefits of housing for individuals accrue in large part indirectly through better health, based on improved water and sanitation. Housing also generates large multiplier effects in terms of employment and output. Employment is created for both skilled and poorer, unskilled workers. The evidence also suggests that there is a symbiotic relationship between housing finance and financial sector development. Housing finance helps to develop the financial sector (contributing to economic growth) and is also helped by financial sector development.

Keywords: housing, finance, mortgages, inclusive growth

JEL Classification: G21, O40, R21

Suggested Citation

Doling, John and Vandenberg, Paul and Tolentino, Jade, Housing and Housing Finance - A Review of the Links to Economic Development and Poverty Reduction (August 2013). Asian Development Bank Economics Working Paper Series No. 362, Available at SSRN: https://ssrn.com/abstract=2309099 or http://dx.doi.org/10.2139/ssrn.2309099

John Doling (Contact Author)

University of Birmingham ( email )

Edgbaston, Birmingham B15 2TT
United Kingdom

Paul Vandenberg

Asian Development Bank - Economic Research ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

Jade Tolentino

Institute for Development and Econometric Analysis Inc. (IDEA) ( email )

Room 16, Ground Floor
Library Building
Quezon City
Philippines

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