Study on Price to Income Ratio Approach in Housing Affordability

Abstract

There are many approaches to measure housing affordability. The approaches are Price to Income Ratio (PIR), Rent to Income Ratio (RIR), Housing Expenditure to Income Ratio, Market Basket Measure, Quality Based Measure and Residual Income Measure. Price to Income Ratio (PIR) is often used as indicators of measuring housing affordability. Concept of housing affordability is generally to determine income affordability of a person to pay for housing monthly instalment. The objective of this research is to examine housing affordability in Pulau Pinang by using Price to Income Ratio (PIR) approach. The sample of this research comprises individuals who own a low-cost house at Pulau Pinang. The convenience sampling technique is used for this research with regression method as its analytical tool. The findings indicate that Price to Income Ratio (PIR) is a valid and easy approach to measure housing affordability in Pulau Pinang.