May 1992
Urban No. HS-7


Steve Mayo and William Stephens

The Housing Indicators Program provides a framework and tools to monitor housing sector performance and improve policy-making in the sector, as well as a way to diagnose specific sectoral problems and identifying priorities for policy reform.

A forthcoming World Bank Policy Paper entitled "Housing: Enabling Markets to Work," emphasizes the importance of housing policy in determining how well the shelter sector provides housing and how well it contributes to broader development objectives. It advocates an enabling strategy which calls on governments to shift their efforts from direct provision of housing to facilitating, energizing, and supporting the activities of the sector, particularly the private sector.

Implementing this policy requires a focus on the sector as a whole, baseline information on sectoral performance, a system for monitoring changes in sectoral outcomes, and a way of measuring links between policies and outcomes. Effective monitoring is therefore a key element of an enabling strategy.

Existing data in most developing countries are inadequate for monitoring the performance of the housing sector, understanding the relationship between policies and sectoral outcomes, or understanding the relationships between the performance of the housing sector and broader social and economic development outcomes.

Key indicators of housing sector performance can be derived from a conceptual framework which defines a "well functioning housing market," one of the major tasks of the Housing Indicators Program.


A simple model of the housing sector is described in Figure 1 . Housing demand and supply interact to determine housing outcomes, which in turn affect the macroeconomy. These interactions can also be modelled in terms of a set of qualitative norms which define a well-functioning housing sector from the point of view of five key market participants - consumers, producers, financial institutions, and central and local governments. These norms in turn imply policy goals and the indicators necessary to measure success or failure.


Assessment of the shelter sector and its economic and social impact requires collection of indicators to provide a tool for monitoring particular countries and allowing for international and inter-urban comparisons. The three major analytical parts of the program are extensive surveys, existing data analysis, and intensive surveys.

Extensive Surveys. The extensive survey collects 25 key indicators and 10 alternate indicators in the areas of housing affordability, quality, finance, production, and subsidies. In addition, 10 regulatory and 10 alternate regulatory indicators collect information on the regulatory and institutional environment. It is currently being executed in 52 urban areas on six continents. (See Annex 1 )

Existing Data Analysis. Household survey and associated socio-economic data already exist in approximately a dozen countries. These data are being used to test hypotheses generated by the results of the extensive survey, such as the effects of the regulatory environment on affordability and quality of housing.

Intensive Surveys. The Intensive Surveys gather more detailed information than the extensive survey, which will allow a level of analysis similar to that of the existing data analysis component. The first two urban areas where intensive surveys are being carried out are Metro Manila, Philippines and Budapest, Hungary.


Preliminary results reinforce the hypothesis that housing policy matters. Countries with effective policies are sometimes able to achieve the same outcomes as countries with levels of per capita income up to five times higher.

Figures 2 and 3 give an idea of the types of results already obtained.In these graphs countries are divided into five income groups and the lowest, median, and highest value of the indicator are plotted. Figure 2 shows a measure of crowding, square meters per person of living space. Figure 3 is a measure of housing quality, the percentage of units built of permanent materials.

The first noteworthy feature of these graphs is the evident association of these variables with income. Economic development is good for housing outcomes.

However the degree of variation in housing outcomes for a given level of GNP per capita is large relative to the variation attributable to income differences. Resources are being translated into better quality housing at very different rates in different countries. Poor quality housing is likely to be as much the result of housing policy and other factors as poverty per se.


A primary goal of the research is to institutionalize the collection and dissemination of housing indicators data, making them available through the WDR and similar publications. In addition, diagnostic tools for housing policy reform are being developed.

The Housing Indicators approach also supports the Bank's new housing policy framework and provides a basis for evaluating loans in the housing sector. Collection and analysis of housing sector data have been made a central feature of sector loans in Korea and Mexico.

In Korea, five indicators have been chosen to assist the government in achieving its two primary policy goals of facilitating the overall efficiency of the sector and assisting the lowest income groups in obtaining adequate housing. The indicators chosen are: House Price to Income Ratio, Rent to Income Ratio, Land Development Multiplier, Targeted Subsidies, and the ratio of production costs to market value of a completed unit. In Mexico, the list will be more extensive, and is currently under development.


"Housing: Enabling Markets to Work, A World Bank Policy Paper," (forthcoming).

Contacts: S. Mayo (31013), W. Stephens (31012)


Indicator 1: New Household Formation - the annual percentage increase in the number of new households.

Indicator 2: Homelessness - the number of people per thousand of the urban area population who sleep outside dwelling units, (e.g. on streets, in parks, railroad stations, and under bridges) or in temporary shelter in charitable institutions.

Indicator 3: Housing Production - the total number of units (in both the formal and informal sectors) produced last year per 1000 population.

Indicator 4: Housing Investment - the total investment in housing (in both formal and informal sectors in the urban area), as a percentage of gross city product.

Indicator 5: The House Price to Income Ratio - the ratio of the median free market price of a dwelling unit and the median household income.

Indicator 6: The Rent to Income Ratio - the ratio of the median annual rent of a dwelling unit and the median annual household income of renters.

Indicator 7: House Price Appreciation - the annual rate of change of house prices, measured as a weighted average of all sales during the most recent year.

Indicator 8: Floor Area Per Person - the median usable living space per person last year.

Indicator 9: Permanent Structures - the percentage of structures of permanent materials.

Indicator 10: Water Connection - the percentage of dwelling units with a water connection in the plot they occupy.

Indicator 11: Journey to Work - the median length in minutes of a one-way commute in the urban area excluding home-based workers.

Indicator 12: Unauthorized Housing - the percentage of the total housing stock in the urban area which is not in compliance with current regulations.

Indicator 13: Residential Mobility - the percentage of all households who moved their unit last year (including newly formed households).

Indicator 14: The Vacancy Rate - the percentage of the total number of completed dwelling units which are presently unoccupied.

Indicator 15: Owner Occupancy - the percentage of all dwelling units which are owned by their occupants.

Indicator 16: Residential Segregation - the percentage of the urban population living in the largest contiguous low-income settlement in the urban area.

Indicator 17: The Housing Credit Portfolio - the ratio of total mortgage loans to all outstanding loans in both commercial and government financial institutions.

Indicator 18: The Creditto Value Ratio - the ratio of mortgage loans for housing last year to total investment in housing (in both the formal and informal sectors) last year.

Indicator 19: Housing Subsidies - housing subsidies as a percentage of the government budget last year.

Indicator 20: Targeted Subsidies - the percentage of housing subsidies reaching below-median-income households.

Indicator 21: The Land Development Multiplier - the average ratio between the median land price of a developed plot at the urban fringe in a typical subdivision and the median price of raw, undeveloped land in an area currently being developed.

Indicator 22: Infrastructure Expenditures Per Capita - the ratio of the total expenditures (operations, maintenance, and capital) by all levels of government on infrastructure services (roads, sewerage, drainage, water supply, electricity and garbage collection) during the current year, and the urban population.

Indicator 23: Construction Cost - the present replacement cost (labor, materials, onsite infrastructure, management and contractor profits) per square meter of a median-priced dwelling unit.

Indicator 24: Industrial Concentration - the percentage of new formal sector housing units constructed by the five largest developers (either private or public) in the urban area last year.

Indicator 25: The Skill Ratio - the ratio between the median wage of a construction worker with at least five years of experience in a skilled trade, e.g. carpentry or masonry, and the median wage of an unskilled construction worker.

Alternate Indicators:

Indicator A1: Households Per Dwelling Unit - the ratio between the total number of households and the total number of dwelling units of all types in the urban area during the current year.

Indicator A2: Persons Per Room - the ratio between the median number of persons in a dwelling unit and the median number of rooms in a dwelling unit.

Indicator A3: Squatter Housing - the percentage of the total housing stock in the urban area which is currently occupying land illegally.

Indicator A4: New Housing Credit - the ratio of new mortgage loans to all new loans in both commercial and government financial institutions made last year.

Indicator A5: Mortgage-to-Prime Difference - the average difference in percentage points between interest rates on mortgages in both commercial and government financial institutions and the prime interest rate in the commercial banking system.

Indicator A6: Mortgage-to-Deposit Difference - the average difference in percentage points between interest rates on mortgages in both commercial and government financial institutions and the interest rate on one-year deposits in the commercial banking system.

Indicator A7: Mortgage Default Rate - the percentage of mortgage loans which are three or more months in arrears in both commercia and government financial institutions.

Indicator A8: Land Concentration - the share of vacant land in the urban area owned by the five largest public, customary, or private land holders.

Indicator A9: Import Share of Construction - the percentage share of residential construction materials which are imported (in value terms).

Indicator A10: Construction Time - the median time (in months) from the start of construction to completion of a median-priced dwelling unit.

Regulatory Indicators:

Indicator R1: Restrictions on Exchange - a composite of questions on the extent of ownership and transfer restrictions in land, housing, and building materials.

Indicator R2: Land Registration Coverage - the percentage of the metropolitan area covered by a land registration system which allows for buying, selling, long-term leasing, or mortgaging urban land.

Indicator R3: Housing Finance Development - a composite of questions on the presence and flexibility of housing finance institutions and instruments.

Indicator R4: Public Sector Involvement - the percentage of annual housing production under the direct control and ownership of public housing corporations.

Indicator R5: Rental Price Distortion - a the ratio of the median controlled rent of the typical private-sector rent-controlled unit to the free-market rent of a comparable unit in the uncontrolled part of the market.

Indicator R6: Permits Delay - the median length in months to get approvals, permits, and titles for a new medium-sized (50-200 unit) residential subdivision in an area at the urban fringe where residential development is permitted.

Indicator R7: Minimum Lot Size - the minimum lot size for a single family housing unit in a new 50-200 unit residential subdivision.

Indicator R8: Compliance - the ratio of building permits issued to new housing starts in both the formal and informal sectors during the past year.

Indicator R9: Squatter Tolerance - the difference between the number of squatter dwelling units for which tenure has been regularized last year and the number of squatter dwelling units demolished last year without resettlement.

Indicator R10: Effective Property Tax Rate - the percentage of the real market value of residential property which is collected as property tax.

Alternate Regulatory Indicators:

Indicator RA1: Public Land Ownership - the estimated percentage of total urban land, including developable raw land at the urban fringe that is publicly owned, including parastatals, land banks, and expropriations.

Indicator RA2: Customary Land Ownership - the estimated percentage of total urban land, including developable raw land at the urban fringe that is owned by religious, customary, tribal, clan, or trust owners.

Indicator RA3: Cement Price Distortion - the ratio of the free market to the official price for cement.

Indicator RA4: Extent of Rent Control - the percentage of the rental stock, including informal rentals, under the coverage of a rent control system.

Indicator RA5: Rent Control - a composite of questions on the stringency of rent control.

Indicator RA6: Foreclosure Delay - the typical time in months from the beginning to the conclusion of foreclosure proceedings on a seriously delinquent mortgage.

Indicator RA7: Rental Eviction Delay - the typical time in months to evict a private-sector rental tenant for non-payment of rent.

Indicator RA8: Salable Land Ratio - the ratio of the maximum net salable residential land to the total undeveloped land area in a new middle-sized (50-200 unit) residential subdivision.

Indicator RA9: Land Development Controls - a composite of questions on the affordability of land use and building code regulations.

Indicator RA10: Property Tax Receipts - the percentage of property tax receipts in the local government budget.

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