Urbanization and Housing Investment / Dasgupta, Basab

Format:

Book

Government document

Author/Creator:

Dasgupta, Basab

Contributor:

Dasgupta, Basab

Lall, Somik V.

Lozano-Gracia, Nancy

Series:

Policy research working papers.

World Bank e-Library.

Language:

English

Subjects (All):

Debt Markets.

Domestic Savings.

Economic Theory & Research.

Emerging Markets.

Finance and Financial Sector Development.

Gdp Growth.

Government Debt.

Housing Investment.

Investment and Investment Climate.

Macroeconomics and Economic Growth.

Non Bank Financial Institutions.

Private Sector Development.

Urbanization.

Local Subjects:

Debt Markets.

Domestic Savings.

Economic Theory & Research.

Emerging Markets.

Finance and Financial Sector Development.

Gdp Growth.

Government Debt.

Housing Investment.

Investment and Investment Climate.

Macroeconomics and Economic Growth.

Non Bank Financial Institutions.

Private Sector Development.

Urbanization.

Physical Description:

1 online resource (39 pages)

Place of Publication:

Washington, D.C., The World Bank, 2014

System Details:

data file

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 USD 3,000 (USD 2005) and tapering down at per capita GDP around USD 36,000 (USD 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.