An Assessment of sustainable housing
affordability using a multiple criteria decision
making method
Mulliner, Emma and Smallbone, Kieran and Maliene,
Vida
2012
MIMS EPrint: 2012.53
Manchester Institute for Mathematical Sciences
School of Mathematics
The University of Manchester
Reports available from: http://eprints.maths.manchester.ac.uk/
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School of Mathematics
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ISSN 1749-9097
An Assessment of Sustainable Housing Affordability Using a Multiple Criteria
Decision Making Method
Emma Mulliner
1
, Kieran Smallbone
2
, Vida Maliene
3*
1
School of the Built Environment, Liverpool John Moores University, Henry Cotton Building, 15-21
Webster Street, Liverpool, UK, L3 2ET.
2
Manchester Interdisciplinary Centre, The University of Manchester, 131 Princess Street
Manchester, UK, M1 7DN.
3
School of the Built Environment, Liverpool John Moores University, Cherie Booth, Byrom Street,
Liverpool, UK, L3 3AF.
*-Corresponding author
An Assessment of Sustainable Housing Affordability Using a Multiple Criteria
Decision Making Method
Abstract
Housing affordability is a complex issue that must not only be assessed in terms economic
viability. In order to increase quality of life and community sustainability the environmental and
social sustainability of housing must also be taken into consideration.
The paper considers the application of a methodology that can be applied to assess the
affordability of different housing locations in a sustainable manner, taking into account a range
of economic, environmental and social criteria. The COPRAS method of multi-criteria decision
making (MCDM) is selected and applied to three residential areas as an example of how
sustainable housing affordability can be assessed using a MCDM method. The outcome of the
study reveals that considering a range of social and environmental criteria can greatly affect the
calculation of an areas affordability, in comparison to focusing solely on financial attributes.
COPRAS was found to be an effective method for the assessment and could be applied in other
regions or internationally.
Keywords: Affordability, Affordable housing, COPRAS, Multiple criteria decision making
(MCDM), Sustainable communities.
1. Introduction
Currently affordable housing and sustainable development are major challenges facing the UK
and many other countries across the globe. Sustainability and affordability concerns are now
often discussed mutually and are recognised as being important to one another [1, 2, 3, 4, 5, 6];
namely, affordable housing ought to be located within sustainable mixed communities and
sustainable communities must provide affordable housing products. Accordingly, it is essential
that affordability and sustainability issues are tackled simultaneously. However, housing
affordability is frequently defined and assessed only in terms of economic viability. Other
important issues, such as sustainability, housing location and quality are sometimes overlooked.
Comparing the relationship between housing expenditure and household income is the most
common way to define and measure housing affordability internationally [7, 8, 9]. Such an
assessment relies on a ‘rule of thumb’ which suggests that any household spending more than a
certain proportion of its income on housing costs lives in unaffordable housing. This approach
stems from initial studies on housing affordability, which date back to 19th
century studies of the
household budget, which commonly equated “one week's pay for one month's rent” [7, p. 471].
Housing cost to income ratios are extensively applied to measure affordability in the UK and
other European countries, the U.S., Canada, Australia, New Zealand and China [10, 11, 12, 13,
14]. The ratio approach appears to be ubiquitously and often indisputably adopted in
international housing policies, within developed countries, to measure housing affordability. This
is not surprising since it has the advantage of being easy to compute as it only relies on a few
variables which are usually easily accessible. However, the housing expenditure to income ratio
has been subject to criticism by several authors [7, 13, 14, 15]. This is primarily due to its
arbitrary and normative nature [7, 13, 14, 16] and inability to account for issues such as housing
quality [15].
In contrast to the conventional way of conceiving and measuring affordability, Stone [13, 14]
recognises that housing affordability is not separable from housing standards. Accordingly Stone
[13] introduced the ‘shelter poverty’ measure which attempts to assess affordability by taking
into account the adequacy of household income to cover both housing costs and other necessary
non-housing costs, thus seeking to maintain an adequate standard of living. This measure
therefore focuses on the residual income remaining after housing costs have been met. However,
the residual approach shares some of the shortcomings of the ratio measure, such as the inability
to control for housing or location quality. Bogdon and Can [15] criticised the pre existing
affordability literature for focusing on house prices rather than the condition, location and
neighbourhood characteristics of the housing. However, even today day the majority of tools
used to assess affordability have little or no regard for housing quality, location and
neighbourhood characteristics, i.e. what households get in return for what they spend on housing.
2. Research problem
The ODPM [5] admit that, previously, in a rush to build more homes to meet demand the
government too often did not build communities. Jobs, shops and services, transport and green
spaces are also important factors for creating thriving communities [5]. It is not enough to simply
provide more homes, there must also be a strong focus on creating sustainable communities [3].
Sustainable communities are defined as “Places where people want to live and work, now and in
the future” [4, p.56]. They should be active, inclusive and safe, well run, environmentally
sensitive, well designed and built, well connected, thriving, well served and fair for everyone [4].
Building housing that is not well connected to jobs, high quality services and infrastructure can
and has contributed to areas experiencing low demand and abandonment. The Housing Market
Renewal Initiative was prompted by the government to tackle problems of low demand and the
emergence of housing abandonment in several parts of the North and the Midlands in England.
In such neighbourhoods, high levels of low demand properties, population loss and high vacancy
rates created decline and deprivation [17]. These areas suffer from a lack of jobs, poor public
services, crime and anti-social behaviour, with streets and parks in disrepair [5]. The traditional
way of conceiving and measuring affordability (the ratio of housing costs to income) may
indicate that such areas are affordable, simply because they are low-cost. However, this fails to
indicate anything about the quality of the housing or the environment in which the housing is
situated. Accordingly, this may be a rather simplistic and unsustainable way to view
affordability.
Research undertaken by the Australian Housing and Urban Research Institute (AHURI) stresses
that OECD countries are increasingly recognising the need for a broad and more encompassing
understanding of housing affordability, such measures would replace simple ratio measures
based on housing costs and income which cannot deal with issues such as housing adequacy,
location quality and access to services [18]. Nevertheless, research by the AHURI continues to
focus on housing costs and incomes [19]. This research advocates the continued use of the
expenditure to income ratio due to its long tradition, ease of use and to provide continuity [18].
In contrast, other research conducted in Australia advocates that housing affordability must
account for ancillary costs that households may face, e.g. accessing key services, facilities and
employment, and the cost of electricity, gas and water [20]. It seems that a number of authors are
seeking to challenge the conventional ratio standards which are frequently used to define and
assess housing affordability.
It has been suggested that the traditional way of defining and measuring housing affordability
(the ability of household income to cover housing costs) may be too limited; the interaction
between housing and location is thought to provide a more meaningful measure of housing
affordability [21]. Furthermore, Fisher et al. [22] suggest that an important aspect of housing
affordability depends on the amenities based on the particular housing location, which affects the
welfare of households. Their study looks at affordability in terms of a bundle of attributes an area
possesses, such as school quality, job accessibility and safety. The authors assess whether
accounting for the implicit prices of such attributes influences an areas affordability measure.
The authors conclude that focusing on price alone may lead to inaccurate conclusions about the
affordability of an area [22].
But how is the concept of affordability perceived by low and moderate income families
themselves? Seelig and Phibbs [16] conducted qualitative analysis of housing affordability to
understand how low-income renters understand residential affordability. They found that low-
income families often did not choose areas that had poor amenity and location measures. Thus,
while cost was an essential consideration, addressing needs or preferences for dwelling features,
location or proximity to services and facilities was a priority for many low income renters, even
though such choices resulted in tighter household budgets and paying more for housing [16]. The
research demonstrates that an array of attributes, in addition to purely economic factors, can
influence a household’s perception of affordability. Specifically, quality, location and access to
services and facilities appear to be important considerations directly related to a household’s
perception of affordability.
Clearly, improving housing affordability is not the only means by which housing can become
economically viable. As well as housing costs, the aforementioned literature advocates that a
wider range of criteria must be taken into consideration in order to determine true housing
affordability and quality of life. Such findings have motivated the authors to conduct this
particular research and develop a methodology that can be used to assess the affordability of
different housing locations in a sustainable manner, taking into account a range of economic,
environmental and social criteria that influence both the affordability and sustainability of
housing. Given the complexity of the issue under consideration, multiple criteria decision
making (MCDM) appeared to be appropriate as the basis of an assessment tool for sustainable
housing affordability.
Multiple criteria decision making (MCDM), often called multi criteria decision aid (MCDA) and
multi criteria analysis (MCA), is a set of methods which allow the aggregation and consideration
of numerous (often conflicting) criteria in order to choose, rank, sort or describe a set of
alternatives to aid a decision process [23]. MCDM is suitable for the said topic as it is able to
address the numerous quantitative and qualitative criteria that affect both housing affordability
and sustainability, all of which can be incorporated into one evaluation process.
