Why housing affordability matters
Housing cost is the single largest line item in household budgets across virtually every income group in the developed world. When housing absorbs 40–50% of income, households have dramatically less capacity to save, invest in education, or absorb economic shocks.
The price-to-income ratio captures the structural challenge of ownership: a ratio of 7 means a household must save the entirety of its gross income for seven years to purchase a median home — with no spending on food, transportation, or anything else. In practice, deposit-plus-mortgage costs mean fewer households can transition from renting to owning, concentrating housing wealth among existing owners.
The rent burden compounds this: in cities where buying is out of reach, heavy rent expenditures also erode the capacity to save toward ownership, creating a cycle that is increasingly difficult to exit.
