Transaction Costs and Housing Affordability in Asia

Abstract

Asia is home to some of the fastest growing cities in the world. As urbanization increases, demand for housing also increases. Well functioning housing markets can minimize problems associated with rapid urbanization such as unaffordable housing and urban slums. This paper explores the different aspects of the residential property sales markets in Asian countries. Using data gathered by the Global Property Guide, transaction costs associated with residential property purchases are analyzed. Housing markets are also examined in terms of tenure, protection of property rights, and openness and transparency. Roundtrip transaction costs for buying properties are high, above 10% in several countries in Asia. High transaction costs and unaffordable housing combined with weak protection of property rights are seen to be conducive to the creation of urban slums.
 

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