Strategy Briefing

Evaluating Business Attractiveness of a City Through the Affordability Lens

24 pages, Dec 2017

US$1,325

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About This Report

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Life is costly in the world’s major developed cities, with closely linked outlays on housing and transport occupying a prime place in consumer incomes. How affordable a city is reveals its potential for discretionary spending, level of diversity and income inequality, appeal to the middle-class and families, as well as future economic success. In light of the subject’s importance, the briefing studies in more detail the affordability of 10 key cities in the US.

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Overview

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Gain competitive intelligence about market leaders. Track key industry trends, opportunities and threats. Inform your marketing, brand, strategy and market development, sales and supply functions.

City affordability is an interplay between housing and transport costs, and income

Factors that impact absolute costs include demand and supply interaction, population density and city layout, and local policies. Household income is determined by labour productivity, the employment rate and household size.

Housing is the single biggest consumer spending category in the majority of 60 cities

In 2016, housing captured on average 22% of total annual disposable income in major developed cities globally. Despite higher incomes, leading cities in most developed countries feature higher housing shares of expenditure than smaller urban areas, due to expensive real estate in larger cities.

In over half of the 60 cities, transport ranks as the third or fourth largest consumer expenditure item

In 2016, transport commanded on average 10% of total annual disposable income in leading cities of the developed world. Major cities register lower transport shares than smaller ones in most developed countries, due to extensive mass transit in major cities.

Housing and transport combined commands the lowest share of total income mainly in the US cities

Cities in the US emerge as the most affordable among a group of 60 metropolises, reflecting their much higher household incomes. However, the finding rests upon treating the limit of 45% of income on housing and transport combined as the common affordability threshold. This method is subject to criticism.

In the US, New York struggles most with affordability, while Houston struggles least

An alternative method looks at whether a household can afford to pay for housing after all other necessities are covered at an adequate level. By applying this framework to 10 key US cities, the briefing finds that urban centres such as New York struggle most with affordability, while Houston struggles least.

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Introduction

Scope

A list of the world’s 60 key developed cities included in the analysis

Key findings

Basic Affordability Concepts

Why pay attention to city affordability?

Affordability is a trade-off between housing and transport costs

Factors that determine the level of city affordability

Examples of studying affordability-shaping factors in three US cities

Housing and Transport Spending Trends in Developed Cities

Spotlight on housing expenditure trends

Top 20 key developed cities for housing spend and its future rise

Spotlight on transport expenditure trends

Top 20 key developed cities for transport spend and its future rise

Interplay between household income and essential living costs

Residual income: a better method to study city affordability

Affordability Analysis of 10 Major US Cities Based on Residual Income Method

Case study: Insights on affordability of 10 major cities in America

Outline of the case study

Identifying the potential size of residual income in 10 key US cities

Four broad categories that emerge from the scatter

How affordability is shaping city economies and consumer markets

Summary

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Megatrends

Strategy Briefing

Evaluating Business Attractiveness of a City Through the Affordability Lens

New Report Guarantee

About This Report

New Report Guarantee

Overview

Why buy this report?

City affordability is an interplay between housing and transport costs, and income

Housing is the single biggest consumer spending category in the majority of 60 cities

In over half of the 60 cities, transport ranks as the third or fourth largest consumer expenditure item

Housing and transport combined commands the lowest share of total income mainly in the US cities

In the US, New York struggles most with affordability, while Houston struggles least

Want to find out more about this report?

Table of Contents

Introduction

Scope

A list of the world’s 60 key developed cities included in the analysis

Key findings

Basic Affordability Concepts

Why pay attention to city affordability?

Affordability is a trade-off between housing and transport costs

Factors that determine the level of city affordability

Examples of studying affordability-shaping factors in three US cities

Housing and Transport Spending Trends in Developed Cities

Spotlight on housing expenditure trends

Top 20 key developed cities for housing spend and its future rise

Spotlight on transport expenditure trends

Top 20 key developed cities for transport spend and its future rise

Interplay between household income and essential living costs

Residual income: a better method to study city affordability

Affordability Analysis of 10 Major US Cities Based on Residual Income Method

Case study: Insights on affordability of 10 major cities in America

Outline of the case study

Identifying the potential size of residual income in 10 key US cities

Four broad categories that emerge from the scatter

How affordability is shaping city economies and consumer markets

Summary

Why buy this report?

Want to find out more about this report?

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