Measuring Housing Adequacy in Sao Paulo Metropolitan Region

Brazil has largely accomplished its urban transition but housing conditions for many residents of its urban centers remain such that they have large negative effects on individual and social welfare. This report develops a comprehensive measure of housing adequacy based on seven different deficiencies and estimates the number of households living in these conditions in Sao Paulo metropolitan region over the period 2007-2013 using PNAD data. These housing situations necessitate policy responses but the nature of these interventions differs and cannot be limited to programs to build new units for owner occupancy using public subsidies. Our main departure from existing measures of housing needs is to estimate housing costs for owners using the owner equivalent rent approach and develop a measure of affordability that combines housing and transportation costs as a share of income. This first attempt to develop a comprehensive affordability indicator is limited by data constraints but indicates that the rise in the number of households spending or who would be spending more than 45 percent of their income on housing and transportation costs combined has been increasing rapidly over the period studied.