This paper proposes a method for identifying housing affordability problems. The housing market being imperfect, high rent-to-income ratios might be the result not only of a taste for spacious housing but also of rent premia. Conversely, some households currently in advantageous housing may face difficulty when they move.

A better indicator of affordability compares income to the average rent the market charges for housing deemed appropriate for a household, and a second indicator compares current housing consumption with appropriate consumption. We find that more than two households out of three that have high rent burdens could afford appropriate housing. Almost one household in two that cannot afford appropriate housing manages to keep its rent burden low.

This paper makes a point for co-ordinating tenant-based assistance with other instruments of housing aid.