Do households escape substandard housing as their income rises? Evidence from Indonesia

Purpose This study aims to use the multiple correspondence analysis method to measure substandard housing index (SHI) and analyze the distribution of substandard housing and identify the underlying determinant. Design/methodology/approach This study uses nationally representative data from 339,584 Indonesian households and identification strategy that accounts for potential endogeneity. Findings The authors find 1% increase in income is expected to reduce housing severity by 14 points. This effect is particularly larger in urban areas than in rural areas, where the former are much more constrained in terms of land availability and high property prices. These findings confirm the central role of household economic capacity in shaping housing outcomes, suggesting that sustainable improvements in housing quality require policy approaches that go beyond direct housing provision and strengthen households’ economic foundations. The results provide an empirical support for integrating housing policy with broader income strategies in Indonesia. Originality/value Housing quality remains a major development challenge in developing countries, reflecting persistent socioeconomic inequalities and structural constraints in access to adequate living conditions. In Indonesia, rapid economic growth and urbanization over the past decades have not been fully translated into improvements in housing quality for many households. To date, comprehensive empirical evidence that systematically measures the severity and national distribution of housing quality remains limited.