Housing Supply in Algeria: Affordability Matters Rather Than Availability

By Bellal, Tahar | Theoretical and Empirical Researches in Urban Management, August 2009 | Go to article overview

Housing Supply in Algeria: Affordability Matters Rather Than Availability


Bellal, Tahar, Theoretical and Empirical Researches in Urban Management


1. Introduction

The provision of satisfactory housing is a major issue in Algeria. It has gained a great interest and became one of the development priorities. The problem of urban housing is most visible in the country as it is in the process of transition from rural to urban and from traditional to modern societies. In addition to rural-urban migration, the population growth witnessed by Algeria creates an urgent need for comprehensive housing policies aimed at providing decent housing for all income groups, but particularly the lower income groups. Appropriate housing policies can help achieve the goals of a well-functioning housing sector which is in fact a basic condition for social and economic stability and development. The housing situation is one of the most important factors in determining living conditions. Housing conditions are expected to improve with economic growth and development. Poor housing conditions are a sign of poverty, and all the indicators of housing quality improve with higher incomes.

The availability of detailed statistical data and indicators on housing are an essential prerequisite to an analysis of the housing situation and policies. However, such data on the housing stock and the condition of such stock are generally difficult to obtain in the country. Because of the lack of comprehensive housing surveys in Algeria, population and housing censuses or household surveys are the major sources of such information. In some studies, housing conditions are examined by comparing the housing stock with the size of the population. An assessment of the average household size can provide an estimate of overcrowding. The condition of the housing stock and the level of services available to household members such as safe water, sanitation, electricity and energy supplies are further measures of the differences across the country.

A preliminary glance shows that the housing sectors in Algeria perform inadequately. Price of housing is extremely high. More precisely the house prices in the country are far above the levels that would be expected at their levels of income. For instances, house price to income ratio is around 9 (Deniz et al, 2008), indicating that a middle income family needs to save its annual income for more than 9 years to be able to buy an average housing unit in big cities like Algiers, Oran or Constantine. Apparently inexorable demographic demand for housing in the country is reflected largely in house price increases rather than in increased housing production. Although housing subsidies in the form of land and interest rates are important components of housing strategies in government's policies, significant portions of those subsidies are mis-targeted. (Deniz et al, 2008) Furthermore, while demand by higher income groups is satisfied, demand by lower and even middle -income groups is left to informal sector. There are signals that informal housing stock increases Algeria.

It is understood that the housing sector produces one of the longest-lived goods in the economy, and housing is the prime investment made by most households in most countries. Therefore, changes in real incomes and savings, and inflation, have impacts on the housing demand and its supply. (Buckley, Ellis and Hamilton, 2001) Housing investments typically account for 2 to 8 percent of gross national product (GNP) and housing services account for an additional 5 to 10 percent of GNP (World Bank Report 2003). Annual spending on housing accounts for between 7 and 18 percent of GNP (Buckley, Ellis and Hamilton, 2007)

2. Methodology

The study is a secondary data analysis of housing sector performance and policies. It focuses on a set of indicators. By that it is meant that the data on the housing sector is not strictly empirical in the sense of the results one might observe or infer from a household survey. Rather, it is based on the reports provided by either government officials and/or local experts. …

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