OVERVIEW OF GENERAL THEMES
About half of the world’s urban population lives in poverty and about 600-800 million people occupy substandard housing. Even so, housing investment represents 3-10 per cent of GDP in most developing countries; it is the largest item of non-food household expenditure and the most valuable asset possessed by most low-income households. In such circumstances it is almost a truism that one solution to poor housing conditions is to raise the amount of finance available to low-income households so as to improve the means by which they are able to build more and better quality housing. That said, there is remarkably little comparable information on housing markets and housing finance. As a United Nations Centre for Human Settlements report points out,
That international agencies have as yet been unable to mobilize the funds and elicit the cooperation of member countries in collecting and supplying information is…indicative of the lack of organization in the sector and of the priority attached to housing by policy-makers.
Even events such as the debt crisis and the demise of public housing finance programmes have prompted a slow response by many governments and multilateral institutions. Yet the argument that correctly structured finance systems and governments which adopt ‘enabling’ strategies, including deregulation of the financial sector, can deliver improved housing is beginning to gain purchase (Malpezzi 1990, van Huyck 1987, World Bank 1993b). Indeed, one observer has argued that housing finance has gone ‘from being something of a policy carbuncle, a mere conduit to carry out government policies, into an issue of major concern’ (Buckley 1996:x).
Understanding the operation of, and potential for, housing finance is important since in many developing countries ‘housing’ policy is about establishing new and more innovative finance policies. Governments have had to scale down or abandon programmes of mass house construction and sites-and-service