Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Massachusetts Institute of Technology Cambridge April 11, 2011 Housing Policy Matters for the Poor Latin American experiences with urban housing Eduardo Rojas Eduardo Rojas basic propositions Everybody needs shelter Shelter, like food, is a basic need for human beings. Humans need a constant supply of the services provided by a household to survive Eduardo Rojas Housing production and consumption Shelter is produced and consumed through complex market processes that involve a wide variety of actors whose behaviours are affected by government regulations and interventions. The interaction of supply and demand in formal and informal housing markets in a country results in a given level of availability of houses and a given quality of the housing stock However, not everybody has access to adequate shelter, especially low-income households in developing countries Eduardo Rojas focus on urban housing issues and programs • The population in Latin America is predominantly urban – In 1900, 1 every 4 inhabitants lived in cities – In 2000, 3 out of 4 inhabitants lived in cities Eduardo Rojas Population and households (in millions) Rates Year 1985 2000 2015 1985-00 Population % Urban Households Average Size 400.8 70 84.1 4.7 519.1 631.1 75 80 127.3 177.8 4.1 3.5 2000-15 1.7 1.3 2.8 2.7 Eduardo Rojas RAPIDLY URBANISING URBANISED Population growth rate FULLY URBANISED Household growth rate Eduardo Rojas • In the 1990s the informal sector generated 60% of the new jobs • 48% of the labor force is in the informal sector – 32% in subsistence employment • 24% self employed • 8% domestic service – 16% informal micro enterprises Eduardo Rojas Inequalities are high and persistent Gini coefficient of distribution of household per capita income 1970s 1980s 1990s Latin America and the Caribbean 48.4 50.8 52.2 Asia 40.2 40.4 41.2 Eastern Europe 28.3 29.3 32.8 OECD 28.3 29.3 32.8 Eduardo Rojas Lack of adequate shelter: housing shortages Type of Shortage Origin of the shortage Category Qualitative Lack of shelter Qualitative Neighbourhood conditions Lack of infrastructure Definition Households doubling up Households in non upgradable shelters Lack of piped potable water Lack of sanitary disposal of waste waters Roof made of non permanent materials Quantitative Shelter conditions Poor quality of Walls made of non permanent materials materials Dirt floors Overcrowding Tenure status Tenure More than three persons per room Insecure tenure on house or the land Eduardo Rojas Estimation of housing shortages based on household surveys !4(5*&% 6& 1,(+)$06&3,( !"" # $%&'()$*+,) $'" +( !"#$%&'"()*'"%+)& -./0$1#+," ("2,''#%3+( !"#$%&+,*%%-./)&& 7)$*+,) $'" +8(&" "# $%&'()$*+ ,)$'" +9( @4(A&6,0#&'+(&%"($1,0?0$2"#%3( 0,*%%-./)&."#&-.&1($. #$ 2*& )'"3#$/*& ='$$0( >1,08( ?0$2" ,"( :&''( ;$$<( E4(F&?G($<(+,01#?,+( B,2&3,( C', ?60#?#6D( : &6,0( H4(I,%*0,( J0$/,06D($<(6) ,("2,''#%3(&%" ('&% "( Eduardo Rojas the facts Housing shortages in LAC: the stock 1995 2000 2006 Shortage % millions % millions % millions 9 6.8 9 8.4 8 8.9 16 12.1 14 13.5 11 12.7 Infrastructure 32 24.8 30 28.8 25 27.4 Tenure 9 6.9 10 9.8 9 10.4 Quantitative Materials Overcrowding Qualitative Eduardo Rojas Housing shortages by income A. Quantitative deprivations B1. Dwellings of disposable materials or overcrowded 31% Q IV QV B2. Inadequate infrastructure Urban QI Q II Q III QI Q II Q III Q IV 06 95 06 95 10% 9% 7% 5% 3% 06 95 16% 14% 06 95 95 06 Urban 06 22% 21% QV B3. Lack of secure tenure Q IV QV Urban QI Q II Q III Q IV 06 95 06 95 06 95 06 95 06 95 06 12%10% 9% 9% 13% 14% 11% 11% 8% 10% 8% 7% 5% 6% 95 06 22% 18% 95 06 95 32% 31% 24% 06 42% 41% 95 95 06 95 32% 25% 06 55% 95 06 95 06 95 06 Q III 06 Q II 95 06 95 06 QI 95 Urban 95 13% 12% 11% 10% 9% 8% 7% 7% 5% 4% 06 95 9% 8% 16% 11% QV Eduardo Rojas Housing deprivation as % of total households Gap in housing shortages in LAC 60% 50% 40% 30% 20% 10% 0% 1995 2000 2006 A. Quantitative deprivation 1995 2000 2006 B1. Dwellings made of disposable materials or overcrowded Quintile I 1995 2000 2006 B2. Lack of infrastructure Urban 1995 2000 2006 B3. Lack of secure tenure Quintile V Eduardo Rojas Future housing needs in LAC: the flow • total number of urban households – 130 million in 2010 – 190 million in 2030 – 230 million in 2050 • approximately 3 million new houses will be needed annually Eduardo Rojas 14 • The housing challenge – Built the 9 million houses required to eliminate doubling up – Improve the services provided by 40 million houses – Built 3 million houses per year for new households Eduardo Rojas Housing shortages and per capita income PPP Quantitative ARG BOL BRA CHL COL CRI DOM ECU GTM HND MEX NIC PAN PER PRY SLV URY 1 VEN 30 20 10 % 5 0 5000 10000 15000 GDP Source: A.Quantitative 0of PPP 000 urban Own calculations households and based GDP on Household surveys and World Development Indicators. 30 A.Quantitative and GDP % of urban households 10 20 BOL PER NIC GTM DOM ECU SLV COL VEN PAN BRA ARG PRY URY CRI CHL MEX 0 HND 0 5000 GDP PPP 10000 15000 Source: Own calculations based on Household surveys and World Development Indicators. Eduardo Rojas Housing shortages and per capita income PPP Qualitative materials ARG BOL BRA CHL COL CRI DOM ECU GTM HND MEX NIC PAN PER PRY SLV URY 1 VEN 40 30 20 10 % 5 0 5000 10000 15000 GDP Source: B. 0of 000 Materials PPP urban Own calculations households and GDP based on Household surveys and World Development Indicators. 40 B. Materials and GDP GTM % of urban households 10 20 30 NIC PER BOL SLV HND ECU PRY VEN ARG DOM COL CRI 0 URY BRA 0 5000 GDP PPP MEX PAN 10000 CHL 15000 Source: Own calculations based on Household surveys and World Development Indicators. Eduardo Rojas Housing shortages and per capita income PPP Qualitative infrastructure ARG BOL BRA CHL COL CRI DOM ECU GTM HND MEX NIC PAN PER PRY SLV URY 1 VEN 50 40 30 20 10 % 5 0 5000 10000 15000 GDP Source: C. 0of 000 Infrastructure PPP urban Own calculations households and based GDP on Household surveys and World Development Indicators. C. Infrastructure and GDP % of urban households 10 20 30 40 50 NIC DOM BOL GTM SLV PER HND PRY BRA ECU PAN ARG COL MEX VEN 0 URY 0 5000 GDP PPP CRI 10000 CHL 15000 Source: Own calculations based on Household surveys and World Development Indicators. Eduardo Rojas Housing shortages and per capita income PPP Qualitative tenure ARG BOL BRA CHL COL CRI DOM ECU GTM HND MEX NIC PAN PER PRY SLV URY 1 VEN 20 15 10 % 5 0 5000 10000 15000 GDP Source: D.Tenure 0of PPP 000 urban Own and calculations households GDP based on Household surveys and World Development Indicators. D.Tenure and GDP % of urban households 10 15 20 PER URY SLV ARG PAN MEX CHL ECU HND NIC BOL GTM PRY DOM COL BRA 5 CRI 0 5000 GDP PPP VEN 10000 15000 Source: Own calculations based on Household surveys and World Development Indicators. Eduardo Rojas Evolution of housing shortages 1995 - 2006 High income countries US$ 12,000 - 10,000 (PPP 2006) Tenure Infrastructure. Materials Quantitative Chile ! Mexico "#$ #$ !"#$ Argentina "#$ #$ !"#$ %&$$ %&&$ %&&&$ %&'$ %'$ "#$ #$ !"#$ %&$$ %&&$ %&&&$ %&'$ %'$ "#$ #$ !"#$ %&$$ %&&$ %&&&$ %&'$ %'$ %&$$ %&&$ %&&&$ %&'$ %&$$ %&&$ %&&&$ %&'$ %'$ %&&$ %&&&$ %&'$ %&&$ %&&&$ %&'$ %'$ %&$$ %'$ "#$ #$ !"#$ %&$$ %&$$ %&&$ %&&&$ %&'$ %'$ %&&$ %&&&$ %&'$ %'$ "#$ #$ !"#$ %&$$ %'$ "#$ #$ !"#$ "#$ #$ !"#$ "#$ #$ !"#$ "#$ #$ !"#$ "#$ #$ !"#$ Venezuela "#$ #$ !"#$ %&&$ %&&&$ %&'$ %'$ %&&$ %&&&$ %&'$ %'$ %&$$ %&&$ %&&&$ %&'$ %'$ %&$$ %&&$ %&&&$ %&'$ %'$ %&$$ %&&$ %&&&$ %&'$ %'$ "#$ #$ !"#$ %&$$ %&&$ %&&&$ %&'$ %'$ "#$ #$ !"#$ "#$ #$ !"#$ %&$$ %&$$ "#$ #$ !"#$ %&$$ %&&$ %&&&$ %&'$ %'$ Eduardo Rojas Evolution of housing shortages 1995 - 2006 Upper middle-income countries US$ 10,000 - 8,000 (PPP 2006) Tenure Infrastructure. Materials Quantitative Uruguay ! Costa Rica "#$ #$ !"#$ "#$ #$ !"#$ %&$$ %&&$ %&&&$ %&'$ %'$ "#$ #$ !"#$ %&$$ %&&$ %&&&$ %&'$ %'$ "#$ #$ !"#$ %&$$ %&&$ %&&&$ %&'$ %'$ %&$$ %&&$ %&&&$ %&'$ %&$$ %&&$ %&&&$ %&'$ %'$ %&&$ %&&&$ %&'$ %&&$ %&&&$ %&'$ %'$ %&$$ %'$ "#$ #$ !"#$ %&$$ %&$$ %&&$ %&&&$ %&'$ %'$ %&&$ %&&&$ %&'$ %'$ "#$ #$ !"#$ %&$$ %'$ "#$ #$ !"#$ Panama "#$ #$ !"#$ "#$ #$ !"#$ "#$ #$ !"#$ "#$ #$ !"#$ Brazil "#$ #$ !"#$ %&&$ %&&&$ %&'$ %'$ %&&$ %&&&$ %&'$ %'$ %&$$ %&&$ %&&&$ %&'$ %'$ %&$$ %&&$ %&&&$ %&'$ %'$ %&$$ %&&$ %&&&$ %&'$ %'$ "#$ #$ !"#$ %&$$ %&&$ %&&&$ %&'$ %'$ "#$ #$ !"#$ "#$ #$ !"#$ %&$$ %&$$ "#$ #$ !"#$ %&$$ %&&$ %&&&$ %&'$ %'$ Eduardo Rojas Evolution of housing shortages 1995 - 2006 Lower middle-income countries US$ 8,000 - 4,000 (PPP 2006) Tenure Infrastructure. Materials Quantitative Ecuador ! Peru "#$ #$ !"#$ Colombia "#$ #$ !"#$ %&$$ %&&$ %&&&$ %&'$ %'$ "#$ #$ !"#$ %&$$ %&&$ %&&&$ %&'$ %'$ "#$ #$ !"#$ %&$$ %&&$ %&&&$ %&'$ %'$ %&$$ %&&$ %&&&$ %&'$ %&$$ %&&$ %&&&$ %&'$ %'$ %&&$ %&&&$ %&'$ %'$ "#$ #$ !"#$ %&$$ %&&$ %&&&$ %&'$ %'$ %&&$ %&&&$ %&'$ %'$ %&$$ %&&$ %&&&$ %&'$ %'$ %&$$ %&&$ %&&&$ %&'$ %'$ %&$$ %&&$ %&&&$ %&'$ %'$ "#$ #$ !"#$ %&$$ %'$ "#$ #$ !"#$ %&$$ "#$ #$ !"#$ "#$ #$ !"#$ "#$ #$ !"#$ "#$ #$ !"#$ "#$ #$ !"#$ %&$$ %&&$ %&&&$ %&'$ %'$ Eduardo Rojas Evolution of housing shortages 1995 - 2006 Low- income countries less than US$ 4,000 (PPP 2006) Tenure Infrastructure. Materials Quantitative Paraguay ! Bolivia "#$ #$ !"#$ Honduras "#$ #$ !"#$ %&$$ %&&$ %&&&$ %&'$ %'$ "#$ #$ !"#$ %&$$ %&&$ %&&&$ %&'$ %'$ "#$ #$ !"#$ %&$$ %&&$ %&&&$ %&'$ %'$ %&$$ %&&$ %&&&$ %&'$ %&$$ %&&$ %&&&$ %&'$ %&&$ %&&&$ %&'$ %'$ %&$$ %'$ %&&$ %&&&$ %&'$ %&$$ %'$ "#$ #$ !"#$ %&$$ "#$ #$ !"#$ %&&$ %&&&$ %&'$ %'$ %&&$ %&&&$ %&'$ %'$ "#$ #$ !"#$ %&$$ %'$ "#$ #$ !"#$ "#$ #$ !"#$ "#$ #$ !"#$ "($ #$ !"($ )#$ #$ !)#$ Nicaragua %&&$ %&&&$ %&'$ %'$ %&&$ %&&&$ %&'$ %'$ %&$$ %&&$ %&&&$ %&'$ %'$ %&$$ %&&$ %&&&$ %&'$ %'$ %&$$ %&&$ %&&&$ %&'$ %'$ "#$ #$ !"#$ %&$$ %&&$ %&&&$ %&'$ %'$ "#$ #$ !"#$ "#$ #$ !"#$ %&$$ %&$$ "($ #$ !"($ %&$$ %&&$ %&&&$ %&'$ %'$ Eduardo Rojas Formal housing is unaffordable for many – 40% of the population lives on less that US$2 a day – 10% of the population gets 50% of the income Housing price to average income ratios Africa Rest of de Asia Asia Oriental Meddle East LAC Eastern Europe Developed 0 2 4 6 8 10 Eduardo Rojas 12 Workers in the informal sector % Country 46 Venezuela 36 Households that can pay a mortgage in market conditions % Mortgage portfolio as a percent of GDP (2007) 4 1.4 Argentina 9 1.7 39 Brazil 32 1.4 54 Peru 32 2.5 43 Colombia 37 6.0 40 Honduras 39 4.6 33 Panama 61 27.7 28 Chile 63 14.0 38 Mexico 65 21.0 50 El Salvador 66 19.2 52 Ecuador 74 s/i Eduardo Rojas Land prices supply in Santiago 1992 - 2002 Residential and and is scarce and expensive prices and supply in Santiago 1992-2002 8.00 8,250,000 6.00 5,500,000 4.00 2,750,000 2.00 PRECIO : MEDIA MOVIL 0 0 82-4 83-1 83-2 83-3 83-4 84-1 84-2 84-3 84-4 85-1 85-2 85-3 85-4 86-1 86-2 86-3 86-4 87-1 87-2 87-3 87-4 88-1 88-2 88-3 88-4 89-1 89-2 89-3 89-4 90-1 90-2 90-3 90-4 91-1 91-2 91-3 91-4 92-1 92-2 92-3 92-4 93-1 93-2 93-3 93-4 94-1 94-2 94-3 94-4 95-1 95-2 95-3 95-4 96-1 96-2 96-3 96-4 97-1 97-2 97-3 97-4 98-1 98-2 98-3 98-4 99-1 99-2 99-3 99-4 00-1 00-2 00-3 00-4 01-1 01-2 01-3 01-4 02-1 Eduardo Rojas PRECIO PROMEDIO (UF/M2) M2 OFRECIDOS VARIACION DE PRECIOS Y SUPERFICIE DE TERRENOS OFRECIDOS GRAN SANTIAGO OFERTA TRIMESTRAL PERIODO 19 11,000,000 Private housing finance is not well developed Mortgage lending for housing in Latin America (selected countries) US and EU Country As % of GDP As % of all lending Argentina 4.0 15.0 Bolivia 8.5 16.3 10.8 17.7 Colombia 7.0 25.0 Panama Chile 24.4 26.4 Peru 2.9 9.5 Mexico 2.1 13.5 Uruguay 7.0 15.7 United States 79.6 87.2 European Union 42.6 41.0 Eduardo Rojas % income segment 1-5 5A Purchase houses with own resources 3 - 10 4B Savings and private mortgages 15 - 20 3C Savings and private mortgages Informal solutions 30 - 35 2D 50 - 30 1E population Eduardo Rojas government intervention • Response to market failures – Imperfect information and externalities often lead to a inadequate level of housing production (quantity and quality) – Under supply of housing limits individual and social welfare • Ideological and ethical arguments – Housing is considered a merit good (a commodity that is judged by society that an individual should have on the basis of need rather than the ability and willingness to pay) – Access to housing is considered a basic human right • Economic – Reactivate the economy – Generate employment for unqualified labourers Eduardo Rojas 29 housing policy pursues guarantee minimum standards for all equal opportunity for those in similar circumstances (horizontal equity), redistribution to poorer households (vertical equity) and Eduardo Rojas 30 Political arguments for government intervention General principle Means Countries All persons have the right to live in adequate housing Housing is a merit good The State will provide social benefits, including housing. The State will guarantee access to a decent and proper housing to all The State will promote social housing programs through adequate financing mechanisms with preference for low-income, rural and vulnerable households The State will facilitate the construction of houses and the development of financing mechanisms accessible to the largest possible number of households Argentina Bolivia Panama Ecuador Brazil Colombia Costa Rica Dominican Republic Guatemala El Salvador Uruguay Venezuela No mention to housing Chile Honduras Mexico Nicaragua Peru Paraguay Eduardo Rojas government responses Eduardo Rojas Institution building Welfare state Subsidiary state Direct provision and financing of finished houses by public entities Funds Treasury Public Housing Agency Repayment of house costs Contract the construction of houses Private Contractors Beneficiaries Houses Eduardo Rojas concentration in the production of finished new houses Low density single family houses Apartment buildings restricted public budgets and high cost of the solutions Eduardo Rojas finished houses for a few poor housing conditions for many end-up mostly in the hands of middle-income households Eduardo Rojas Eduardo Rojas • “Enabling markets” approach to housing policy – – – – • Adopted by Chile 1978 Proposed by United Nations 1987 Adopted by the World Bank 1992 Adopted by the Inter American Development Bank 1995 Premises – Markets are more efficient than governments in producing and distributing houses – Governments should focus on “enabling” housing markets to work – Low-income households may need government help to access housing Eduardo Rojas 38 • Enabling markets approach: objectives – Facilitate the operation of all housing markets • Housing inputs • Housing finance • Household mobility – Expand the role of the private sector • Produce and sell new houses • Finance house purchase – Pull government out of direct production and financing of houses Eduardo Rojas • Enabling markets approach: focus public interventions on – The development of mortgage financing – Facilitate low-cost residential land subdivisions – Improve the efficiency of the construction and real estate development industries Eduardo Rojas 40 – Rationalise government involvement in the direct production and financing of houses • Intervene only when proven that other mechanisms do not work • Minimise intervention to mobilise household and community resources – Focus public interventions on • The development of mortgage and micro financing • Effective low-cost housing solutions • Improve the efficiency of the construction and real estate development industries Eduardo Rojas The Do’ s an d Don’t s in En ab ling H ousing Mar kets t o Work Instru me nt Developing property rights Developing mortgage f inance R ationalizing subsidies P roviding infrastruc ture R egulating land and housing development Organizing the building industry Developing a policy and institutional fra mework Do Re gularize la nd tenure Expa nd land re gistr ation P riva tize public housing stoc k Establish property taxa tion Allow priva te sector to lend Lend a positive /m arket rates Enforce for eclosure la ws Ensure prude ntial regulation Introduce better loa n instr um ents M ake subsidies transparent Target subsidies to the poor Subsidize people, not houses Subject subsidies to review Coordina te la nd development Emphasiz e cost rec over y B ase provision on dema nd Im pr ove slum infra structur e Re duce regula tory c omplexity Asse ss c osts of regulation Re move price distortions Re move ar tificia l shortages Elim inate monopoly pra ctice s Encour age small-firm entr y Re duce impor t controls Suppor t building researc h B ala nce public/private sector r oles Cr eate a forum f or ma na ging the housing sec tor as a whole • Develop enabling stra tegies • M onitor se ctor performa nc e • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • Don ’t Engage in m ass evic tions Institute costly titling syste m Nationa lize la nd Discourage land transactions Allow interest-rate subsidie s Discriminate against r ental housing investm ent Neglec t resourc e m obilization Allow high default rates Build subsidized public housing Allow for hidden subsidie s Le t subsidies distor t pr ic es Use rent control a s a subsidy Allow bias a ga inst infr astructure investm ent Use environme ntal concerns f or slum clearance Impose unaffordable sta ndards Mainta in unenforcea ble rules Design proje cts without links to regulatory/institutional re for ms Allow long perm it delays Institute re gulations inhibiting competition Continue public monopolies Engage in public housing Neglec t local governme nt role Retain fina nc ially unsustainable Eduardo Rojas institutions 42 Development of housing finance • Reduce credit risk – Leverage savings and payment capacity of families assisting them to access to private mortgage financing • One-off direct subsidies • Loan guarantees • Micro credit for home improvements and expansion Eduardo Rojas • Reduce collateral risk – Land titling and registration reform – Improve judiciary procedures and practices to facilitate the recovery of collateral in cases of default – Establish extra-judiciary procedures for small and micro loans Eduardo Rojas • Mitigate interest rate risk – Macroeconomic stability – Indexation of principal and payments in situations of high inflation (increase credit risk) Eduardo Rojas • Reduce term mismatch risk – Promote long-term savings in local currency • Private retirement funds • Insurance industry – Promote the development of new instruments in financial markets Eduardo Rojas Improve the operation of the land markets the objective is to expand the supply of affordable serviced land for housing • revise land use regulations promote high density, mixed-uses land developments allow low-cost land subdivisions for housing • invest in macro infrastructure to expand the supply of serviced land buy rights of way ahead of future development capture betterment Eduardo Rojas control land speculation enact mechanisms to generate land for social uses statutory land extractions land readjustment promote public-private partnerships for land development mixed capital urban development corporations support for cooperatives and other types of housing associations to purchase land Eduardo Rojas % income segment 1-5 5A Purchase houses with own resources 3 - 10 4B Savings and private mortgages 15 - 20 3C Savings and private mortgages Savings, government assistance and private mortgages (ABC Programs) 30 - 35 50 - 30 2D Low-income government housing programs incremental housing neighbourhood upgrading 1E population Eduardo Rojas The ABC programs Public funds Private funds Developers Loans Build Houses Funds C Loans B Private Banks Payments Households A Savings Treasury Public Housing Agency Subsidies Guaranties Household Savings Eduardo Rojas ABC-type programs do not reach the very poor mostly due to lack of access to loans the “C” component ! Incide nce (% of households that rec eive d the program) CO L -I N U RBE (1 9 9 8 -2 0 0 2 ) #'"( N I C-P R O G V IV (2 0 0 3 -2 0 0 5 ) P A N - P A RVI S (1 9 9 9 -2 0 0 3 ) !"# !*"# # ("% **"# # % ") ) + "$ $%"% CH L -F SV (2 0 0 1 -2 0 0 6 ) + ' "# ( ! ") $%"& CH L - RU RA L (2 0 0 2 -2 0 0 6 ) + $ "& #'"' '"$ CR I- BO N O (2 0 0 6 ) CRI- BO N O (2 0 0 1 -2 0 0 7 ) #&"' #("% ' *"$ $ # ") ' *"! CH L -SSH (2 0 0 4 -2 0 0 6 ) & ! "$ CH L - L E A SIN G (1 9 9 7 -2 0 0 6 ) &)"& "# E x t. P o o r $"# P o or %"# & "# '"# (""# N o n -P o o r Eduardo Rojas 51 Government housing programs a typology Approach Type of program Program State guarantee access to good housing Government facilitates the operations of housing markets Programmes supporting the supply of housing Direct provision of finished houses by the Gov. Very low Direct provision of incremental houses by the Gov. Gov. provision of serviced land for houses Gov. provision of subsidised housing finance Programs supporting the demand for housing Barrio upgrading and security of tenure Housing upgrading Housing vouchers Gov. financing for incremental housing Regulation to facilitate land sub division for housing Promote private housing finance Low Leverage of household resources = High households savings + payments government contributions Eduardo Rojas Approach Type of program Program State guarantee access to good housing Government facilitates the operations of housing markets Programmes supporting the supply of housing Direct provision of finished houses by the Gov. Direct provision of incremental houses by the Gov. Gov. provision of serviced land for houses Gov. provision of subsidised housing finance Programs supporting the demand for housing Barrio upgrading and security of tenure Housing upgrading Housing vouchers Gov. financing for incremental housing Regulation to facilitate land sub division for housing Promote private housing finance ARGENTINA BOLIVIA BRAZIL CHILE COLOMBIA COSTA RICA DOMINIC REP ECUADOR EL SALVADOR GUATEMALA HONDURAS MEXICO NICARAGUA PANAMA PARAGUAY PERU URUGUAY Eduardo Rojas Three different housing programs under implementation Argentina Federal Housing Program Direct provision of finished houses Chile Housing Solidarity Fund Incremental housing Colombia Programmed Savings Program Programmed savings and supplementary subsidy Target group Program not aimed specifically at poorest households. Key objective the reactivation of the economy Target Group Families living in conditions of vulnerability (housing, old age, single parents, disabilities) Target group Informal workers with limited income Selection mechanism Vary among provinces: raffles, scoring systems. Selection mechanism Mandatory nation-wide point system Social Protection Certificate Score Housing Shortage Score Self selection incentive: low standard of the housing solution Selection mechanism Mandatory nation-wide point system Social Protection Selection System SISBEN Housing needs: household size, savings amount and time. Eduardo Rojas 54 Targeting )'# '(# !"#$%&'()%** -./01213# 45670# 48789:63# !"# &$# &&# $%# &&# &# *#+# *#++# $"# $&# $%# *#+++# %# %# *#+,# %# %# *#,# +,-&./%0*1%*-&2#%0"* Eduardo Rojas 55 new housing programs and approaches • Enabling markets programs – – – – One-off direct subsidies Mortgage origination improvement Second tier markets support Land use and building regulation reform • Additional programs Low-cost basic expandable housing Programmed savings Micro credit for home improvement Technical assistance for home expansion and improvements – New construction materials development and commercialisation – – – – Pro-poor urban development policies Eduardo Rojas New housing products for low income households Sites and Services Government financed programs that supply minimum size plot of land sanitary unit electricity access roads water and sewerage services title to the land house expansion instructions Eduardo Rojas Advantages reduced cost of providing a housing solution simplicity and speed of execution Disadvantages usually built in the outskirts of cities with minimal services and difficult access to the city leave to the beneficiaries to built the houses and improve the neighbourhoods Eduardo Rojas Sites and services - 1965 the starting point sanitary unit adjacent lots Eduardo Rojas Eduardo Rojas the objective sanitary unit self built home Eduardo Rojas Eduardo Rojas Incremental housing support programs public support to the ways how people built homes access land land invasions illegal land acquisition legal land acquisition gradually adding space improving quality of the houses through self help community help Eduardo Rojas the incremental housing construction process years 0-3 occupy in the lot 4-8 9 - 12 expand the house 12 + rental units? activities Eduardo Rojas incremental housing construction process Eduardo Rojas Attributes Activities Eduardo Rojas Land subdivision Secure tenure documents Fiscal cadastre Land registration Access road construction Road paving Community water supply In house water supply Individual waste water disposal Sewerage Activities required for a house to incrementally acquire all the attributes of a finished house in a fully serviced subdivision Natural hazard protection Drainage systems Public lighting Neighbourhood Education infrastructure Heath infrastructure Sports equipment Parks Initial shelter In house bathroom Expanded house area Shelter Improve roof quality Improve flooring quality Improve wall quality Improve doors and windows Improve bathroom and kitchen Eduardo Rojas Responsibilities Public sector Eduardo Rojas Households Chile: incremental housing support program After a few years The houses have sufficient space to accommodate household needs Later the grow to have space for rent Eduardo Rojas Eduardo Rojas • Many actions can only be executed by the public sector – – – – Provision of access roads Potable water Drainage Natural hazard protection • Home improvements can be executed by households if assisted – Technical assistance – Legal assistance Eduardo Rojas • Areas of public support for the incremental home-building – Access land • Turn land invasions and illegal land acquisition into affordable legal land purchases – Support the families to gradually add more space and improving quality • By making the self help and community help methods more efficient • Providing micro-credit Eduardo Rojas Macro Housing Subdivision Soacha Bogotá The city entered in a partnership with land owners to service lands in the expansion area of the city in exchange of serviced land for low-income housing Eduardo Rojas Quinta Moroy, Iquique, Chile. Redevelopment of illegally occupied land to build high density incremental houses Eduardo Rojas Eduardo Rojas The government supplies a core expandable unit Households complete the houses with their own resources Eduardo Rojas Eduardo Rojas conditions for success • Mechanisms to access low cost land for residential uses • Availability of financial intermediaries with capacity to handle micro credit for home expansion and improvement • Existence of organisations capable of providing technical assistance to communities and households • Urban regulations allowing progressive housing construction and completion of infrastructure and services in neighbourhoods Eduardo Rojas Incremental housing program, Guyana The program offered beneficiaries several initial options cost considerations influence the choice as beneficiaries must pay a 20% of the cost Serviced Lot Only: Eduardo Rojas Sanitary Core Eduardo Rojas Core Starter House Eduardo Rojas 1 Incremental Expansion Possibilities Core Starter House Op.on (by contractor) Eduardo Rojas 2 Expansion by Owner Eduardo Rojas 3 Other Possible Expansions by Owner Eduardo Rojas incremental housing programs • Hold the promise of reaching the poor with affordable new housing • Mobilise households savings and sweat equity contributions expanding the reach of scarce public resources • Support home improvements by low income households expanding the range and quality of services they receive from their dwellings Eduardo Rojas Scale up neighbourhood upgrading programmes Eduardo Rojas government approach to illegal settlements changed over time 1960´s considered a temporary anomaly 1970´s eradication and resettlement in new houses in the outskirts of cities 1980´s in situ solution to the infrastructure and land tenure problems 1990´s efforts to integrate the settlements to the physical and social fabric of the city 2000´s efforts to expand the interventions to integrate settlers to the economy of the city Eduardo Rojas Eduardo Rojas evolution of the neighbourhood improvement programs first generation second generation third generation physical integration physical and social integration physical, social and economic potable water sewerage drainage roads and sidewalks public lighting electricity sanitary units in houses secure tenure potable water sewerage drainage roads and sidewalks public lighting electricity sanitary units in houses secure tenure community centres parks and recreation areas nurseries health centres community development potable water sewerage drainage roads and sidewalks public lighting electricity sanitary units in houses secure tenure community centres parks and recreation areas nurseries health centres community development skills training employment placement micro enterprise promotion Eduardo Rojas Houses and workshops for samba artists Potable water tank Water pumping station Cultural centre and open air theatre Paved roads Paved sidewalks Parks and recreation areas Resettled households Schools Cultural activity areas Nursery and school improvements Eduardo Rojas Parque Royal, Favela Bairro Program, Rio de Janeiro Macumba practice area Eduardo Rojas adding components increases the cost of the projects greatly complicate execution Eduardo Rojas maximum investment cost selected programs (in US dollars) Country Maximum cost per household US$ Colombia 2,000 Chile 4,000 Bolivia 4,300 Argentina 6,800 Brazil Favela Bairro Rio de Janeiro 5,000 Brazil Habitar Brazil 4,300 Uruguay 7,300 Ecuador 1,200 Eduardo Rojas decisions on costs Maximum public investment per households is usually determined with the assistance of some form of economic cost-benefit analysis Project components are usually selected with the involvement of the community within a fixed set of eligible investments and a tight budget constraint Eduardo Rojas economic analysis and the project cycle Eduardo Rojas community participation helps to select the most needed investments within a strict budget constraint Eduardo Rojas adopting pro-poor city-wide urban development policies Eduardo Rojas Direct public resources to solve critical problems of the settlements access to and from the city promote employment and services improve health, education and recreation services Eduardo Rojas Medellín, Colombia Eduardo Rojas Eduardo Rojas improve transportation to and from the slums Eduardo Rojas Integrated improvement of the infrastructure and public spaces Eduardo Rojas provide good health and education services Eduardo Rojas promote employment in manufacturing activities and local services Eduardo Rojas Eduardo Rojas In sum Housing policy matters for the poor if well designed and executed housing policy can help households access good housing Housing policy must focus on two major areas Expand the production of new houses to levels compatible with the growing demand coming from the formation of new households Improve the quality of the existing housing stock Eduardo Rojas The Latin American experience indicates that to attain these objectives, housing policy must: Ensure that all segments of the population have access to housing solutions according to their resources, needs and (if possible) their preferences Mobilise all the resources available to individuals households community Treat housing as a merit good not as an entitlement households are primarily responsible for housing themselves governments should help those households facing severe difficulties in accessing adequate shelter Eduardo Rojas To reach this objective, housing policy must go beyond the the individual house In urban areas, the policy must even go beyond the neighbourhood and confront the issues of adequate shelter as a city-wide urban development policy concerns In rural areas, the policy must focus on the needs of the community as well as those of the individual households Eduardo Rojas • Housing policies cannot be implemented in isolation from other development policies – – – – Economic development Income redistribution Financial markets development Urban development Eduardo Rojas