affordable land and housing in asia - International Union of Tenants

can be found throughout Asian cities and arelargely financed and led by private developers.Imposing advertisements abound for residentialproperty that is portrayed as comfortable andsecure, and often provided with associatedmortgage finance for middle- and high-incomehousehold purchasers. Such housing, however,is simply out of financial reach for the vastmajority of households and as a result, informalhousing, slums, squatter settlements, low-qualityrental housing, house sharing and street sleepingcontinue to proliferate in most Asian cities.In Asian countries that have relatively strongeconomies and well functioning housingmarkets the present issue is not the cost ofhousing per se but rather securing housingfinance. Compared with Africa and LatinAmerica, the rapid economic development inAsia over the last several decades has led to largeeffective demand, but the lack of housing financeis the major obstacle. Many households are ableto service a mortgage but they cannot get finance,often due to high down-payment requirements.In India, for example, there is considerablepotential at the lower-income end of the housingmarket. Private developers can produce low-costhousing units, but they cannot sell them becauseof the lack of lower-income finance options.There are 23 to 28 million middle- and lowerincomehouseholds in urban India with incomesbetween 5,000 and 11,000 INR (112 to 248USD) that could meet housing repayments. 39Yet they are constrained as they cannot get creditto buy housing. While the poorest still can notafford such housing, expanding housing financeto the group where there is effective demandcould potentially transform housing sector andeconomy. Likewise, in Bangladesh there isinterest from private developers in producinghousing for low-income households but ‘inthe absence of fundamental improvements ininfrastructure, land, and housing development,this nascent trend will not go far’. 40 Smalladjustments to the housing unit price andmortgage terms would increase the market to 40per cent of the urban population. This, again,highlights the importance of developing housingfinance mechanisms to support low-incomehouseholds to secure housing.In light of this brief historical snapshot itis clear that while the challenge of housingaffordability is not new, it is an increasingproblem in most Asian cities. Even with thesignificant theoretical, policy and practice shiftsover the last sixty years, informal housing hascontinued to play a leading role in deliveringurban housing at a economic cost that thepoor can afford. While it may be economicallybeneficial, such informal development is nota suitable method for delivering affordable,comfortable, and healthy housing consistentwith the sustainable and planned growth of citiesand urban regions.Over the last sixty years the key challenges havenot notably changed. For households, the keymicro challenge for obtaining and retainingaffordable housing is access to affordable land andhousing finance. For governments, the key macrochallenge remains the need for governments toinstil a supportive institutional and regulatoryframework that can improve the affordabilityof housing and increase its supply in face ofcontinued rapid urbanisation and populationgrowth.1.3 HOUSING AFFORDABILITY:ITS COMPONENTS ANDMEASURESAffordable housing is broadly defined as thatwhich is adequate in quality and location and doesnot cost so much that it prohibits its occupantsmeeting other basic living costs or threatens theirenjoyment of basic human rights. 41Housing affordability is affected by many factors.Figure 8 outlines the components of housingaffordability for households. Affordability isprincipally set by two main variables: capitalvariables (house purchase costs) and occupationvariables (costs associated with keeping thehouse).The ability of a household to purchase a house isaffected by the purchase cost (which is the sumcost of land, infrastructure, building materialsand labour and profit) and the ability to financethe purchase (principally set by the financedown payment requirement and the balance ofhousehold savings).10PART ONE