affordable land and housing in asia - International Union of Tenants

POORER URBANHOUSEHOLDSIN ASIA SIMPLYCANNOT AFFORDTO SPEND SUCHPROPORTIONS OFTHEIR INCOME ONHOUSING. MILLIONS OFHOUSEHOLDS, THEREFORE, HAVENO OTHER OPTION THAN TORENT ROOMS IN HOUSING BUILTBY THE INFORMAL SECTOR,OFTEN IN SLUMS AND INFORMALSETTLEMENTS.For example, in Chang Mai, it takes 6.8 annualmedian salaries to purchase a median pricedhouse, but 25.0 median salaries to rent a medianpriced rental house. A similar trend is observedin Surabaya, where it is over 200 per cent moreexpensive to rent a house than to purchase one(Figure 15).Poorer urban households in Asia simply cannotafford to spend such proportions of their incomeon housing. Millions of households, therefore,have no other option than to rent rooms inhousing built by the informal sector, often inslums and informal settlements. This offers themfar more affordable options, with shared roomsor services being among the alternatives availableto them. Millions of other households buildrudimentary dwellings on illegally occupied land,while still hundreds of thousands of others becomepavement dwellers, as in the major cities in India.The cost of housing relative to income in Asia issecond only to Africa. The relative cost of housingis particularly high for the lowest income groups.Rent-control measures may contribute to lowerrent-to-income ratios, but they can also reduce81 82rental housing supply.A key determinant of housing supply andaffordability is the role played by the formaland informal sectors in housing production.In Asia, a substantial proportion of the housingstock is produced by the informal sector. Oneof the characteristics of the informal sector thatdistinguishes it from the formal sector is the orderin which development takes place. 83 Formal sectorhousing is planned beforehand, after which it is atleast partially serviced before construction. Onlythen do the occupants move in. In contrast, inthe informal sector, occupation takes place first,often on vacant, un-serviced land. Housing issubsequently constructed, and then services andplanning follow—typically after an extendedperiod of time, trying to improve the situationretrospectvely.Figure 14: House price/rent-to-income ratios for selected Asian capital cities302520151050AmmanAnkaraBangkokDamascusDhakaHouse price/rent to income ratioGazaJakartaKuwaitPhnom PenhSeoulSingaporeTokyoUlaanbaatarVientianeHouse price to income ratioCityHouse rent to income ratioHouse price/rent-to-income ratios for selected Asian capital cities (Note: house rent-to-income data not availablefor all cities; no value does not mean a ratio of zero). Source: UN-HABITAT, 200324PART two