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Claudio Acioly Jr
Head Capacity Building and Training
Senior Housing and Urban Management Expert
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AFFORDABLE HOUSING PROVISION:challenges & experiencies in a global context
Claudio Acioly Jr.
Senior Housing Expert
Head of Capacity Building
1.What do we mean for Housing?
It is more than bricks and mortars and a roof. 23/06/2019 Claudio Acioly Jr, UN-HABITAT 3
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PoliciesStrategies
Instruments Actions
Institutional Frameworks
Legal & Regulatory Frameworks
LandInfrastructure
Finance
Building Materials
Labour
HOUSING
What is the ultimate goal?
Affordable& Adequate
Housing
Source: Acioly, C. IHS: 1994 2003; UN-HABITAT, 2011.
Urban Policies
Planning Strategies
Planning Instruments Actions
The right to live somewhere in peace, safety and dignity, with access tobasic infratructure, in a location that allows adequate access to jobs and opportunities and urban services, all at an affordable price.
The Right to Adequate Housing
Security
of Tenure
Provision of
services,
materials,
infrastructure
AffordabilityHabitability
Accesibility LocationCultural
Adequacy23/06/2019 Claudio Acioly Jr, UN-HABITAT 5
Denying people access to affordable housing is of course a serious breach of basic human rights.
Hugh Pavletich, in Performance Urban Planning, Annual Demographia Housing Affordability Survey, 2019.
Affordable Housing
Connecting the New Urban Agenda and the SDGs: (re)thinking UN-Habitat’s role
1 Agenda 5 Main Areas 17 Goals 169 Targets 240 Indicators
2030 Agenda for Sustainable Development
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Sustainable Development Goal 11SDG11.1
By 2030, ensure access for all to adequate, safe and affordable housing and basic
services and upgrade slums
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Making Housing Affordable
Understanding the supply and demand sides of the housing markets is the first step to design policies.
2.
GOVERNMENT & POLICY INTERVENTIONS
(Adapted from Lundqvist)
SUPPLY DEMAND
DWELLING PRICE
MONTHLY HOUSING AMORTIZATION OR
RENT
FAMILY INCOME
MONTHLY HOUSING REPAYMENT OR
RENT
HOUSING PRODUCTION COST
FAMILY PURCHASING
CAPACITY
AFFORDABILITY
Housing Policy Interventions
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MONTHLY HOUSING AMORTIZATION OR
RENT
POSSIBLE GOVERNMENT INTERVENTIONS(Adapted from Lundqvist)
SUPPLY DEMAND
DWELLING PRICE
FAMILY INCOME
MONTHLY HOUSING REPAYMENT OR
RENT
HOUSING PRODUCTION COST
FAMILY PURCHASING
CAPACITYFlow
Flow
CAPITAL COSTFINANCING
INFRASTRUCTURECOST
SALES PRICEREGULATIONS
LOCAL FEES
LAND COSTLABOR COST
MATERIALS SUBSIDIES
FINANCIAL SYSTEMRENT REGULATIONS
MANAGEMENT/REPAIR/MAINTENANCE
PROPERTY TAXATION
INCOME TAXATION
SALES TAXATION
INCOME TRANSFERS
COMPULSORY SAVINGS
SUBSIDIZED INTEREST
TAX RELIEF TO HOMEOWNERS
HOUSING ALLOWANCES
HOUSINGGRANTS
AFFORDABILITY
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3.The Global Affordability Crisis:
The lack of affordable housing compels people to resort to informal housing solutions which propels informal urbanisation and slum formation and generates more exclusion & segregation
Global Sample of Cities 200 cities that statistically represent this Universe of Cities.
A cooperation between UN-Habitat, University of New York and the Lincoln Institute of Land Policy.
1. Housing affordability is measured by comparison of house prices to household incomes
2. Median house price divided by median annual gross pre-tax household income to assess housing affordability.
3. The Median Multiple is a house price to income ratio that is widely used for evaluating housing markets
1. Areas rated as 'affordable’: housing prices should not exceed 3 times gross annual household earnings.
HOUSING AFFORDABILITY DEFINED
15
25
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
13.0
14.0
15.0 H
ou
se P
rice
-to
-Ho
use
ho
ld I
nco
me
Ra
tio
Cities
City Housing Sector Occupant Affordability
Accepted Standard for Affordability (3 HH Incomes)
Median Occupant Affordability UN Sample of Cities
City A, Very Affordable 1.7
City B, Affordability Standard 3.0
City C, Median Affordability 4.9
City D, Unaffordable
12.1
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0%
10%
20%
30%
40%
50%
60%
70% R
en
t E
xp
resse
d a
s S
ha
re o
f H
ou
se
ho
ld In
co
me
Cities
City Monthly Rent-to-Household Income Ratio
25% Standard for Rent Affordability
Median Rent Occupant Affordability in the UN Sample of Cities
City A, Affordable17%
City B, Affordability Standard
25%
City C, Median Rent Affordability
30%
City D, Unaffordable
58%
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0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
Low-Income Middle-Income Middle-Upper-Income High-Income
Hou
se P
rice
-to-H
ouse
ho
ld I
ncom
e R
atio Occupant Affordability
Median Affordability
CONCLUSION 1: Regardless of GDP Housing is UNAFFORDABLE
(house price-to-income ratio higher than 3.0) in the Global Sample of Cities
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0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Low-Income Middle-Income Middle-Upper-Income High-Income
Ren
t Exp
ress
ed a
s S
hare
of H
ouse
hold
Inco
me
Occupant Rent Affordability
Median Rent Affordability
CONCLUSION 2: Regardless of GDP, rental housing is UNAFFORDABLE
(more than 25% of household income committed to housing)
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4.The 2019 Demographia International Housing Affordability Survey:
309 metropolitan housing markets (metropolitan areas) in 8 countries (Australia, Canada, China [Hong Kong Only], Ireland, New Zealand, Singapore, the United Kingdom and the United States)
Demographia 2019 SurveyHousing Affordability Ratings by Nation
1. The main message is that unaffordable housing is not an unavoidable fatality linked to economic success Some cities achieve high demographic and economic growth without abnormal housing inflation. (Alain Bertaud)
2. High housing prices misallocate resources toward real estate at the expense of the rest of the economy. This misallocation could eventually significantly slow down economic growth and causes a housing bubble to burst, freezing investments in the entire economy.
Key ConclusionsThe 15th Annual Demographia International
Housing Affordability Survey 2019
Conclusion on Affordability
1. House price-to-income ratio above 3 in the majority of cities
2. Accessibility to affordable housing is largely obstructed
3. Access to housing via homeownership and rent is hampered.
4. The housing sector in many cities is not functioning well, with restricted options for several income groups.
5. Distortions reflected on the form & structure of cities: overcrowding, informal housing, slums, poor housing management, high land price, spatial exclusion23/06/2019 Claudio Acioly Jr, UN-HABITAT 23
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Lack of Affordable Housing
1. Physical and spatial manifestation in the urban landscape of cities
2. Dynamic informal land and housing markets3. Geography of inequality and segregation
1. informal urbanization2. growth of slums:
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5.The Problem of Slums in a nutshellThe scale of the problem calls for immediate action to improve the quality of life in the existing stock of slums and prevent the formation of new ones.
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1 out of 4 people living in urban areas
lives in slums.
Caracas
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Nairobi
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1995 2000 2010
Slums in AfricaSource: World Atlas of Slum Evolution, UN-Habitat.2015
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6.Addressing the Housing Challenge: the Twin-trackapproach.
Citywide slum upgrading is implementedsimultaneously to policies that bringhousing options to scale.
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Preventive Policies1. Plannning BEFORE development2. Unlocking land delivery for planned urbanization3. Unlocking Housing Finance – accessibility for all4. Policies to bring housing solutions to scale.5. Connecting housing to income and the economy
Improvement Policies1. Planning for development
2. Strategies to improve existing slums
3. Approaches to improve the quality of life
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Existing Slums
Existing Slums
New Housing
Existing Housing
SLUM UPGRADING SLUM PREVENTION
Infrastructure provision
Settlement planning
Land regularisation
Housing improvement
Components of the Improvement Strategies
Land supply
Housing Finance
Regulatory Reforms
Building Industry Capacity
Housing & Urban Policies
etc.
Opening Streets
IMPROVE
Planning for Growth
Infrastructure InvestmentPREVENTOne
SinglePolicy
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FIVE Policies to Bring Housing Options to Scale
1. Improvement, upgrading and regularization of existing slums must go hand-in-hand with housing at the center of urban policies and strategies leading to a well-performing housing sector and housing supply at scale in diversity of price, location, size, standard and typology;
2. Unlock land for housing: serviced land supply at scale;3. Citywide Slum Upgrading: from projects to programme with
a menu of interventions that includes streets, urban planning, citizen participation, mapping, infrastructure, land allocation, security of tenure, economic development, etc.
4. Unlocking housing finance: different forms of self-financinge.g. property tax, plus-valia, value capture, TDR
5. Data & Information: knowledge and indicators to sustainevidence-based policies
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7.Learning from Singapore:
Housing at the centre of transformativeand sustainable urban policies.
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So
urc
e: E
. S
tee
ke
lenb
urg
, 2
00
7
Urban Planningand Design
Housing at the Center of Urban
PolicyNationalHousing
FundCPF
LandSupply forUrbanization
Housing at the Center - Singapore
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Singapore Housing SystemCentral
Government
Annual GrantLow Cost LandConstruction Loans
Government Bonds
Sale of flats on mortgage loans
Housing Development
Board
CPFCentral Provident FUND
Compulstory Individual contribution
Repayment of mortgage loan on behalf of the buyer
Home Owner
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Key Lessons from Singapore
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1.Legal provision for land supply
2.A Housing fund and guarantees to housing finance
3.Strong link between urban planning, land allocationand housing development
4.Promotion of the housing sector as a wealth generator
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8.Learning from TheNetherlands:
Housing at the centre of transformativeand sustainable urban policies.
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National SpatialPlanning
Framework
Housing at the Center ofUrban Policy
NationalHousing Fund
& NationalGuarantee
Fund forSocial
Housing
The 1901 Housing Act & Housing Associations
Housing at the Center – The Netherlands
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Key Lessons from The Netherlands
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1.Legal provision (1901 Housing Act)
2.Government funding and guarantees
3.Self-regulated sector of Housing Associations (privateentities that build for the public good)
4.Promotion of social rental sector to enable access toaffordable housing by those who cannot find it throughthe market
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9.Learning from Chile:
Housing at the centre of transformativeand continuous urban policies.
More than 100 years of housing Policies
The ABC Housing Finance Model
A = Ahorro A = Savings
B = Bono B = Bonus
C = Credito C = Credit
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10.Learning from Mexico:
Housing at the centre of unsustainableurban policies.
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Land Banking
Housing Policies
National Housing Fund(compulsorycontribution) & Guarantee Funds
EnablingInstitutional & RegulatoryFrameworks(increasing privatesector participation)
Housing NOT at the Center of Urban Policies– Mexico
Urban Policies
Making land available for housing
• Establishment of land banking – reservas territoriales
• Privatization of social land – ejidios (usufruct)• Expropriation of social land –• Purchase of social land by government• Purchase of social land by private developers,
builders, contractors
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RESULTS
• A significant housing production between400,000 and 600,000 housing units per annum during a period of 10-12 years
• 4.9 million housing units abandoned, vacant, under-occupied in the country, equivalent to14% of the total housing stock.
• The rise and fall of large housing developmententerprises
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11.AFRICA:What are the underlying causes of the Housing Affordability crisis in Africa?
Land delivery bottlenecks? Household incomes are too low in relation to housing prices or production prices are too high? High mortgage interest rates?
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Across Africa, the confluence of low urban household incomes, high mortgage interest rates, and short tenors results in very low housing affordability.
1. Land Supply remains cumbersome: customary landownership co-existing with roman-based propertyrights regimes and challenges related todocumentation-registration-legal protection;
2. Mortgages and housing finance under-developed;3. Institutional capacity ill-developed;4. Governance of the Housing sector not sufficiently
established.5. Lack of data and information adversely affecting the
development o well-informed and evidence-basedpolicies
CONCLUSIONS
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THE ENDThank you.