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Affordable Housing

Five lessons on affordable housing provision from Indonesia

Dao Harrison's picture
When first-time homeowner Dewi moved into her new house in the Yogyakarta area a year ago, thanks to a government subsidy program, she thought: everything is perfect.
 
Well, not quite. Located an hour away from the city center, Dewi’s house is far from employment opportunities, shopping, and schooling for her two children. Two years after completion, more than half the housing development remains unoccupied. Because the house is not connected to the local water system, Dewi buys water twice a week. When seasonal floods are underway, the heavy rains impede access to her house.



Providing affordable and adequate housing has become a top policy priority for the government of Indonesia with the launch of Satu Juta Rumah (One Million Homes) program. Previous efforts to address the demand for affordable housing – a function of both new annual demand creation and an unmet housing deficit – had not effectively improved housing outcomes at the scale necessary.
Source:  Ministry of Public Works and Housing, Indonesia

But should homeownership volume be the sole indicator of a successful housing subsidy program? Is it possible to have a program that meets the government’s needs to be fiscally and economically cost effective, while also responding to the private market as well as the needs of residents?
 
Options are being explored. The recently approved National Affordable Housing Program Project (NAHP), for example, aims to innovate the affordable housing market by addressing bottlenecks and actively engaging the private sector in delivering for unserved segments. So far, Indonesia’s efforts provide valuable lessons. The lessons are:

Building more affordable and disaster-resilient housing in Latin America and the Caribbean: a few policy ideas

Julian Palma's picture
Photo by C64-92 via Flicker Creative Commons

Between 2010 and 2017, Chile was struck by 10 major natural hazard events. These disasters affected as many as 340,583 houses and cost $3.6 billion in reconstruction (Ministry of Housing and Urbanism of Chile). Post-disaster assessments point to housing as one of the most affected sectors in the wake of climate-related and other natural hazards—most commonly floods, earthquakes, landslides, and fires. In a 22-year period between 1990 and 2011, minimum losses in the housing sector for 16 countries in Latin America and the Caribbean (LAC) amounted to $53 billion.

In the LAC region, one quarter of the population lives in slums, characterized by the prevalence of substandard housing quality as well as incremental and self-construction of homes. Families living in these informal settlements are at greatest risk to natural hazard impacts. Programs providing new housing do not always reach families in the lowest quintiles; and without access to affordable and well-located housing alternatives, households have no other option than to build informally, and in areas most prone to natural disasters.

Retrofitting: A housing policy that saves lives

Luis Triveno's picture
Building earthquake-resistant housing in Peru. Photo: USAID/OFDA, Auriana Koutnik/Flickr
When a hurricane, earthquake or other natural disaster strikes a poor country, families too often suffer a double tragedy: the loss of loved ones and their most valuable (and sometimes only) asset, their home. In the aftermath of the 7.0 magnitude earthquake in Haiti in 2010, which killed more than 260,000 people, 70% of asset losses were related to housing. Ecuador faces billions of dollars in reconstruction costs from last April’s 7.8 earthquake, which killed 900 and injured almost 28,000. If Peru were hit by an 8.0-degree earthquake, an estimated 80% of potential economic losses would involve housing.
 
And while nature’s fury does not distinguish between urban and rural areas, a large majority of disaster losses are concentrated in cities, where they disproportionately affect the poor. This creates a great challenge for low and middle-income countries.  In Latin America and the Caribbean, 200 million people—1/3 of the population—live in informal settlements, where most dwellings don’t comply with construction codes and home insurance is non-existent. Perhaps unsurprisingly, LAC’s informal districts also account for the majority of disaster-related deaths in the region.
 

Eight stubborn facts about housing policies

Luis Triveno's picture
A low-income residential neighborhood in Mumbai, India. Photo: Simone D. McCourtie / World Bank
As John Adams famously warned, “facts are stubborn things” that we cannot wish away. Governments in the developing world are finally facing up to the increasing need for affordable housing: today 1.2 billion people live in substandard housing; by 2030, 3 billion will need new housing. While challenges may vary by country, I believe there are at least eight “stubborn facts” about housing policy that should not be ignored.

Success when we deemed it failure? Revisiting sites and services 20 years later

Sumila Gulyani's picture
Between 1977 and 1997, the World Bank supported “sites and services” projects in 27 cities across India
A freshly-minted architect stood staring at a sea of toilets. Row after row of them, on small “housing plots” meant for low-income families who would build their house incrementally as their incomes and savings grew. The neighborhood was “planned” and provided with services—under a World Bank-supported “sites and services” project—to serve as the anti-thesis of and an antidote to the slums that were, at the time, increasingly becoming the only housing option for low-income families.

It was 1980 and the architect, Barjor Mehta, was deeply disappointed. There were no houses, no people and no chance that they would ever come, given the seemingly god-forsaken location—in an area called Arrumbakkam—so far from the city center in Madras (now Chennai). Having just completed his thesis on housing, he wrote a scathing news article in the Times of India denouncing the sites and services approach. Barjor wasn’t alone in his critique, and by the mid-1990s the World Bank had almost entirely abandoned such projects.

In October 2015, Barjor, now Lead Urban Specialist at the Bank, invited me to revisit Arumbakkam and other neighborhoods developed, between 1977 and 1997, under four Bank-supported sites and services projects: With my colleagues Kate Owens and Andrea Rizvi, I visited 15 of the 28 sites developed in Chennai and Mumbai. We also reviewed archival material, analyzed satellite images, and recently presented our preliminary findings. Now, Barjor and I agree that previous assessments of failure may have been both premature and erroneous. Why?

Of tigers and elephants: The rise of cities in Asia

Judy Baker's picture
Rush hour traffic in Mumbai, India. Photo: Adam Cohn/Flickr
Over the next decade and a half the world will add a staggering 1.1 billion people to its towns and cities. About one half of this urbanization will happen in the regions of East and South Asia.
 
If history is any guide, this growth in urban population will provide tremendous opportunities for increasing prosperity and livability. One can look at the successes of a few Asian cities such as Tokyo, Seoul, and Singapore to demonstrate how, with the assistance of good policies, urbanization and economic development go hand-in-hand. More generally, no major country has ever reached middle-income status without also experiencing substantial urbanization.
 
Yet cities can grow in different ways that will affect their competitiveness, livability, and sustainability. The more successful cities of Asia have been effective at creating opportunities, increasing productivity, fostering innovation, providing efficient and affordable services for residents, and enhancing public spaces to create vibrant and attractive places to live. But many, many, more cities have neglected fundamental investments in critical infrastructure and basic services, and have mismanaged land, environmental and social policies. This has resulted in traffic congestion, sprawl, slums, pollution, and crime.
 
Among the many complexities of urban development that have contributed to success, two critical factors stand out – investing in strategic urban planning, and in good urban governance.

How Latin America’s housing policies are changing the lives of urban families

Luis Triveno's picture
Photo: Pierre-Yves Babelon/Shutterstock
In an effort to harness the benefits of urbanization and improve the living conditions of the urban poor, Latin American countries have experimented with housing subsidies. Now that the region has several decades of experience under its belt, it is time to look back and ask: Have subsidies worked? What kind of impact have they had on the lives of lower-income residents? Moving forward, how can cities pay for ongoing urban renewal?

To address those questions and share their experiences, officials in charge of designing and implementing national housing policies in eight countries (Argentina, Bolivia, Brazil, Chile, Colombia, Mexico, Paraguay, and Peru) recently met in Washington DC, along with representatives from the World Bank, Cities Alliance, the Urban Institute, and Wharton's International Housing Finance Program.

Singapore: The Pelé of urban design

Abhas Jha's picture

Photo: Nicolas Lannuzel/Flickr
Who is the best soccer player of all time? A Google search will offer this name: Edson Arantes do Nascimento, popularly known as Pelé. Kicking off in 1958 as a 17 year old World Cup winner, Pele bookmarked his brilliant career a dozen years later with another World Cup triumph for Brazil. 
 
I like to think of Singapore as the Pelé of urban design. The city regularly appears in the top ranks of globally livableconnected and competitive cities. Pelé once famously said, "Success is no accident. It is hard work, perseverance, learning, studying, sacrifice, and, most of all, love of what you are doing or learning to do”. There is no doubt that Singapore’s accomplishments have been made possible by the hard work, perseverance and far-sightedness of its policy makers.
 
2013 speech by Peter Ho, Chairman of the Urban Redevelopment Authority, outlines the careful thought, planning and attention to detail behind Singapore’s urban policy, particularly the decisions, influence and foresight of Mr. Lee Kuan Yew over the decades of development. One astonishing success has been the provision of affordable housing and the care with which each neighborhood has been designed, taking care of the smallest details, in order to ensure social cohesion and a sense of community. These details include provisions for hawker centers and high quality public green spaces.

The "starchitect" of the poor: the keys to Alejandro Aravena's work

Luis Triveno's picture

Pritzker Prize winner Alejandro Aravena’s Elemental firm designed the “half a good house”, which includes gaps between the houses for residents to fill according to their own needs.
Cities are the world’s factories of progress and prosperity. Eighty-percent of all production takes place in our urban areas; it’s where most economic opportunities are. People know it, and this is why five million people migrate to cities all over the world. Every month.
 
The problem is that most cities are not prepared to absorb these numbers. The tragic result is chaos, inequality and environmental damage. One clear manifestation of the mismatch between people’s demand for opportunities to prosper and the inability of cities to maximize the benefits of agglomeration while minimizing the costs of congestion is the omnipresence of slums throughout the world. Today, one billion people live in slums; worse still, many of those settlements are in areas highly vulnerable to natural disasters. By 2030, this figure is expected to double.
 
To absorb this ever-increasing demand for affordable urban housing, would require creating, in effect, a new city capable of housing 1 million people – every week during the next 15 years. Governments are already overwhelmed. The private solution of reducing the size of dwellings and relocating them to the peripheries of cities has produced economic and social segregation, which has become a ticking bomb for unrest.
 
During the past 12 years, the Chilean architect, Alejandro Aravena, 48, has offered solutions to the global housing crisis that are so creative, speedy, budget-conscious and scalable that he has been awarded the 2016 Pritzker Prize, considered the Nobel for architecture. His work—and the prize—challenge architects to envision innovative buildings not just for businesses and other wealthy clients but for all the people.