Published on Sustainable Cities

Three misconceptions in the way of better housing policies

This page in:
Also available in: 中文

Photo by Dominic Chavez / World Bank

While the need for housing is widespread, individually people have different needs—depending on whether they are single, married, senior citizens, families with children, or members with disabilities. Despite the best of intentions of policymakers, "a roof overhead" remains an elusive goal for a large majority of the world’s people. Most households cannot afford even the cheapest house that fits their needs and qualifies as “decent,” and no government alone can close this gap with subsidies. Nor are we on track to build the 300 million new houses needed to close the housing gap by 2030.

What’s missing? At least three misconceptions stand in the way of better housing policies:  

1. Housing and employment policies are independent of each other.

Households need a continuous stream of income to pay for housing. Innovations are making economies more productive but employment more precarious. Automation has already wiped out good paying permanent jobs in formal economies, leaving many families dependent of “flexible working arrangements.” For example, 95% of the 10 million jobs created in the U.S. between 2005 and 2015 were “alternative work”—i.e. temporary, contract, or freelance assignments rather than traditional 9 to 5 jobs.

These flexible job markets are not being supported by equally flexible or tenure neutral housing policies, which are still focused on ownership and long-term mortgages. Governments that do not address this issue risk seeing their efforts at housing reforms actually increase credit defaults and the homeless population.

2. Incremental housing has no long-term prospects.

Most of the institutional structure for designing, financing, and subsidizing housing has been geared to those operating in the formal economy. And they are the minority in developing countries. If access to housing were a highway, those who had the cash to buy a house or the cachet to get a bank mortgage would be in the express lane speeding toward home ownership; while the rest of the road was a bumper-to-bumper traffic jam filled with those most in need of housing—“the informals.” In Sub-Saharan Africa, 70% of the 10 million people moving to urban areas every year end up living in slums.  Only about 2 million are lucky enough to live in a formal housing unit during their lives. The rest will have to be content with improving their existing informal homes gradually over time, but without access to the know-how to achieve even minimum safety standards.

Today, 1.2 billion people are living in substandard housing. By 2030, this figure is expected to reach 3 billion. Policymakers would better serve the needs of their constituents by balancing housing policies aimed at the acquisition of new housing units with those that help finance home improvements—and provide the technical assistance—so that people can bring their most important asset up to building codes.

3. The role of government in housing is best limited to post-disaster relief.

The data suggests that each new housing unit can create 3 full-time jobs, and it affects the ongoing debate on the role of government in housing, whether in supporting the construction of new houses or the retrofitting of informal ones. Advocates of government intervention argue that housing is as much a right as access to education or healthcare. For opponents, housing is a private asset subject only to limited government intervention, until an earthquake, flood, or hurricane leaves thousands of people injured or homeless. In the midst of public grief, everyone looks to the government for help in reconstruction, no matter how high the costs.

And the price tag—in terms of loss of life and property—is disproportionally higher in developing economies. After the 2010 earthquake in Haiti, estimated costs were larger than its annual GDP, mostly due to housing. The estimated costs of the 2011 Japanese earthquake were only 3.6% of GDP. Investing in making new—and existing—housing more resilient can close such gaps.

"Designing a dream city is easy," Jane Jacobs, the writer and activist for the social and economic benefits of cities, once noted. “Rebuilding a living one takes imagination." The challenge for policymakers in the developing world is to begin reimagining their cities with the realities of rapid urbanization, changing labor market, and inevitable natural disasters in mind. In that picture, affordable, safe housing—owned, rented, new, or retrofitted—looms large.

Please tweet: 
Housing and employment policies are interdependent. #Housing4All 
​Incremental housing is part of the solution to #Housing4All. 
A natural disaster that destroys existing housing may also destroy the economy. 


Luis Triveno

Luis Triveno, Senior Urban Development Specialist

Ellen Hamilton

Lead Urban Specialist for the Urban, Resilience and Land Global Practice – Europe and Central Asia Region

Join the Conversation

The content of this field is kept private and will not be shown publicly
Remaining characters: 1000