AUHF & IUHF Conference “Real i s ing Affordabi l i ty in G loba l Hous ing Markets”

November 04, 2019

Cape Town, South Africa

Global perspectives on the affordability challenge: where is the innovation?

Silvina Audi Community, São Bernardo do Campo, Brasil – Photos Leonardo Finotti

Outline

• The big picture & global trends

• Addressing the housing agenda – systemic innovation

This Photo by Unknown Author is licensed under CC BY-SA

The big picture & global trends

Global commitments – leadinginnovation?

▪ The New Urban Agenda: housing & people at the centre.

▪ SDG 11 Make cities and human settlements inclusive, safe, resilient and sustainable. Target 11.1 - By 2030, ensure access for all to adequate, safe

and affordable housing and basic services and upgrade slums.

▪ The Climate Agenda: sustainable materials & maintenance; careful urban expansion: environmental surroundings & food security (rural – urban

links)

Major trend: going beyond housing, stronger socioeconomic component, urban integration, public spaces, accessibility, gender equity, increased but

balanced densities.

Increasing pressure: urban poverty, climate change, new migration and demographic dynamics (a new household composition).

Photo: Jorge Jauregui.

Photo: Jorge Jauregui.

Silvina Audi, Bernardo do Campo. By Fabio Knoll

Some regional challenges

• Europe: migration, affordability, urban renovation (use of vacant spaces), new housing needs.

• Eastern Europe: sustainability, renovation housing stock (high costs, individual ownership x collective maintenance)

• North America: social vulnerability, evictions, new migration and demographic trends, urban sprawl.

• Central America & Caribbean: rural – urban transition, international migration flows, climate change, poverty.

• Latin America: overcome segregation, affordable housing in urban and peri-urban centres (use of vacant spaces), slums.

• South East Asia: housing policies/subsidies, slums, affordability, city wide planning.

• Japan, northern countries: aging population, new preferences, shrinking cities.

• China: affordability (empty developments), maintenance public housing, new cities.

• Africa: housing & urban policies, city wide planning & inclusion of slums, rural – urban linkages.

Housing needs x affordability

96,150 housing units per day (2030)

Source: World Bank, McKinsey Global Institute, 2014

Informality

1 billion slum dwellers

2 billion informally employed (61%)

% Urban population living in slums

Source: Slum Almanac 2015-16-UN Habitat & ILO

This Photo by Unknown Author is licensed under CC BY-NC-ND This Photo by Unknown Author is licensed under CC BY

More about affordability

.

0%

20%

40%

60%

80%

100%

120%

Housing Finance not reaching most emerging economies

Source: World Bank Mortgage database, UN Populations

More about affordability

.

Housing Finance not

reaching most emerging

economies

Source: World Bank Mortgage database, UN Populations

0.0% 1.0% 2.0% 3.0% 4.0%

North America

Europe & Central Asia

Latin America & Caribbean

Middle East & North Africa

East Asia & Pacific

South Asia

Sub-Saharan Africa

Annual Urban Growth Rates By Region, 2015-2050

0% 20% 40% 60% 80%

North America

East Asia & Pacific

Europe & Central Asia

Middle East & NorthAfrica

Latin America &Caribbean

Sub-Saharan Africa

South Asia

Mortgage depth (2006-2010)

Mortgage Depth

More about affordability

.

More about affordability: LAND IS KEY

• Land availability for social housing

• Increase supply of social housing

Addressing the housing agenda – systemic

innovation

Addressing the housing agenda – systemic innovation

• National legal frameworks, policy, housing finance investments & subsidies programmes

• City wide planning, normative and urban integration mechanisms

• Innovations from CBO’s /NGO’s /social enterprises

• Private sector role – PPP’s & technology - proactivity

• Governance at project, city, and policy levels

Addressing the housing agenda – systemic innovation

National legal frameworks, policy, housing finance investments & subsidies programmes

• Mexico: re-shifting the financial model from individual and new houses towards urban renovation and home improvements

• Kenya: institutionalizing slum upgrading, clear roles and public land

• National urban legal frameworks: (i) the social function of land & property – Brazil, Colombia, Ecuador, Mexico. (ii) Informal settlements regularization

law, Argentina (2018). Portugal (2019): subsidies and guarantees to improve affordability, state protection vulnerable population, social function of

property.

• National housing policies: Paraguay, Colombia, Morocco, Indonesia.

• National housing programmes: housing improvement and urban regeneration in Colombia and Mexico. Slum upgrading in Argentina.

• Alternative housing solutions: social rental voucher Chile; rental voucher (savings for finance/acquisition) in Colombia; backyard rental in South Africa

& Ethiopia; social vulnerabilities/rental Finnland & São Paulo, Brazil.

Householdsin Mexico

Family

Nuclear Extended Mix

Non family

Co-esidents Individuals

92.02% 7.98%

68.25% 23.17%0.60% 0.49% 7.50%

Source: INFONAVIT.

Infonavit.

Mexico: re-shifting the financial model from individual and new houses towards urban renovation and home improvements

Colombia: Housing Policy 2018 – 22 –home regeneration and improvement

Source: presentation by Colombia Government at World Bank TDD, Tokyo, 2019 .

The National Slum Upgrading Program (2015-2021) is a World Bank-financed US$ 216.50 million program to improve access to urban infrastructure and services in targeted slums in Indonesia.

• institutional strengthening and capacity building of central and local government agencies

• integrated planning support and capacity building for Local Governments and Communities to design and implement slum improvements in 154 cities

Integrated Approach: Indonesia

The National Affordable Housing Program (2017-2021) aims to improve access to affordable housing through a mix of demand and supply side interventions targeting both lower-middle income and lower-income households

• mortgage-linked down payment assistance targets lower middle income households that are unable to access commercial mortgage finance for home purchase without public assistance (10 – 40% scaled by income)

• provides subsidies for home improvement and targets the bottom 40 percent of Indonesian households that require home improvement rather than home purchase solutions

Slum upgrading Home improvement

Source: presentation by Sameh Wahba, World Bank at Kenya Urban Dialogue.

Source: presentation by Yan Zhang at World Bank TDD, Tokyo, 2019 .

South Africa: Backyard rental – needs & business

Chile: rental voucher & PPP

Source: presentation by Chilean Government at World Bank TDD, Tokyo, 2019 .

Argentina: National & City Wide

Source: presentation by Cathy Lynch at World Bank TDD, Tokyo, 2019 .

Kenya: institutionalizing slum upgrading

Source: presentation by Sheila Kamunyori at World Bank TDD, Tokyo, 2019 .

Kenya: National Policy

Source: presentation by Government of Kenya at World Bank TDD, Tokyo, 2019 .

Addressing the housing agenda – systemic innovation

City wide planning, normative and urban integration mechanisms

• Barcelona: 30% reserve for social housing (all new build and renovation projects)

• California: State wide rent control (limit of 5% after inflation for rent control + security against evictions)

• São Paulo: densification strategy, social interes zoning (slums regularization + vacant land for new houses), selling of air/building

rights & urban operations, increasing taxation of empty and underutilized property in central areas

• Densification strategies in LAC

Addressing the housing agenda – systemic innovation

S ã o P a u l o – p a r t i c i p a t o r y c i t y M a s t e r P l a n ( 2 0 1 4 )

D e n s i f i c a t i o n a r o u n d m e d i u m a n d h i g h c a p a c i t y p u b l i c t r a n s p o r t a x e s w e r e p r o m o t e d . I n t h e s e a r e a s ,

p r i v a t e d e v e l o p e r s a r e a l l o w e d t o b u i l d h i g h r i s e b u i l d i n g s , w i t h m i x e d u s e s a n d s m a l l e r a p a r t m e n t s ,

i n o r d e r t o l e v e r a g e d e n s i t i e s i n a r e a s w e l l s e r v e d b y p u b l i c t r a n s p o r t . I n r e t u r n , d e v e l o p e r s m u s t p a y

f e e s t h a t f e e d a n u r b a n i z a t i o n f u n d t h a t a l l o c a t e s 3 0 % o f t h e r e s o u r c e s f o r t h e p u r c h a s e o f w e l l -

l o c a t e d l a n d - a n d c l a s s i f i e d a s Z E I S ( s o c i a l i n t e r e s t z o n i n g ) - f o r t h e c o n s t r u c t i o n o f s o c i a l h o u s i n g .

A d d i t i o n a l l y , i n t h o s e a r e a s a n d , m a i n l y , i n t h e c i t y c e n t r e , e m p t y o r u n d e r u t i l i z e d b u i l d i n g s w e r e

n o t i f i e d , u n d e r t h e r i s k o f p r o g r e s s i v e l y i n c r e a s e o n p r o p e r t y t a x e s ( 2 , 0 0 0 p r o p e r t i e s w e r e n o t i f i e d ,

a b o u t 2 m i l l i o n s q u a r e m e t e r s o f b u i l t a r e a ) , s o m e r e d i r e c t e d t o s o c i a l h o u s i n g .

This Photo by Unknown Author is licensed under CC BY-NC-ND

Paraisópolis, São Paulo. By Maria Tereza Fedeli

I n f o r m a l & p r e c a r i o u s s e t t l e m e n t s – d e n s i f y & d e s - d e n s i f y

U r b a n C e n t e r s

P e r i - u r b a n c e n t r e s

U r b a n p e r i p h e r i c z o n e s

Addressing the housing agenda – systemic innovation

Densification alternatives at city level: making room for affordable housing in LAC

NGOs, PPPs & governance

• Habitat for Humanity Argentina: making the case for rental housing investments in central Buenos Aires

(piloting & policy incidence)

• Housing PPPs: São Paulo, Mumbai – limited outreach, requirement of strong guarantees and subsidies –

LAND IS the main input

• Sustainable technology: less environmental impact, less maintenance costs – challenges to set up new

standards, decrease initial construction costs and adjust to existing subsidies

• Governance: National Urban Development Council in Chile, National Housing Council in Mexico,

Governance system in Brazil at city, state and national levels – private, public and social at the same table

Addressing the housing agenda – systemic innovation

Conclusions

• Integration & sustainability is on the top of the agenda

• Housing affordability gap is linked to the limitations of housing finance: if there is no change in income distribution, gap will have to be addressed by government regulations &

subsidies

• Innovations at project/pilot level needs to be inserted in a broader evolutive scenario that includes policy, investments, subsidies & guarantees, financial systems, city wide planning &

social support

• To advance, the housing agenda has to be pushed at all levels of government and be complemented by innovation and a cultural shift at private and social levels, + supporting

information and practice oriented research

• Social function of land – regulations at national and city level are required, requirements for reserves for social housing and for maximizing the use of empty and vacant land are being

set up at local and national level

• Slum upgrading connected to land regularization and home improvements is a big agenda to tackle and can leverage innovative business models for all sizes of private sector and social

enterprises

• New housing is needed, strategies for densification are being developed to save environment and rural areas

Addressing the housing agenda – systemic innovation

Anacláudia Marinheiro Centeno Rossbach – Regional Manager LACarossbach@citiesalliance.org