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‘The shock waves of the new political economy steering housing policies are widespread across the globe’

Kilamba new city jpg

To tackle this global crisis, we must look at people as a vital infrastructure for 21st century cities, not just to systems of pipes or cables

According to the World Urbanization Prospects published by the United Nations in 2014, in the next three decades the rate of urbanisation will increase at a fast pace, adding 2.5 billion new dwellers to the current urban population. To accommodate this growth the world needs to create the equivalent of 300 new megacities, each roughly the size of London.

However, London, like Rome, was not built in a day, and maybe creating new megacities is not the best solution to cope with this path of urbanisation. So, where will all these people live? More importantly, perhaps, how will these new urbanites dwell? What will be the role of architects and urban planners in this process? Answering these questions is anything but simple. 

Recent critical scholarship following in the footsteps of Henry George’s Progress and Poverty or Thomas Piketty’s Capital in the Twenty-First Century singles out inequality as the single most problematic issue that challenges the future of cities, both in the so-called urban global south and in the most developed countries. The recent history of the role of the state in the promotion of affordable housing is vital to understanding how inequality in housing opportunities became the new normal.

Bukit batok jpg

Bukit batok jpg

Source: Holger Ellgaard / Wikimedia

Bukit Batok town in Singapore

Historically, affordable housing policies designed to promote more inclusive cities have been used as social engineering and the instruments of economic policy. This was the case of Sweden’s Million Homes Programme (1965-74) or Singapore’s post-colonial affordable housing programme developed from the 1960s through to the 1970s. This was the moment when the paradigm of the state as producer of affordable housing was fully fledged.

After the deregulation process of the early 1980s, the public sector changed swiftly from producer to being the enabler of the affordable housing market. For example, in Britain, the housing estates developed in the 1960s by the Greater London Council were replaced with housing vouchers – the famous Housing Benefit, which is currently used by the government to enable roughly 5 million lower-income households to access the private and public rental sector.

The same trend can be found in many other social, economic and political contexts, including Sweden, where roughly a quarter of the country’s households are beneficiaries of housing allowances. 

Fittja sweden jpg

Fittja sweden jpg

Source: Holger Ellgaard / Wikimedia

Fittja in Sweden, an area developed by the Million Homes Programme

This paradigm shift, as many housing experts have already demonstrated, created a new political economy of affordable housing that favoured middle-class households, large housebuilding companies and the mortgage finance industry. And it went far beyond the geographical boundaries of the traditional welfare state societies. In China, for example, in 1998 and for 10 years after, mortgage finance was less than 1 per cent of GDP. In 2008 it rose to an overwhelming 15 per cent. As a side-effect of this sudden abundance of money in the housing market, housing prices – and the cost of urban land in particular – increased sharply. Consequently, with the enabling and expansion of housing markets, the shelter problems of low-income sections of the urban population were not solved: and they have stagnated and deteriorated since.

In Shanghai, for example, the average housing space per person for rural migrants in 2010 was 13.98m2, down from 14.93m2 in 2000. In fact, in 2010, 8.4 per cent of the urban population of Shanghai lived in overcrowded dwelling units, where housing space is less than 8m2 per person. At the same time, as reported by The Guardian in July 2015, the six European-style suburban boroughs built by Shanghai Planning Commission in 2001 remained mostly empty. This dual portrait testifies to the inequality produced by the paradigm-enabling housing markets that emerged in Shanghai after the welfare housing system ended in 1998. Of these boroughs, Holland Town and Thames Town are now mainly used by young Chinese couples as backdrops for their wedding photos, while millions of Shanghai’s citizens are living in crammed flats.

The shock waves of the new political economy that steered housing policies after the fully fledged development of neoliberal housing markets are widespread across the globe. The Chinese ‘ghost town’, a token of this phenomenon, became a trending topic in western media, even – or especially – when such cities started to appear in a different continent, Africa. In July 2012 a journalist reporting for BBC News was quite impressed with ‘Angola’s Chinese-built ghost town’, the infamous Kilamba New City, which had been planned to accommodate half a million people in the suburbs of Luanda, Angola’s capital. As in Shanghai’s copycat towns, only the higher echelons of Angola’s middle class can afford the flats built by the powerful China International Trust and Investment Corporation (CITIC) in Kilamba. Two-thirds of the Angolan population still lives in shantytowns in the suburbs of the country’s main cities. 

Slum concentrationdiagram jpg

Slum concentrationdiagram jpg

Source: Robbert Guis/Mecanoo

Concentration of urban population living in slum areas

The number of informal settlements in Angola is in tune with the percentage of slum dwellers in sub-Saharan Africa: at 62 per cent, it is the region of the world with the highest slum prevalence. In southern Asia the proportion of slum dwellers reduces to 35 per cent, while in Western Asia, Latin America and the Caribbean one fourth of the urban population was classified by UN-Habitat as living in slum conditions in 2012. North Africa has the lowest prevalence of slum dwellers in the Urban Global South, with a level of 13 per cent. According to UN-Habitat, the number of slum dwellers is now estimated at some 863 million, compared with 650 million in 1990 and 760 million in 2000. This relentless growth of ill-housed populations calls for a critical account of the current political economy of affordable housing.

In 2015 the United Nations announced its famous Sustainable Development Goals (SDG) for the next decade and a half. Among the 17 SDGs, there is one – goal 11 – directly focused on the development of sustainable cities and communities. One of the targets to achieve this goal is to ensure by 2030 ‘access for all to adequate, safe and affordable housing and basic services and [to] upgrade slums’. 

Considering the worsening state of affairs outlined above, is this a feasible target or just wishful thinking? Answering this question is all but simple. In 2000, the Peruvian economist Hernando de Soto presented a groundbreaking hypothesis that allegedly would unlock the entrepreneurialism of the majority of the poor in the developing world, and eventually contribute to solve the housing problem of the Global Urban South.

In his The Mystery of Capital, De Soto argued that the economic prosperity of the developing world could be triggered by a very simple process: giving title deeds to extralegal squatters. This simple initiative would instantly bring to life trillions of dollars, transforming dead capital into fungible assets. Despite gathering many institutional supporters for his quasi-mystical belief in the power of the real estate market, De Soto’s ideas have not yet proved their potential to promote more equitable and sustainable societies. In fact, the inequality and the social divide between formal and informal economic, spatial and social practices persists.

Minha Casa Minha Vida

Minha Casa Minha Vida

Source: Manu Dias/Wikimedia

Eunápolis, Bahia, Brazil. Housing built for the ‘Minha Casa, Minha Vida’ programme

According to housing experts, the bottom 60-80 per cent of the population in the urban global south has to resort to incremental housing schemes to obtain adequate housing. Incremental housing offers an alternative to the real estate market through building practices based on self-help and self-contracting, distributing the construction costs through time in consecutive upgrading stages. In Brazil, for example, 62 per cent of new housing investment in 2005 was triggered by self-financed progressive housing, mainly in the informal sector, while only 3.2 per cent was generated by mortgage finance of developer-built units.

Indeed, in Brazil the mortgage finance as a share of GDP grew from 2 per cent in 2002 to 4.1 per cent in 2011. The governmental housing programme Minha Casa, Minha Vida (My House, My Life), launched in 2009, contributed a great deal to this increase. In 2011, one million houses had been contracted, through an institutional and financial engineering system targeted to provide shelter to families earning up to three minimum salaries, a group that concentrates about 91 per cent of Brazil’s national housing deficit. The development and construction of these houses was delegated to the private sector. Despite the amplitude and the ambition of the MCMV programme, its impact on mortgage finance as a share of GDP in 2011 was still remarkably low in Brazil compared with 17 per cent in Chile in that same year, and much inferior to 71.8 per cent in the United States in 2010, after the sub-prime crisis. Yet Brazil’s 4.1 per cent is still much higher than in the most populated African country, Nigeria, where in 2011 mortgage finance corresponded to only 1 per cent of the GDP.

Addis ababa jpg

Addis ababa jpg

Source: Images of Africa / Alamy

Addis Ababa. Informal processes could be the answer to meeting housing demands

In contrast with the global prevalence of the enabling system in the political economy of affordable housing, in Ethiopia the government remains the provider. In effect, the number of affordable housing estates produced by the government is increasing swiftly since the outset of the Integrated Housing Development Programme (IHDP), launched in 2004. Over the last decade, the government produced 220,000 dwelling units and aims to increase the pace of construction to meet the goal of building 50,000 units a year. While this is a remarkable achievement, it is still insufficient to cope with the housing backlog in Addis Ababa, due to the city’s rapid demographic and economic growth and the substandard living conditions observed in most of the existing settlements.

Ethiopia’s two-digit GDP annual growth observed over the last decade has created an emerging middle class that struggles to find accommodation to meet its housing aspirations. Empirical research shows that the middle class has eventually occupied a great deal of the estates developed under the IHDP, thus distorting the initial aims of the governmental programme. Consequently, and in resonance with a phenomenon disseminated worldwide, in Addis Ababa the development of new informal settlements continues despite the ongoing massive state-led affordable housing production.

The persistence of urban informality in Addis Ababa and in many other urban agglomerations of the Global Urban South challenges the optimism of the UN’s Sustainable Development Goals and testifies to the need to integrate informal building practices as part and parcel of the path of urbanisation of cities in rapid demographic growth. It is high time to think about urban informality as a ‘new’ way of life, as the urban researcher Nezar AlSayyad puts it.

Megacity diagrams jpg

Megacity diagrams jpg

The financial sector and high-level policy makers such as the World Bank are already showing signs of an increasing interest in urban informality. After three decades of failed attempts to implement the ‘enabling’ approach, the political economy of affordable housing has developed new instruments to penetrate the multi-billion markets populated hitherto by informal entrepreneurship. Housing microfinance has developed at a fast pace over the past few years. Further, big corporations such as the Mexican cement manufacturer Cemex, its Swiss competitor Holcim, or Philips, the Dutch manufacturer of home appliances, can be seen frequently sponsoring development programmes, design awards, or research projects focused on affordable housing strategies engaged with local circumstances, participatory processes and heterodox building practices such as incremental housing. Maybe these are the signs that De Soto’s Mystery of Capital is about to be finally revealed.

Or maybe not…

In any case, there is sufficient evidence that demonstrates the need for a new approach to the design and politics of affordable housing, one geared to promote more inclusive and resilient human settlements.

Rural popand mortgage diagrams jpg

Rural popand mortgage diagrams jpg

Top: projected relative change in rural population, bottom: mortgage loans and a percentage of GDP. Click to expand

We need a housing system ready to acknowledge the importance of the what AbdouMaliq Simone describes as the ‘conjunction of heterogeneous activities, modes of production, and institutional forms that constitute highly mobile and provisional possibilities for how people live and make things, how they use the urban environment and collaborate with one another’. In other words, we should look at people as a vital infrastructure for 21st century cities and not just to systems of highways, pipes, wires, or cables. 

This does not mean that we should give away technical expertise and all become social workers. Quite the opposite: technical expertise can and should play a key role in contributing to counter the radical inequality that currently cuts off an increasing number of people from the subsistence solidarities that were part and parcel of life in the traditional city.

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