New approaches to progressive housing in Latin America: A key to habitat programs and policy

Abstract

In advanced industrialized countries, ‘housing’ has become a product delivered complete to families by a sophisticated network of lenders, developers, title companies, and other organizations. In developing countries, 70% of housing investment occurs progressively—that is, households acquire land through purchase or invasion, and gradually improve the structure and legal tenure, and lobby for basic services. A useful approach for housing in this context: (a) offers a wider range of low-cost solutions, rather than just complete new units; (b) joins small loans at market rates (rather than long-term traditional mortgages), with family savings, and—sometimes—a small subsidy; and (c) has Government set the rules of the game and the private-sector directly produce and finance housing. The paper compares the “product” approach of industrialized countries with the progressive housing of developing countries, and profiles three types of program interventions that form an emerging housing practice in Latin America relevant to other developing regions: (a) housing microfinance; (b) low/moderate-income land development; and (c) direct demand subsidies.