Informal Housing Sector Research Articles

Micro Housing Finance Corporation

This case describes the evolution of MHFC, a player in the Indian informal housing sector. As a new entrant offering micro home loans to the financially excluded lower income families of urban India in 2008, MHFC had grown to an annual number of 18,000 loans worth INR 8 billion with an average ticket size of INR 0.43 million (USD 6,000). With a 53.5% purchasable equity stake in MHFC, Chopra and his team were left with certain decisions to make. Should the company on-board a new social investor? Or should it bring on the more readily available and capital-rich private equity investors interested in the lucrative prospects of the microfinance housing sector? The case discusses two key objectives: (1) to understand the entire entrepreneurial journey of a group of entrepreneurs and how they plan to exit the venture, and (2) to enable classroom discussion on how to develop a business model from scratch, get it funded, achieve scale and then exit.

Measuring the housing sector’s contribution to GDP in emerging market countries

PurposeThis paper aims to document the economic importance of the housing sector, as measured by its contribution to gross domestic product (GDP), which is not fully recognized. In response to the joint economic and health crises caused by the COVID-19 pandemic, there is an opportunity for emerging market countries to develop and implement inclusive housing strategies that stimulate the economy and improve community health outcomes. However, so far housing does not feature prominently in the recovery plans of many emerging market countries.Design/methodology/approachThis paper uses national account data and informal housing estimates for 11 emerging market economies to estimate the contribution of housing investments and housing services to the GDP of these countries.FindingsThis paper finds that the combined contribution of housing investments and housing services represents between 6.9% and 18.5% of GDP, averaging 13.1% in the countries with information about both. This puts the housing sector roughly on par with other key sectors such as manufacturing. In addition, if the informal housing sector is undercounted in the official national account figures used in this analysis by 50% or 100%, for example, then the true averages of housing investments and housing services’ contribution to GDP would increase to 14.3% or 16.1% of GDP, respectively.Research limitations/implicationsFurther efforts to improve data collection about housing investments and consumption, particularly imputed rent for owner occupiers and informal activity require national government to conduct regular household and housing surveys. Researcher can help make these surveys more robust and leverage new data sources such as scraped housing price and rent data to complement traditional surveys. Better data are needed in order to capture housing contribution to the economy.Practical implicationsThe size of the housing sector and its impact in terms of employment and community resilience indicate the potential of inclusive housing investments to both serve short-term economic stimulus and increase long-term community resilience.Originality/valueThe role of housing in the economy is often limited to housing investment, despite the importance of housing services and well-documented methodologies to include them. This analysis highlights the importance of housing to the economy of emerging market countries (in addition to all the non-GDP related impact of housing on welfare) and indicate data limitation that need to be addressed to further strengthen the case for focusing on housing as part of economic recovery plans.

The role of informal housing in lowering China’s urbanization costs

Over the past 30 years, China has experienced unprecedented economic growth spurred by large-scale rural-urban migration, industrialization, and strong global demand for its cheaply produced goods. This paper argues that an abundant supply of informal housing helped accommodate huge migrant inflows and contain labor costs. By constructing a unique proxy for city-level informal housing supply elasticity, we examine the linkages between urban housing markets and labor markets (migration flows and wages), with a focus on the low-skilled migrants who are most likely to live in informal housing. We find greater migration inflows in cities with more elastic housing supplies, in both informal and formal sectors. We show that the supply elasticity proxy for informal housing matters more for low-skilled migrants (those with a high school education or less), and that formal housing supply conditions matter more for high-skilled migrants (those who have a college degree or more education). In cities with higher housing supply elasticity, GDP rises more, and wages rise less, as labor demand increases. The findings provide a better understanding of the important role the informal housing sector has played in facilitating the low-cost urbanization and industrialization of China.

The Role of Informal Housing in Lowering China’s Urbanization Costs

Over the past 30 years, China has experienced unprecedented economic growth spurred by large-scale rural-urban migration, industrialization, and strong global demand for its cheaply produced goods. This paper argues that an abundant supply of informal housing helped accommodate huge migrant inflows, and contain labor costs. By constructing a unique proxy for city-level informal housing supply elasticity, we examine the linkages between urban housing markets and labor markets (migration flows and wages), with a focus on the low-skilled migrants who are most likely to live in informal housing. We find greater migration inflows in cities with more elastic housing supplies, in both informal and formal sectors. We show that informal housing supply elasticity matters more for low-skilled migrants (those with a high school education or less), and that formal housing supply conditions matter more for high-skilled migrants (those who have a college degree or more education). Cities with greater elastic housing supplies have lower wage levels and faster economic growth. The findings provide a better understanding of the important role the informal housing sector has played in facilitating the low-cost urbanization and industrialization of China.

Assisted Self‐help Housing in Mexico: Advocacy, (Micro)Finance and the Making of Markets

AbstractThis article examines forms of housing finance that offer poor households opportunities for sourcing resources for construction work through non‐mortgage microloans. In Mexico, these housing microfinance schemes have recently been incorporated into national housing policies. On a global level, the past 10 to 15 years have seen the emergence of institutional investment in microfinance. I reflect on these processes in this article by bringing critical accounts of financial inclusion in development studies and the debate on financialization within urban studies and beyond into dialogue. I combine micro‐ and macro‐scale perspectives to examine how households become financial clients and how finance gains influence by expanding capitalist markets into the informal housing sector. This discussion is based on policy review and document analyses and an empirically grounded account of an assisted self‐help housing case study. In the article I draw on three focal concepts—risk, debt and marketization—to highlight the ambivalences of the expanded access to finance for poor households engaged in self‐organized building practices. These ambivalences emerge from the multiplicity of operational logics and motivations in the field of housing provision for the poor, and the profoundly conflicting rationalities of financial‐ and social‐sector actors.

Real Estate Industry as an Urban Growth Machine: A Review of the Political Economy and Political Ecology of Urban Space Production in Mexico City

Cities concentrate the means of production, wealth, political power, infrastructure, educational institutions, and a relevant share of our cultural heritage. As such, they are seen as places of opportunities. Contemporary urbanization, however, being central to the accumulation of capital, has also escalated environmental problems that are usually suffered by the urban poor due to an uneven production of urban space. Mexico City is not an exception. It has mainly expanded through a lively auto-construction process and, more recently, under the incentive of a speculative urban development. The first trend reinforces the informal housing sector, in certain cases, involving significant environmental implications such as the degradation of land of ecological value. The second trend responds to capital accumulation dynamics, promoting urban renewal in central areas or where a greater potential rent-gap exists, underpinning the uneven production of urban space, and usually withholding most of its related socioenvironmental impacts. This paper focusses on this second process. It assesses the so-called “urban growth machine” in action, its socioecological impacts, and related contestation processes. With that in mind and after a general introduction and a brief description of urban development in Mexico, the real estate industry in Mexico City is evaluated in terms of the potential ecological implications of the building stock expansion from 2012 to 2018. A spatial distribution analysis of contestation processes, correlated to such urban expansion, is presented as well. The case study confirms what has been learned in other locations of the Global South, where a contradictory and uneven process of urban development has also been experienced under the stimulus of capital speculation. The paper, however, offers a novel approach by bringing together urban political economy, industrial ecology and urban political ecology analytical tools. Such hybridization, it is argued, enables a more comprehensive understanding of contemporary urbanization and its socioenvironmental impacts, which in turn is central to any effort for urban transformation.

Small property rights housing in major Chinese cities: Its role and the uniqueness of dwellers

As China has rapidly urbanized, housing prices in many cities have skyrocketed, reducing housing affordability and leading to the rise of an informal housing sector. This paper provides the first comprehensive demand-side analysis of the small property rights housing (SPRH) sector, using data from the 2015 China Household Finance Survey (CHFS) across twenty-seven major cities. This study shows that SPRH, despite its ambiguous legal status, has an average unit size larger than those in the formal sector. People who buy SPRH for basic needs (consumption demand) are more likely to be the locals with a middle range (“sandwiched”) financial and social status. They often have a large family size and thus have a strong demand for living space, and at the same time, they are willing (and able) to compromise on the benefits associated with legal property rights for a lower price. In this sense, the existence of SPRH supplements the short supply of affordable housing provided by local governments. Wealthy locals with high-risk preference are more likely to buy SPRH for investment. Such investment threatens social justice, and those people's strong influence on public policies is a potential reason for the continuing prevalence of SPRH. Findings in this paper contribute to a more solid understanding of the mechanisms and social structures behind this informal housing sector in Chinese cities.

Renting Shacks: Tenancy in the informal housing sector of the Gauteng Province, South Africa

Abstract Informal settlements are where a significant proportion of urban population find shelter in the cities of the Global South. In some cities, this settlement type is the norm and urban residence are forced into these areas due to a lack of formal housing capacity. Housing tenure in the informal sector is tenuous and the most vulnerable of this group are those who find rental housing in the sector. The idea of a slumlord within this context is one of exploitation and abuse, this study explores the slumlord tenant relationship within informal settlements in Gauteng, South Africa. The study found that there is a symbiotic relationship between landlords and tenants where the informal economy fills a gap in the low income market. While there are issues of exploitation within the informal rental market, this large, unregulated and growing sector points to a significant need for more low cost housing within the formal sector.

Growth and resilience of informal settlements: toward informal contractual frameworks as alternatives for enhancing low-income housing

ABSTRACTFormal housing provision is a pressing concern evident in the burgeoning informal settlements scenario that characterize most global south cities. Several studies establish the observed resilience of the informal housing sector to be reinforced by administrative, technical, fiscal, and contractual contexts which shape the governance of housing. This research examined the resilience from the perspective of contractual context of informal housing system as alternative frameworks for enhancing low-income housing. The methods used were literature reviews and interviews with respondents from two informal settlements in Lusaka, Zambia. The study demonstrates contractual practices which shape the general context of housing governance to be reinforcing factors of the informal housing resilience. It indicates mortgage, land, labor arrangements, and rental housing access policies present serious impediments. But the informal housing sector, where social support networks and local credit practices are dominant features of contractual arrangements, provides affordable, simple, flexible, accessible, and convenient means for acquiring land, contracting labor, finances, and leases. Accordingly, the study shows enhancement of housing that adequately cater for different needs, uses, and income abilities that require adaptation, and institutionalizing of social-cultural contractual arrangements that do not involve tightly prescribed contracts, which impact on affordability for majority builders and renters.

Assessment of housing design decisions in informal housing schemes in urban areas of selected cities in north central Nigeria

The rapid urbanisation of cities in developing countries has witnessed a growth in the volume of housing construction in the urban areas. The demand for housing and the inability of government to meet this demand has encouraged the growth of informal housing. The concept of healthy buildings is of great importance, considering the amount of time spent inside a building.Little attention is placed on the healthy nature of the building with respect to the provision of adequate natural ventilation within the building and the use of plants to ensure a more natural environment. The aim of this paper is examine the design decisions taken by house owners that affect the healthiness of their houses. The research method adopted was the descriptive survey method using an observation schedule and questionnaire. Six cities in north central Nigeria were selected and residential communities were selected and studied. The research showed that 87% of the urban dwellers in these cities usually spend more time within the building interior when they are at home and that 22% of the respondents made consideration made for outdoor activities. The paper concludes that there are options for improving the current housing provision in order to make them healthy. The paper recommends design considerations that housing providers in informal housing sector of urban areas should consider in order to ensure that healthy houses are provided. Keywords : building, design, healthy , housing, urbanisation

A role for housing in development: Using housing as a catalyst for development in South Africa

In many parts of the world, housing is as an economic commodity, with the property acting as an asset that accumulates passive wealth for the owner. This trend stems from housing markets in the Global North, yet many formal housing markets in the Global South demonstrate similar characteristics. However, in the Global South, there is a prolific shortage of housing at every level; this has pushed many individuals to seek shelter in the informal housing sector. This situation has meant that the informal housing sector and any associated economic activities are lost to the official development agenda, and housing does not contribute fully to local economic development. This article explores the role of housing in development in South Africa and how a ‘developmental state’, with a housing-driven development strategy, can accelerate development at the local level.

Implications from Recent Experience of an Incremental Housing Project in Egypt

The urban population in the developing world will double by the year 2030 increasing the pressure in the housing sector that already suffers from the lack of adequate and affordable housing. Egypt, similar to most countries in the developing world, witnesses a huge deficit in the housing units needed for low-income groups. Since the mid Nineteen Seventies, the Egyptian government adopted and implemented a variety of low-cost housing development strategies including: site and services schemes, core housing projects, partially completed housing units in apartment blocks, and totally finished housing projects. The huge informal housing sector in Egypt has proved the ability of the low-income groups to build for their own-selves. Thus, the incremental housing approach was one of the approaches that were adopted by the Egyptian government to solve the housing problem. Ebny Baitak or “Build Your House” is an incremental housing approach and one of the approaches undertaken by the Ministry of Housing, Utilities, and Urban Development within the National Housing Program to solve the housing problems of low-income groups in Egypt. This paper discusses the recent Egyptian experience in encouraging the participation of low-income groups in the construction process of their own houses through an incremental housing program “Ebny Baitak project”. The paper also derives the implications that could be learned from this experience towards better application in the future.

Renting shacks: Landlords and tenants in the informal housing sector in Johannesburg South Africa

Renting is a common form of tenure in many developing countries in the global south. This is due to a housing shortage in these countries and has led to a situation where the vast majority of individuals in major cities find accommodation in the rental market. This situation can be put down to the difficulty to entering the market as a homeowner. While this condition is found in much of the formal housing market in the global south, little has been explored in the informal housing market. This state of affairs has pushed many residence in informal settlements into the rental market. This paper examines the rental market in informal settlements in Johannesburg, South Africa by conducting a qualitative investigation into the experiences of landlords (n = 11) and tenants (n = 15) in three informal settlements in Johannesburg. Overall, there is an asymmetric relationship between the two actors within this market, with the perception that landlords, who view their role as noble provider, impose arbitrary rental terms on tenants in an illegal tenancy market.

Elusive Boundaries of the Informal Housing Sector

Conceptualizing the urban economy in a dualistic framework generated debate since it was first introduced in the International Labor Organization (ILO) studies in the early 1970s (Moser 1978). The duality originally posed in these studies with reference to urban economic activities was later adopted in contexts as diverse as transportation and housing, gradually losing its differen­ tiating focus. Currently its use is quite ambiguous, and may even misguide public action unless its connotations are clarified at the· outset of policy formulation. Historically, the 'informal' housing concept has been equated with self-built housing. Nonmonetary relationships in particular have been perceived as characterizing 'informal' housing production and transactions. In this paper, by highlighting the increased evidence of commercjalization of housing activi­ ties,2 I will illustrate the increasing ambiguity of the 'informal' housing con­ cept. If the empirical evidence shows that the distinction between formal and informal housing sectors is blurring, the justification for using these concepts to characterize housing activities would be untenable. This paper is an attempt to critically assess what we mean by the 'informal' housing sector, and to examine whether the distinction between formal and informal sectors as an analytical construct accurately depicts current housing activities in developing countries.

Exclusionary policies in urban development: Under-servicing migrant households in Brazilian cities

Localities in developed countries often enact regulations to deter low-income households from moving in. In developing countries, such restrictions lead to the emergence of informal housing sectors. To deter low-income migrants, localities in developing countries withhold public services to the informal housing sector. Using a large sample of Brazilian localities, we examine migration and exclusion, focusing on the public provision of water to small houses where low-income migrants are likely to live. Withholding water connections reduces the locality growth rate, particularly of low-education households. In terms of service provision, during dictatorship in Brazil, we find evidence of strategic exclusion, where localities appear to withhold services to deter in-migration. We also find evidence of strategic interactions among localities within metro areas in their setting of service levels: if one locality provides more services to migrant households, other localities respond by withholding service.

Housing supply in Delhi

Delhi is experiencing the highest population growth rate among mega cities in India. By 2021 its population is projected to be around 27 million. The consequence of rapid increase in population and the changing socio-economic pattern in Delhi has resulted in an acute shortage of housing and related infrastructure especially for the poor and low-income households. Nearly half the population however lives in conditions of miserable poverty, crammed into overcrowded slums and hutment. Delhi’s informal housing is a reflection of a poor and inappropriate urban planning system, with a lack of public investment and restriction in the formal land and housing market. This paper reviews the housing delivery system and the problems associated with the housing delivery system in Delhi and presents a broad guideline for policy makers to improve the housing delivery system in Delhi. It was found that to improve the housing delivery system of Delhi multiple sectoral approaches are required. The study demonstrates that the informal housing sector and its quality can be improved and transformed into formal housing by improving the essential infrastructure.

JEFFREY A. NEDOROSCIK, The City of the Dead: A History of Cairo's Cemetery Communities (Westport, Conn.: Bergin and Garvey, 1997). Pp. 140.

Jeffrey Nedoroscik's book is a sensitive sociological survey of life in Cairo's City of the Dead, where more than 500,000 people are now enlisted to reside. In an attempt to both demystify and account for this phenomenon, Nedoroscik argues that life in the City of the Dead is as old, and as rich, as life in Cairo itself. Today, residence in and among the family tombs stretching across some five square miles at the base of the muqattam Hills, constitutes an informal housing sector that has developed as a response to Cairo's severe housing crisis. Historically, though, the cemetery also teemed with life as a religious center housing some of the Muslim world's most important monuments, and a site of temporary and permanent shelter to relatives to the deceased, guardians of tombs, itinerants, the poor, the sick, Sufis, and other religious leaders.

The informal housing sector in the metropolis of Abidjan, Ivory Coast

The informal housing sector in the metropolis of Abidjan, Ivory Coast

The informal housing sector in the metropolis of Abidjan, Ivory Coast

This paper describes the people who live in informal housing in Abidjan's precarious settlements. This includes details of from where they came, how long they have been in the city, and where they lived before coming to their current home. It also describes why they came to live there (and why they chose that particular neighbourhood), how they gained access to land or rooms and, for owner occupiers, how they built and financed the building. The paper also contrasts the situation of owner occupiers and tenants in each of these descriptions.

Housing Turnover in Developing Nations: The Case of Seoul

Housing turnover analysis in developed nations has grown increasingly sophisticated in its 40 years of use. Unfortunately, the use of turnover analysis and vacancy chain research has been far more limited for developing nations. Here we review and critique past efforts and then turn to vacancy chain analysis to examine the housing market in Seoul, emphasizing: 1) the formal market's links to the informal housing sector; 2) tests for evidence of upward housing filtering and downward raiding by the middle and upper- middle classes; and 3) the location of the sequence of vacancies, including partial rental housing. We also discuss the policy implications of using turnover analysis including how emphasizing locational aspects of vacancy chains could be particularly helpful to planners who must contend with the locational spillovers of multiplier effects.