AFFORDABLE HOUSING POLICY

Problems of developing affordable housing policy for mixed community in South Africa

Problems of developing affordable housing policy for mixed community in South Africa

Introduction

In a 1986 article Mayo and others summarized research on housing economics in developing countries. At that time empirical work on housing was a relatively new field, with the first cross-country econometric study by Burns and Grebler (1977) less than a decade old.1 Since then, research has grown rapidly, and the policy framework that governs the approach to providing shelter has evolved considerably. This article is an attempt to give shape to the changing consensus on housing policy in light of the research findings and broader changes in perspectives on public policy. The first section captures the broad changes in the world over the past 20 years that have significantly affected public policy and traces the implications of these changes for housing policy. The second section provides a brief overview of the research consensus on developing country housing problems in the 1980s. The third section reviews the implications of more recent research on housing economics for housing policy strategy. The final section highlights some evidence of the effects of the research on the emerging policy consensus.

The Changed Housing Policy Environment in Developing Countries

Much has changed in the 19 years since the Mayo and others (1986) review of housing policy in developing areas. First, and perhaps most important, is the change in perspective on what constitutes effective forms of public governance. There are now twice as many democratic governments in the world, and they are overwhelmingly much more decentralized. Developing country policymakers now operate in a more open and generally stable, if sometimes volatile, policy environment.2 Second, with the fall of the Soviet Union in 1989 and the adoption of market-oriented economic policy in China and India during the 1990s, the central planning approach to policy has largely been discarded. Most countries now rely on a public policy approach that augments and complements market processes rather than substitutes for them. These changes mean that arguments about the comparative advantages of the public and private sectors are considerably less likely to cloud discussion. Third, most developing economies now have more sophisticated and diversified economies and financial systems that often include emerging housing finance systems. This was not the case in the 1980s.3

Since the fall of the Soviet Union, the world has become a very different place, and the understanding of what constitutes effective public policy has been transformed. At the same time, there is a more robust understanding of how housing and land markets in both developed and developing economies work. As Renaud (1999) argues, there is now an active body of research on real estate economics in general and for developing countries in particular. How this new environment and evolving policy perspective affect strategies to improve the conditions of the millions who live in substandard housing is reviewed here.

The Evolution of Housing Policy in Developing Countries: A Brief Overview

The overarching idea of housing policy ...