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‘Worldwide crisis in affordable housing’ says RICS
26 March 2014
A lack of affordable housing provision, prices rising faster than income and not enough focus on the feasibility of local projects, have taken their toll in Brazil, India and China, says new RICS research.
There is a pending crisis due to the shortage of affordable homes around the world, warns the RICS.
The worst shortages are in developing nations, where housing provisions has failed to keep pace with economic development and in wealthier nations where housing costs have risen faster than incomes, says the Royal Institution of Chartered Surveyors in a report unveiled today.
Findings of the research, Global Affordable Housing: BRICs PLUS Mortar, centres on the housing markets in Brazil, India and China suggest there has been too great a focus on national broad housing policy 'visions' rather than the feasibility of local housing policies.
The research, presented , by RICS President Michael Newey at the RICS International Summit, held in São Paulo, investigates how housing needs and supply in Brazil, India and China have been affected by economic growth and compares the government housing policies.
Report author, Professor Duncan Maclennan, says, 'International bodies and lobby groups talk of the looming challenges of population ageing, the environment, worklessness, immigrations and the like. They also need to recognise that there is an emerging global crisis in relation to the provision of decent homes and neighbourhoods.'
'Policy responses have been too little and too late in many countries and with deregulated finance markets a demand side emphasis on policies to support home ownership has shaped sluggish housing provision systems. New times need a new emphasis on rental housing provision and for programmes to help the poor there will have to be a new, sustained government commitment of resources.'
Decision-makers should adopt locally-effective policies, recognised and supported at national level and implemented at neighbourhood, town and city level, says the report.
A substantial focus on the creation of home ownership, along with a lack of attention being paid to the development of an efficient rental housing market has led to a shortage in affordable housing supply. This has been most apparent in Brazil and India, where limited housing supply has been exacerbated by lagging infrastructure provision, inadequate developer funds, long delays in the planning system and, in some instances, corruption.
Dr Clare Eriksson, Director of RICS Global Research and Policy, explains, “The research traces how housing provision and policies in Brazil, China and India have responded to economic growth. Based on the study, recommendations are made for both BRICS and OECD economies to ensure more effective delivery of housing in the future.
'Key findings stress the importance of improving supply, fashioning an efficient rental market, integrating housing and city development policies, and taking a contextualised and local approach to housing policy supported by adequate national frameworks and resources.'
'Although some progress has been made, particularly in Brazil and China, the research highlights that much still remains to be done until sufficient levels of decent affordable housing are a reality.'
Over the coming months, RICS says it will consider the role it can play in helping ensure there enough affordable homes are provided.
Commissioned by RICS and authored by a team led by Professor Maclennan from the University of St Andrews, the report includes recommendations to governments, academic researchers and international agencies on the need to focus more critically on the diversities within the BRICs and OECD nations to convey accurately how housing systems actually operate on a local scale.
In Brazil and China, sluggish housing supply systems paired with deregulated housing finance markets, has created a housing market susceptible to booms, bubbles and busts and poor market stability. However, in China, with public ownership of land and a past tradition of public housing provision, there is a record of stronger and effective policy action to deal with urban housing shortages.
The research concludes that rapid urbanisation has led to a rise in informal settlements, particularly in Brazil and India. The formation of favelas and slums, whilst providing shelter for those in need, can deter the development of quality housing provision; with slum and favela formation outstripping other major housing investments since 2006.
However, lessons can be learnt from the intimate links established in Brazil and China, between housing policy, urbanisation and infrastructure, which many OECD nations could benefit from.
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