Financing for affordable housing

Millions on earth do not earn enough to afford a house. Housing prices have spiraled up, and would continue to do so as pressure of population and nuclearisation of families continues. As there is a humanitarian angle to affordable housing finance, this topic is very dear to me, and I wish to do much more work in this field… Here is a modest beginning.

Links and resources:


Projects we have undertaken

  • Royal Initiative on Housing, Jordan – we suggested a funding method that neutralizes the subsidy burden on the government, while making housing extremely affordable.Executive summary of our report


Evidently, the housing problem is largely a result of urbanization. The way our economic system works, it moves people away from agrarian and rural jobs into more and more urban jobs. The education system helps to create workforce suited for urban jobs. The result is a massive process of urbanization.

The extent of urbanization is acute. Take Asia as an example. In 1950, some 232 million people lived in urban areas; this was 16.6 per cent of Asia’s total population. In 2005, the urban population of Asia counted 1.6 billion people or 39.9 per cent of the total population. UN's website provides projections of population including urban and rural population. Here are the results obtained from the website for percentage of urban population in the world:

Year               Percentage Urban
1950 29.1
1955 30.9
1960 32.9
1965 34.7
1970 36.0
1975 37.3
1980 39.1
1985 40.9
1990 43.0
1995 44.7
2000 46.6
2005 48.6
2010 50.6

If someone thought this is global data, and therefore, biased by Western countries which admittedly have a higher percentage of urban population, the situation in Asia, for example, is no better:


Percentage urban (%)


Year               Percentage Urban
1950 16.8
1955 18.2
1960 19.8
1965 21.5
1970 22.7
1975 24.0
1980 26.3
1985 29.0
1990 31.9
1995 34.4
2000 37.1
2005 39.7
2010 42.5

What makes the urbanization problem particularly acute is that developing economies of China and India are exhibiting a far steeper rate of urbanization, strengthening the point that we made at the inception that the operation of the economic system causes population to shift from villages to cities, partly because most economic development is coming from the non-agrarian sector, and partly  because prosperity tends to shift people from villages to cities.

The above is an alarming number. If more than half of the world's population comes to stay in cities, the acute pressure it creates on all kinds of resources, housing in particular, is easy to understand.

Apart from housing shortage, urbanization is the cause of lots of other evils – it leads to ecological imbalances, creation of urban communities where interpersonal relations are more tense, breeding of violence, hatred and terrorism. A society that is fast urbanizing will find it difficult to escape the problems of unbridled class struggles, violence and terrorism.

While ultimate solution to the problem of urbanization lies in fundamental changes to our economic system and economic thought, we cannot wait until those changes take place. Hence, affordable housing becomes a must to tackle the after-effects of massive urbanization.

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