Everything You Always Wanted To Know About Housing In The Global South*

(*But were afraid to ask)

Housing is an essential human need – for rich or poor everywhere. However, it is a “need” that is blurred by differences of opinion and socioeconomic factors. What is clear is that there is a housing crisis and something must be done to alleviate it. By delving into the key issues we explain how the crisis has unfolded and provide answers to help fix the problem.

Human right or market commodity?

The debate around whether housing should be a guaranteed human right or governed by market forces remains central to social policy discourse. If housing is a human right, why can’t everyone claim it? Quite simply, as there is a cost embedded in providing housing, or shelter in general, there are fundamental differences over who should pay for this cost. Those from the left of center generally believe that the state should bear this cost (to be met from higher taxation and wealth redistribution) whereas advocates of the market coalesce around the view that individual responsibility drives the need to obtain shelter.

Advocates of housing as a universal right, such as UN-Habitat, the United Nations program for human settlement and sustainable urban development, emphasize the state’s responsibility to ensure adequate living conditions for all citizens as enshrined in international frameworks like the Universal Declaration of Human Rights. UN-Habitat notes that “everyone has a fundamental human right to housing, which ensures access to a safe, secure, habitable, and affordable home.” This perspective argues that access to shelter is fundamental to dignity and social inclusion.

On the other hand, proponents of market-driven approaches argue that private sector dynamics encourage efficiency, innovation and responsiveness to demand. They believe that housing is not a right in itself. In the USA for example, the 1968 Fair Housing Act banned discrimination when providing housing or making housing policy, yet it did not allocate living space of a minimum size or guarantee automatic qualification for a mortgage.

In this view, housing is seen as a commodity. However, market-based systems often lead to inequalities, especially when housing becomes a speculative asset, driving prices beyond the reach of ordinary citizens. A balanced approach may involve state intervention to correct market failures while promoting private sector involvement in a regulated environment.

When is housing considered affordable (or unaffordable)?

Housing affordability is typically assessed by the proportion of household income allocated to housing costs, including rent or mortgage payments, utilities and maintenance. The commonly accepted threshold is that housing should not consume more than 30 percent of a household’s gross (before tax) income. Beyond this point, families often face financial strain, compromising other essential needs such as healthcare, education and food. The tipping point varies by context: in high-cost urban areas even families with moderate income may struggle, whereas in lower-cost regions affordability thresholds may be higher. Policy-makers must consider local economic conditions and wage levels to establish realistic affordability benchmarks.

This, however, can bring regional disparities in wages and housing affordability into conflict. For example, capital cities tend to offer higher wages (because they attract the most highly skilled and able workers), but also higher housing costs (due to increased demand for limited housing resources). In neighboring regions, wages may be similar or the same as in the capital city (aided by good transport links that encourage commuting), but housing costs may be lower due to the time-effect required to commute to a well-paying job. The dilemma for policy-makers is how to enact regulations, such as rent controls or housing subsidies, to ensure fair housing costs across areas that have different income levels, housing infrastructure and transport links.

What is causing the current housing crisis?

The World Economic Forum has declared that we are in the midst of a global housing crisis1. Around 1.6 billion people worldwide lack adequate housing, according to a 2023 UN report presented to the UN General Assembly2; experts say this could rise to 3 billion by 2030. In order to house those 3 billion people, the world will need to build 96,000 new affordable homes every day. In that report, Balakrishnan Rajagopal3, the UN Special Rapporteur on the right to adequate housing, said “the underlying factors driving the affordability crisis are rooted in structural shifts spanning recent decades.”

There are several factors that have contributed to the global housing crisis, including:

Supply-Demand Imbalances: Rapid urbanization and population growth outpace housing supply (including a decline in public housing), especially in urban areas.
Speculation and Investment: Housing often serves as an investment asset, driving up prices and reducing availability for residents, thereby stripping it of its intrinsic function to provide secure and affordable living space.
Regulatory Barriers: Zoning laws, construction regulations and bureaucratic processes can hinder development, for example making brownfield sites too expensive to develop.
Economic Inequality: Stagnant wages and soaring living costs (reflected in rising inflation) exacerbate the affordability gap, particularly in regions with significant income disparity.
Financialization of Housing: Mortgage-backed securities and investor-driven markets prioritize profit over social needs.

How is the Global South dealing with the housing crisis?

The housing crisis is affecting the Global South due to rapid urbanization, limited provision of new or replacement infrastructure and socio-economic disparities. Informal settlements, often lacking basic services such as sanitation and electricity, are growing. Kibera, on the outskirts of Nairobi, for example, is the ever-expanding largest urban slum in Africa.

High land prices and inadequate housing policies exacerbate the problem, leaving millions in precarious living conditions. Additionally, global economic pressures, such as inflation, trade disruptions and debt burdens limit the ability of governments in these countries to invest in social housing. The crisis not only affects living standards but also hinders economic growth by perpetuating poverty and social instability.

What are some ways out of the crisis?

Though the housing crisis in the Global South clearly needs to be mitigated, there are no easy solutions and many actions have already been taken. Addressing the housing crisis requires a multifaceted approach involving various stakeholders:

Government Action - Governments should play a proactive role by implementing policies that promote affordable housing development, such as investing in social housing, providing targeted subsidies and enforcing sensible rent controls.
Mortgages - Banks could develop more inclusive lending practices and offer affordable mortgage products – but this would come at a cost to them and their shareholders.
Monetary Policy - Central banks can influence housing affordability through appropriate monetary policies that help stabilize mortgage interest rate repayments and prevent speculative bubbles – balanced with attaining low inflation and high employment.
Community Action - Individuals can advocate for housing rights and participate in cooperative housing initiatives. Financial literacy programs can also help households manage housing costs more effectively.
Land Ownership - Community land trusts are nonprofit organizations that acquire land and remove it from the speculative real estate market, enabling home construction on that land to be rented, owner-occupied or cooperatively owned.
Public-Private Partnerships - Public-private partnerships (PPPs) focusing on affordable housing can finance, develop and manage affordable housing projects. Typically, the government provides land, development rights and tax incentives or subsidies, while housing developers and investors contribute financing, architectural design, construction expertise and operational management.
Construction Materials - Low-cost construction materials are being used in several countries around the world – replacing bricks and mortar – to bring down the price of housing and speed up the building process. The cost of constructing a home using low-cost materials can be 20-30 percent cheaper reflecting the reduced need for cement and steel, along with associated reduced labor costs.
Construction Methods - In 3D-printed homes the primary structural components like walls and foundations are constructed using industrial-sized 3D printers. Doors, windows, plumbing and electrical wiring are added at later stages. A main benefit of 3D-printed homes is reduced construction time.
Associated Costs - Investments in energy-efficient housing can reduce long-term living costs. Additionally, charities, philanthropists and other socially-focused organizations can step in to provide funding (for land purchase or construction) or provide pro-bono services such as legal advice and support (for example, to complete a real estate purchase and title register).