Even during the worst financial crisis in eighty years, it is still possible to provide finance for houses for the poor, participants at the 22nd Session of the Governing Council of UN-HABITAT concluded on Monday.
“It is possible to continue providing finances for these people because they have a strong track record worldwide in repaying loans given to them,” said Irene Vance, a leading expert in housing finance.
She was moderating the event: “Promoting affordable housing finance systems in an urbanizing world in the face of the global financial crisis and climate change”. According to her, despite the current global financial crisis, stakeholders still should explore viable ways of financing shelter for the poor.
Ms Ayanthi Gurusinghe from Sri Lanka provided evidence from her country that showed that poor people could be helped to access loans for housing. Even more encouraging is that the default rate amongst the poor was very low making them genuinely bankable.
“The aim of the international community should be to provide funds that can take the bigger percentage of the risk when the poor negotiate for loans. Though these guarantees and subsidies may be necessary during the start up phase, there is no question that in due course that lending to the poor will be commercially viable,” she said.
According to Brazil’s Housing Secretary Jorge Bittar, one of the greatest challenges facing his country is to provide housing for those whose income does not exceed three minimum wages per month, which he said was exactly where 90% of the housing deficit is concentrated.
“There are two main actions necessary slum upgrading and provision of low income housing. In Brazil we are now giving subsidies to poor families, not only in Rio, but all over the country, in a nation wide effort to improve life quality in Brazilian cities. The target is to build 100,000 housing units in the next four years.”
Kecia Rust, Housing Finance Coordinator from South Africa said “Very few people in Africa can afford to buy the cheapest newly built house. Research commissioned recently by the FinMark Trust in eight African countries has found that at best, 17% of the population in South Africa, and less than 10% in Zambia, Botswana, Uganda, Rwanda, Mozambique, Namibia and Kenya are eligible for mortgage finance.”
The Swedish State Secretary for Local Government Dan Ericsson said that the current global trend where investing in housing is seen as risky must be reversed to make the investment in housing in developing countries attractive to the global investor. What is needed is an environment that respects property rights, which can be used to guarantee mortgages.