Social Policy in East and Southeast Asia by M. Ramesh

Author:M. Ramesh [Ramesh, M.]
Language: eng
Format: epub
Tags: History, Asia, Southeast Asia, Political Science, Public Policy, Social Policy, Social Science, Ethnic Studies, General, Regional Studies
ISBN: 9781134320141
Google: CZY0NJ6QIuYC
Publisher: Routledge
Published: 2004-08-02T22:36:14+00:00

5

HOUSING

The significance of housing extends beyond the issue of shelter, as it has a strong bearing on the nation’s social and economic welfare. While the problem itself is essentially about providing a roof over people’s heads at an affordable cost, its causes and many of its consequences touch on an array of economic, political, and health issues. But this is not entirely reflected in the housing literature, which has traditionally underestimated the complexity of the problem and the solutions to it.

The economic significance of housing is reflected in the fact that housing investment typically forms 2–8 per cent of GNP (7–18 per cent if the associated services are included) and 10–30 per cent of gross capital formation (World Bank, 1993a: 10). Studies show that each dollar of housing investment generates two dollars of economic activity in other sectors, and each additional job in housing construction creates two other jobs (World Bank, 1993a: 34). It is a major reason for households to save, and thus affects the nation’s overall savings behaviour and eventually its macro-economic conditions (Miles, 1994).

Housing’s social significance is most manifest in the population’s health. Ill-health in developing countries has been found to be strongly associated with inadequate shelter, poor ventilation, lack of facilities for solid-waste disposal, air and noise pollution, and over-crowding (Weil, 1990: 124). Poor housing conditions are likely to affect the educational performance of children as well. Housing assets are also a major source of income security for the aged and the extent to which these should be taken into account in the calculation of social-security benefits is the subject of much debate in policy circles.

The main problem with housing is affordability — prices are often simply too high compared to income for a significant proportion of the population. Rapid urbanization and inflation have a particularly adverse effect on housing affordability. The problem is especially acute for immigrants from rural areas who tend to be poor and without kinship or social networks in their new surroundings.

Housing affordability is determined by price, which in turn is determined by demand and supply. Housing demand is a function of demographic conditions (rate of urbanization, household formation, and the like) and macro-economic conditions affecting household income. It is also affected by property rights, availability of housing finance, taxes, and subsidies. Housing supply, on the other hand, is determined by availability of land, infrastructure, building materials, and, no less significantly, the organization and resources of the construction industry. Both the demand and supply of housing is affected by government regulations and institutional legacy of housing provision and financing in a country (World Bank, 1993a: 13–14).

While the market forces of demand and supply are paramount in determining affordability, there is considerable scope for state intervention to improve the situation. States can improve affordability in various ways, most commonly through direct provision, subsidy to producers, subsidy to buyers, or a combination of the three. Each of these themselves can be of different types (Haffner and Oxley, 1999: 148). However, complicating the government’s ability

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