What makes housing affordable?

By Lindsey Kreckler, Engagement Strategist

Affordable housing, like so many other things in life, can be very difficult to define, and instead often is determined by normative statements. What constitutes “affordable” housing can vary widely even within a single city, never mind a country or the entire world. Affordable for whom? Affordable where? Many common definitions of affordable housing do not take these differences into account.

The most commonly occurring definition of affordable housing is that used by the United States government, which defines affordable housing as housing and related expenses (mortgages, utility bills, etc.) that do not exceed 30% of a household’s income. If a family’s housing expenses are higher than 30% of their income, they are considered burdened. This standard can generally be applied to households within the United States, and even in comparably developed countries, such as Australia, the United Kingdom, and Canada.

Another recurring definition of affordable housing, one that takes into account the differences between different geographic areas, looks at individual markets. The median multiple system, used in this report from Demographia and recommended by the World Bank and United Nations, determines the price to income ratio of a market by dividing the median house price by median household income. According to this system, a median multiple of 3.0 or less signifies an affordable housing market, while a median multiple of 5.1 or more demonstrates “severely unaffordable” housing. The map here at Numbeo, based on user-reported numbers, shows a similar measure, the Price to Income Ratio, defined as the “ratio of median apartment prices to median familial disposable income, expressed as years of income.” While these data are user-reported and should be taken with a grain of salt, the map provides an interesting visual of how the United States and other developed economies compare to the Global South and similarly developing economies.

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The Historical Evolution of South Africa’s Housing Policy, Exemplified in Cato Manor

By Ellie Leaning, Analyst

This is the first of a series of blog posts on the historical evolution and uniqueness of South Africa’s housing policy as seen in Cato Manor. This initial post aims to provide a historical overview of the political, economic, and cultural factors at play in Cato Manor.

Cato Manor is one of South Africa’s most historically significant townships. It sits on Durban’s periphery, tucked out of the public eye amongst the hillside, about a ten minute drive from the waterfront. I have a particular affinity to Cato Manor because I lived there for eight-weeks in 2013 with a Zulu family. This was where I had my first exposure to affordable housing projects and became acutely aware of the significance of my family’s Reconstruction and Development Programme (RDP) house in their quest for opportunity in a world of pervasive inequality (tune into the next post in this series for a discussion of RDP houses!).

Gardens Drive1

Gardens Drive in Cato Manor with RDP houses as far as the eye can see and a mini-bus taxi parked along the street, waiting for customers. These taxis are constantly running back and forth, honking and blasting music, trying to attract a new client. While perhaps intimidating for a foreigner, these taxis are very inexpensive and very efficient (although perhaps not very safe), connecting the township to the greater Durban area.

 Fun fact: As the buses do not have signs indicating their destination, the drivers (or a driver’s assistant who sometimes rides along) and passengers use hand signals to indicate where the bus is going. For instance, lifting your index finger in a circular motion will get you a ride to South Beach. This stems from Apartheid-era innovation when the government did not supply any public services to these areas – yet another example of a creative response to a market failure! 

Cato Manor’s role in the monumental political, economic, and cultural changes of 20th century South Africa make it a useful and relevant case study. It was one of the main areas where the African National Congress (ANC) focused re-development efforts post-1994, and today it is frequently considered Durban’s equivalent to District Six in Cape Town. While this is a specific township with its own history, the lessons learned and the complexity of that history are representative of the rest of South Africa.

Cato Manor has a unique history that is deeply rooted and very important in its culture today. The Nqondo clan occupied the area as early as 1650, until the Ntuli clan took over about a century later. It is unclear what happened to these tribes, but in 1815 the British established Port Natal (the Portuguese word for Christmas, as Natal was first found by a Portuguese explorer on Christmas Day 1497). The Brits lived primarily on the coast, while the Zulu King Shaka controlled the interior. In 1845, George Cato became the first mayor of Durban and was given the land of Cato Manor, which he subdivided and sold to Indian market gardeners (Durban is also home to the world’s largest Indian population outside of India) who decided to remain in South Africa after their terms as indentured slaves ended. Africans began to set up shacks and informal settlements along the periphery of the area, and as more and more Africans settled in, a unique mixture of vibrant Indian and African culture appeared. These Africans were primarily Zulus, who previously ruled large parts of present-day KwaZulu Natal (KZN) and had an incredibly strong empire. The long-lasting periods of conflicts and consequent colonization were brutal and oppressive, but resulted in a strong sense of identity and pride in the Zulu Kingdom, one that is still evident today in Cato Manor and elsewhere in KZN.

In 1932, Cato Manor was officially brought into the Durban municipality, and the (mostly native African) shack-dwellers were declared illegal occupants. Regardless, Africans continued to rent homes and land from Indians (under the law at this time, Africans were not allowed to own land or build homes in urban areas), with established tenure and amicable relationships for a time. Around 1945, historians estimate that Cato Manor was home to over 50,000 Africans, who began accusing Indians of rent-hikes and overcrowding. This occurred simultaneously with the rise of the Afrikaaner National Party in 1948, which imposed a legalized racial segregation system, infamously known as Apartheid. Racial tensions exacerbated existing divides, leading to a brutal “anti-Indian war” on 13 January 1949 that left 137 dead and thousands injured.

After this, Indians began to leave Cato Manor, returning only to collect rent from Africans, who were busy building more shacks and sub-letting to more Africans. Indian landowners then sold a large portion of their land to the Durban City Council, which then developed the land as a largely unregulated and overcrowded emergency center for homeless people. This became one of the main points of unregulated production of shimeyane, a homemade distilled liqueur, and consequent chaos.


Cato Manor forced removals and police brutality in mid-1950s.

In 1950, National Party passed the Group Areas Act, the Population Registration Act, the Immorality Act, and the Suppression of Communism Act – the infamous laws of Apartheid. The 1950s marked significant increases in brutal legalized segregation and horrific race-based violence. Apartheid’s opposition, the ANC, was gaining immense power when it was forced to go underground by laws prohibiting political groups and defining anti-apartheid sentiments as equal to treason. The ANC had various underground hubs in the different provinces, and Durban’s branch was based in Cato Manor. The ANC women’s league was also largely prominent in Cato Manor around this time.


Cato Manor: October 1959.

The apartheid regime responded to this by attempting forced removals (within the law, under the Group Areas Act) to place residents in racially exclusive Indian and Black townships, such as KwaMashu and Chatsworth. These efforts were met with massive resistance and violent conflicts, but eventually the bulldozers and police forces won.

Cato Manor was mostly vacant from the late 1960s, aside from a few Hindu temples and avocado trees, a sad ghost of its vibrant history. As the anti-apartheid movements gained strength in the later 1970s, people began trying to move back, but violence plagued the region again in the 1980s. Soon after, people began proactively reclaiming their land and returning to Cato Manor. The first area which people resettled was along the ridge of Cato Manor, an area called Cato Crest.  In 1994, the ANC won the national elections in a remarkably peaceful power transfer. The Zulu Kingdom was incorporated in the Province of Natal in a deal which recognized the power and presence of the Zulus in Natal while stably bringing them into the Republic of South Africa. Natal was renamed as KwaZulu Natal, in which “Kwa” denotes ownership-of or possession: the Zulu’s Natal.

The ANC, left with a broken country, attempted to implement broad changes, including a brand new constitution containing Section 26: the Right to Housing, where “Everyone has the right to have access to adequate housing”. A unique aspect of the South African constitution is that is does not only apply to South African nationals; anyone living in the country is entitled to the same rights as a citizen. In this unique aspect of the constitution, the state took on the responsibility of providing access to adequate housing for both its citizens and permanent residents. In a country of legally enforced geographic segregation of races and consequent socio-economic divides, this was no easy task. Accordingly, since 1994, South Africa has devoted a lot of time and resources to pro-poor housing initiatives, most of which were implemented in Cato Manor with varying levels of success.

Residents of Cato Manor and the larger eThekweni (Durban) municipality established the Cato Manor Development Association to upgrade and redevelop the area. Soon following this, Cato Manor was identified as a Presidential Lead Project of the Reconstruction and Development Programme (RDP), which awarded R130 million ($11.2 million) for specific upgrading schemes to be explained in the next South Africa post.

Mama Ngini House

The RDP house that I lived in for eight weeks with my homestay family (my little sister is at the front door)!

Today, Cato Manor is a very large and partially well developed area, yet is still plagued with violent crime, unemployment, and poor health. Cato Crest, one of the six informal settlements on the outskirts (the ‘crest’) of Cato Manor, is a place of extreme poverty and violence. Parts of Cato Manor are formally owned by their dwellers, with homes attached to the grid with relatively steady electricity and functional plumbing, while others, as in Cato Crest, are completely informal with no legal land ownership, no financial mechanisms for home improvement, no connection to grids, no sanitation, etc. The different mechanisms of housing are at play in Cato Manor, from the 1994 RDP houses, to “green streets” of solar power and efficiency upgrades, to basic slum upgrading schemes attempting to solve the dilemmas of the informal settlements.

South Africa’s, and Cato Manor’s, unique history has led to a regeneration process that is both very difficult and vitally important to get right as the country struggles for socio-economic equality. As we stress here at AHI, there is not one sector of life that housing does not touch. Housing is the keystone species of development, and Cato Manor has been a guinea pig for a lot of these initiatives.

The next blog post in this series will discuss the different regeneration and redevelopment programs at the national level and the local level – stay tuned!  

India photo-share: Slum upgrading in Ahmedabad, Gujarat

By: Vidhee Garg

On my recent visit to India, I went on a guided tour of Ramesh Dutt Colony, a slum settlement on the outskirts of Ahmedabad, led by Kinnariben of Mahila Housing SEWA Trust (MHT). MHT is a sister organization of Self-Employed Women’s Association (SEWA), with which AHI has partnered since 2008.

MHT was a key partner in the Ahmedabad Municipal Corporation’s Slum Networking Project (SNP), which aimed to transform the physical environment of the slums, and has been working with this particular settlement since the late 1990s. The transformation of the environment established several basic infrastructure services – household water connections, toilets and underground sewerage for individual households, and stone paving of internal and approach roads, among other things.

More than a decade in the making, the residents are now eagerly awaiting government permission to rebuild the settlement under the Rajiv Awas Yojana (RAY) scheme, which will give the residents title to land and permanent housing.


Kinnariben (left) with one of the SEWA members in Ramesh Dutt Colony. Kinnariben is one of many field operation staff (called ‘Saathibens’) who interact regularly with community residents, thereby forming an integral part of SEWA’s last-kilometer delivery system in meeting the banking needs of SEWA members.

Children play gully cricket in the mid-afternoon. Narrow alleys (gully in Hindi) between the houses are good locations for children to play while being supervised by family and community members. 

Children play gully cricket in the mid-afternoon. Narrow alleys (gully in Hindi) between the houses are good locations for children to play while being supervised by family and community members.

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Promoting a Rare Breed: Private Nonprofit Housing Developers in the GCC

This piece was originally published by Jadaliyya, an ezine produced by the Arab Studies Institute. Jadaliyya combines local knowledge, scholarship, and advocacy to better understand the Arab World and to fulfill its dedication to discussing the Arab world on its own terms. The original article can be found here.


By Maysa Sabah Shocair, AHI’s Managing Director of the GCC Region

While working as a Project Manager at the Fenway Community Development Corporation (CDC) in Boston and as a Consultant to Phipps Houses in New York City, I experienced firsthand how nonprofit developers can contribute to preserving housing affordability in central locations. Fenway CDC builds and preserves housing and champions local projects that engage the entire Fenway community in protecting the neighborhood’s economic and racial diversity. It has operated since 1973 and has developed nearly six hundred homes, housing approximately 1,500 low and moderate-income [1] residents, including those with special needs. In addition, Fenway CDC has supported residents through offering job placement and career advancement services, building playgrounds, running after-school programs for teens and operating a center for seniors. Similarly, Phipps Houses develops, owns and manages housing in New York City. Since its  founding in 1905, it has developed more than six thousand apartments for low- and moderate-income families, valued at over one billion US dollars. Phipps Houses manages a housing portfolio of nearly ten thousand apartments throughout New York City. In addition, it serves over eleven thousand children, teens, and adults annually through educational, work readiness, and family support programs.

Now that I am working in the Gulf Cooperation Council (GCC) as an affordable housing consultant for several public and private entities, I often wonder: Could private nonprofit housing developers, like the Fenway CDC and Phipps Houses, make an impactful contribution to bridging the supply and demand gap in affordable housing in the GCC for both citizens and non-citizens? Could the experience of other countries with nonprofit housing developers be distilled and adapted to the GCC states?

To answer these questions, I will first discuss the main attributes of nonprofit housing developers, followed by a discussion on the shortage of affordable housing for citizens and non-citizens in the GCC and the resulting need for nonprofit housing developers. I will then recommend strategies to enable the growth of nonprofit housing developers and end with a few concluding remarks. 


Domed roofs in Haram City

Nonprofits Housing Developers as Mission Entrepreneurial Entities

In its 2010 landmark study Mission Entrepreneurial Entities: Essential Actors in Affordable Housing Delivery, the Affordable Housing Institute (AHI) defined Mission Entrepreneurial Entities (MEEs) as “private nongovernment entities that are in the business of making housing ecosystemic change by doing actual transactions valuable in themselves that also serve as pilots and proof of concept.” MEEs could be Non-Governmental Organizations, Community Development Corporations, or Housing Associations, labels that have sometimes been used interchangeably. The study profiles twenty-three MEEs in the United Kingdom and the United States, where, in both countries, there has been a steady migration from entirely publicly managed and operated systems to hybrid public-private models, with MEEs as key delivery mechanisms.

According to the study, the three main attributes of MEEs are: (i) being mission oriented, since their goal is impact, not just profits; (ii) entrepreneurship, taking risks and persuading established institutions, including governments, to approve proposals, provide capital, etc.; and (iii) self-containment, because sustainable MEEs must make profits and maintain a positive cash flow. However, generated profits are used to further the purposes of the organizations instead of being distributed to managers and shareholders.

MEEs also share the following strengths:

·         Willingness to serve populations that the private for-profit sector cannot or will not serve, including the hardest-to-house residents;

·         Commitment to providing affordable housing to lower income people for the long term;

·         Building strong connections with residents and the communities they serve;

·         Commitment to providing various social services that lower income or special needs residents may require;

·         Potential for accessing affordable land, buildings and funding through governments and philanthropic entities or individuals;

·         Commitment to seeing projects through both during their early and post-delivery phases.

Given the potential of MEEs to serve populations that are not served by private or public housing provision, this essay discusses the potential relevance of this model to the GCC countries. This interrogation is critical at a time during when many GCC countries are facing a shortage of housing for low and moderate income households. It is also a time in which we are witnessing the emergence of institutionalized charitable giving that could be in part harnessed to help with housing provision. These conditions are creating a ripe environment for the growth of nonprofit housing developers, with the much needed support of the public and private sectors.

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Secession: the key to more affordable housing in cities?

By Judy Park, Analyst

Panelists at The Atlantic’s CityLab 2014 conference, held this past September, proposed the idea of home rule – or even more radically, city secession – as a potential solution for increasing affordable housing in cities.

aff housing solution home ruleClick ­­­­­­­­­here for the full article.

During the event, Vishaan Chakrabarti of SHoP Architects and Ben Hecht of Living Cities argued that state and national governance often restricts the ability of cities to produce more affordable housing. The solution, they claim, is to emancipate these cities and allow them to subsidize as they please:

“Subsidize the supply, subsidize the demand: We know how to do all of those. We just don’t have the will to do those things,” said Living Cities CEO Ben Hecht. “Singapore and Hong Kong are willing to do those things.”

The thought that cities would be more effective if left to their own devices is not new. In a time where urbanization is widening the physical and sociopolitical discrepancy between the city and its surroundings, and where cities are increasingly outpacing the GDP of entire countries, it makes some sense.

But good governance is tricky and inevitably context-specific. Home rule could be exactly what that blue bastion in a sea of red needs to build more affordable housing. Unconstrained by state and national regulations, a city could more easily raise and borrow money from their tax base and capital markets. It could vote to direct more money to affordable housing needs.

In other instances, however, the state’s ability to override local priorities and decisions is important and beneficial for affordable housing, as in the case of Massachusetts’ Chapter 40B, a statute that allows an affordable housing developer to obtain state zoning overrides for building in municipalities that fail to meet their 10% affordable housing requirement.

Further, in choosing Singapore and Hong Kong as their poster-children, the panelists seem to imply that the production of mass public housing indicates success: in Singapore, 82% of citizens live in flats built by the government (via the Housing Development Board, or HDB), and in Hong Kong, this figure is slightly less than half.

But all is not well, especially in Hong Kong, which still suffers from a high shortage of public housing and recently won its fourth successive crown for having the most unaffordable housing in the world. Supply may be high, but demand is even higher. Those who are able to qualify for a government flat typically wait three years or more. In the meantime, many residents have no choice but to live in grossly overcrowded units, which have been referred to as cages, that average around 40 square feet. Such housing may technically qualify as “affordable,” but it is certainly not suitable.


Soaring, high-density public housing in Hong Kong.



Society for Community Organization, a local advocacy group, documents the conditions in the cage homes of Hong Kong. Photo by Benny Lam, for the Society for Community Organization.

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Indonesia photo-share: self-help housing in Depok

By: Duong Huynh, Project Manager

As part of the housing sector mission to Indonesia, I joined another colleague Matt Nohn, whose work focuses on incremental housing, and a team of staff from Indonesian Ministry of Housing to visit Depok. After a 1+ hour drive through some peaceful Indonesian peri-urban farm land, we landed in Depok to begin our tour of a few of the city’s self-help housing project.


Self-help housing belonging to a family of one working mom and three daughters.

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What we’re reading: Rebuilding Gaza

Addressing ecosystemic housing challenges and gaps – which all cities and countries face – is difficult when the housing units themselves are destroyed. What we’re reading this week – a recent report from the global humanitarian response coordinator Shelter Cluster on the situation in Gaza – reminds us of the tragedy of both natural and, in this case, man-made disasters that cause people to lose their homes.

Although the cease-fire between Israel and the Palestinian Authority has been in effect for nearly a month now, the region is just now taking definitive steps toward rebuilding Gaza after the most recent conflict. According to Shelter Cluster’s recent report (available for download as a pdf here), 17,000 housing units were destroyed in the most recent conflict between Israel and Palestine. This is on top of 5,000 housing units still in need of repair from prior conflicts, as well as a general shortage of about 75,000 units. These numbers include residential buildings only, without taking into account the schools, power plants, and other public infrastructure damaged during “Operation Protective Edge,” Israel’s latest military operation in Gaza.

Much of this housing shortage can be attributed to restrictions on importation of cement, aggregate, steel, and other building materials into Gaza. Past use of these materials to construct the tunnels between Israel and Gaza has made the Israeli government reluctant to allow further importation, so oversight of the use of these materials has been a major point in the recent negotiations between Israeli and Palestinian authorities.

palestinian rubble

A Palestinian woman in the rubble of her home, destroyed in the conflict this summer. Credit Said Khatib/Agence France-Presse — Getty Images, New York Times.

Despite Shelter Cluster’s grim prediction that it will take 20 years to rebuild Gaza after this most recent conflict, journalists report that talks between Israeli and Palestinian authorities about rebuilding have been positive. Last week, the UN revealed the details of a temporary deal regarding construction struck late on September 16. As the New York Times reported:

“…Robert H. Serry, the special envoy for the Middle East peace process, told the Council that he hoped the deal would lead to a broader agreement on opening border crossings to Gaza and on ending severe restrictions on imports to the Palestinian territory, where the economy was stagnating before the 50-day war this summer.

The Palestinian Authority, led by President Mahmoud Abbas, will have “a lead role in the reconstruction effort,” while United Nations monitors will ensure that reconstruction materials are not “diverted from their entirely civilian purpose,” Mr. Serry said.

…“Arriving at this agreement has not been without its challenges,” Mr. Serry said, according to a prepared statement. “We consider this temporary mechanism, which must get up and running without delay, as an important step toward the objective of lifting all remaining closures, and a signal of hope to the people of Gaza.”

Unfortunately, housing is just one of the issues Palestinians will face as they seek to rebuild Gaza. A recent World Bank report details several obstacles, including restriction of movement, economic recession, and an energy crisis, which will have to be dealt with before Palestine is able to build a resilient economy.