Expanding Housing Finance to the Underserved in South Asia

Tatiana Nenova

Description

Rapid economic growth in South Asia, urbanization, and a rising middle class have created considerable pent-up demand for housing and housing finance. More than 14 percent of low-income South Asians have no home. In response, South Asia's dynamic housing and housing finance markets have grown at rates of around 30%, but are still limited to upper-income groups. The contribution of housing and real-estate sector to overall economic growth, social uplift and employment is considerable.
Housing and housing finance services have the clear potential to expand to middle- and even lower- income families. This requires an improved land administration, strengthened legal framework for land titling, registration, and foreclosure, better market data provision, and promotion of long-term funding for mortgage lenders and developers. Innovative traditional mortgage products and Islamic finance could match demand in underserved market segments.
This report, a first regional effort on the topic, examines housing shortages in South Asia, as well as outlines shortcomings of the market for home mortgages. Information on good practice and country-specific examples are presented on enabling builder/developers, mortgage lenders, land administration, as well as foreclosure and other relevant regulations, to strengthen home ownership in South Asia. Special emphasis is accorded to low-income housing solutions.

Sujets

• Crédit
• Bank
• Microfinance
• Foreclosure
• Urban planning
• Low-cost housing
• Law and development

Informations

• Publié par: world-bank-publications
• Publié le: 22 juin 2010
• Nombre de lectures: 56
• EAN13: 9780821383230
• Langue: English
• Poids de l'ouvrage: 3 Mo

Extrait

Expanding Housing
Finance to the
Underserved in
South AsiaExpanding Housing
Finance to the
Underserved in
South Asia
Market Review and
Forward Agenda
Tatiana Nenova
Washington, DC© 2010 The International Bank for Reconstruction and Development / The World Bank
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ISBN: 978-0-8213-8322-3
eISBN: 978-0-8213-8323-0
DOI: 10.1596/978-0-8213-8322-3
Cover photos: Hye Sakm Abdul and Lohita Karunasekera
Cover design: Quantum Think, Inc.
Library of Congress Cataloging-in-Publication Data
Nenova, Tatiana.
Expanding housing finance to the underserved in South Asia : market review and forward agenda / Tatiana
Nenova.
p. cm.
Includes bibliographical references and index.
ISBN 978-0-8213-8322-3 — ISBN 978-0-8213-8323-0 (electronic)
1. Low-income housing—South Asia—Finance. 2. Housing policy—South Asia. I. Title.
HD7359.3.A4N46 2011
363.5'820954—dc22
2010013120Contents
Foreword xiii
Acknowledgments xvii
Abbreviations xix
1 Introduction 1
Growth Potential of Housing Finance Markets 3
Summary of Key Challenges 5
Objectives of the Report 6
Scope of the Report 6
2 Housing Demand 9
3 Housing Supply 13
Current State of Housing 13
Development of Housing Stock 14
Construction Quality and Enforcement of Construction Standards 16
Housing Costs 16
Housing Price Index 17
Secondary Property Markets 17
vContents
4 Housing Finance Institutions and Instruments 19
Traditional Mortgage Lending 20
State-Owned Specialized Housing Banks 22
Private Specialized Mortgage Lenders 24
Islamic Housing Finance 25
Large-Scale Project Finance 26
Informal Housing Finance 26
Homeowners’ Insurance 27
Risk Management 27
Secondary Market for Mortgage Finance 29
Prudential Regulation and Oversight 30
A Word on the Global Financial Crisis 32
5 Low-Income Housing Finance 33
The Power of Microfinance 33
Affordability of Housing 34
Low-Cost Market Solutions 34
6 Regulatory Framework for Housing and Housing Finance 37
Land Administration 37
Foreclosure 43
Credit Information 45
7 Policy Options to Improve the Framework for Housing
and Housing Finance 47
Efficient Land Administration 47
Housing and Housing Finance Information and Transparency 48
Long-Term Funding Availability through Mortgage Refinancing 48
Expanded Housing Finance to Low-Income Groups
through Product Innovation 49
Appendix A Afghanistan 51
Overview 52
Housing Demand 56
HSupply 57
Housing Finance 60
viContents
Low-Income and Microfinance Housing 67
Regulatory Framework and Mortgage Market Infrastructure 72
Policy Options for Improving the Framework for Housing Finance 76
Appendix B Bangladesh 83
Overview 84
Housing Demand 85
HSupply 86
Housing Finance 91
Low-Income and Microfinance Housing 105
Regulatory Framework and Mortgage Market Infrastructure 111
Policy Options for Improving the Framework for Housing Finance 116
Appendix C India 127
Overview 129
Housing Demand 133
HSupply 135
Housing Finance 141
Low-Income and Microfinance Housing 160
Regulatory Framework and Mortgage Market Infrastructure 175
Policy Options for Improving the Framework for Housing Finance 191
Appendix D Pakistan 209
Overview 211
Housing Demand 214
HSupply 216
Housing Finance 223
Low-Income and Microfinance Housing 247
Regulatory Framework and Mortgage Market Infrastructure 254
Policy Options for Improving the Framework for Housing Finance 262
Conclusion 275
Appendix E Sri Lanka 279
Overview 280
Housing Demand 282
HSupply 284
Housing Finance 289
viiContents
Low-Income and Microfinance Housing 304
Regulatory Framework and Mortgage Market Infrastructure 308
Policy Framework and Suggestions for Future Development 314
Index 323
Boxes
1.1 Twin Challenges: High Property Prices and Expensive Mortgages 5
4.1 Successful Financial Sector Development in India 20
4.2 Securitization in India 23
4.3 Dynamic Specialized Mortgage Lenders in Bangladesh 24
4.4 Malaysia’s Experience with Housing Finance Reforms 29
4.5 India’s Recent Prudential and Supervisory Strengthening
for the Financial Sector 31
Appendix Boxes
A.1 Meeting Housing Needs: Efforts from the Public Sector 58
A.2 A Housing Developer in Need of Finance: Shelter for Life 59
A.3 Finding Strong Demand for Upper-Middle-Class Housing in Kabul 67
A.4 Rehabilitating Land Records in Afghan Courts: A Success Story 73
A.5 Improving Ownership Security in Informal Settlements in Kabul 74
B.1 Market Failures in the Housing and Housing Finance Markets
in Bangladesh 92
B.2 Role of NGOs in Housing-Related Social Services 109
B.3 Property Registration in Bangladesh 114
B.4 Contractual Savings Schemes for Housing: A Primer 122
C.1 Typical Low-End Housing Available in Urban Markets 140
C.2 Market-Based, Low-Income Housing Pilot Projects in India 171
D.1 The Central Bank’s Prudential Regulations 237
D.2 Low-Income Housing Initiatives in Pakistan 251
D.3 Land Titling System Description and Shortcomings 255
E.1 Cagamas Berhad, the Malaysian National Mortgage Corporation 319
Figures
1.1 Ratio of Housing Debt to GDP, Selected Areas and Countries 3
1.2 GDP Growth Rate, 2007 and 2008 3
1.3 Urban Population, 2008 4
2.1 Housing Shortages in South Asia, 2008 10
4.1 Growth Rates of the South Asia Housing Finance Industry, 2007–08 20
6.1 Cost and Time to Register a Property in South Asia 39
6.2 Time to Foreclose on Property in South Asia 44
viii