Habitat report: Emerging economies undervalue housing’s share of GDP, risk missing a key to COVID-19 recovery

More than 30 years ago, when the United Nations designated the first Monday in October each year as World Habitat Day, we never could have foreseen the importance of safe and adequate shelter in the face of the COVID-19 crisis.

According to data from ECLAC, almost 100 million people (21% of the urban population) live in poverty in Latin America and the Caribbean, in unsuitable housing or settlements, with little access to drinking water and sanitation. In 2019 Trinidad and Tobago’s Ministry of Housing and Urban Development estimated that some 200,000 people, about 19% of the population, live in informal settlements. The waiting list for government-subsidized housing is approximately 107,000 people, some waiting for up to 25 years.

For this reason, this World Habitat Day 2020 Habitat for Humanity published the report “Cornerstone of Recovery” in which we discussed how much official statistics might underestimate the role of housing in the economy, given the size of the informal sector in many emerging market economies. We further developed “back-of-the-envelope” estimates of the potential undercount, to measure the role of housing in the economies, representing both investment and housing consumption. To this end, the GDP data of 11 countries were examined in detail and it was analyzed whether the housing sector could really support the economic recovery in the world; taking into account that at the same time the economy would be activated, low-income households would be improving to safer and healthier homes and thus, helping to reduce the spread of COVID-19.

“The results are revealing: existing datasets in low-to-middle-income countries are often incomplete or inaccurate, and efforts to measure housing’s contribution to the economy have largely focused on developed countries, according to the report”, says Ernesto Castro-García, Area Vice President, Habitat for Humanity International, Area Office for Latin America and the Caribbean. Low-and-middle-income countries tend to emphasize housing construction’s share of GDP in national datasets but not the larger housing services component, which includes rent, maintenance and utility costs as well as rent equivalency values assigned to owner-occupied homes, according to the report.

In our 23 years of service, we have seen how housing interventions create jobs and, particularly in this pandemic time, how strategic actions help avoid the overcrowding that makes communities more vulnerable to the virus.

Although interventions in the housing sector can produce large economic stimulus effects and would improve the health conditions of families, they are not used prominently by governments. “Interventions in the housing sector can have not only large economic stimulus effects but also improve individual welfare and community health, by helping alleviate overcrowding and creating healthier living conditions. In our 23 years of service, we have seen how housing interventions create jobs and, particularly in this pandemic time, how strategic actions help avoid the overcrowding that makes communities more vulnerable to the virus. Our country must review and include the housing market in the economic reactivation plan”, assures Jennifer Massiah, National Director, Habitat for Humanity Trinidad and Tobago. “I strongly urge consideration of this report, which supports our own recommendations to the Roadmap To Recovery Team. It spells out stimulus policies that, in cooperation with the international and private sectors, focus on middle- and low- income families while including the formal and informal housing market. It emphasizes short-term actions to: make good land available for housing; open access to finance for developers, households and landlords; provide equitable subsidies to households; and offer incentives to lenders and builders.”

You can download the report from the original link above, or from our site here. Cornerstone-of-Recovery_Oct2020 – Habitat and Terwilliger Centre