Finance for incremental housing; current status and prospects for expansion

Paraguay: a housing finance proposal for middle- to low-income groups

“…This is a case where microcredit can be used to foster social development and combat poverty. Short-term loans at unsubsidized interest rates (Serageldin and Driscoll, 2000) of between US$ 500 and US$ 2,000 (Ferguson and Smets, 2010) can be used to buy materials for informally built housing, the ultimate objective of which is to extend and improve the owner's home (incremental housing). The soundness of the loans, which are channelled through non-governmental organizations, is based on ongoing supervision rather than on real guarantees.…”

“…Traditional mortgage institutions have not devised mechanisms to serve these markets, nor have institutional bodies offered microcredit or larger loans to buy or improve houses. To satisfy this demand, longer 10-to-30-year loans are needed, along with lower interest rates, new methods (including for funding and servicing loans, and risk management) and institutional innovation (Ferguson and Smets, 2010). A wide range of innovative credit products must therefore be designed in order to meet housing needs in developing countries such as Paraguay.…”

Vernacular Pattern of House Development for Home based Enterprises in Malang, Indonesia

“…Furthermore, there are several aspects to discuss about housing improvements such as: (1) Low building quality and slow construction evolution in the process of self-built houses (Kowaltowski, 1998;Bredenoord and Lindert, 2010;Abbot, 2002a;Abbot, 2002b;Ferguson and Smets, 2010;Shiferaw, 1998;Al-Naim and Mahmud, 2007;Kigochie, 2001;Sullivan and Ward, 2012;Tipple, 2004), (2) The ability and motivation of households to consolidate their housing situation for self-help settlements (Kellett and Granham, 1995;Ghafur, 2002;Gough and Kellett, 2001;Mukhija, 2001), (3) The symbiotic connection between house and economy, such as HBEs (Onyebueke, 2001;Sinai, 1998;Coen, Ross, et al, 2008). Laquian (1993) says that for the people who live in slum areas, the house is not just for home-life, but it is a place of production, marketing, entertainment, and financial institutions.…”

“…It is basically people's economic activities run by the family in which the activities are flexible and less bound by rules. According to Ferguson and Smets (2010), resources dedicated to incremental housing have to compete with other needs of the household.…”

“…Abbot (2002a) argues that house development is based upon the ability of external interventions to address the key issue of vulnerability and argues for the need to plan for the long-term sustainability of housing. In addition, Ferguson and Smets (2010) argued about finance for incremental housing, incorporating current status and prospects for expansion, as well as housing finance that encompasses individual and group savings, and also households who combine a wide variety of sources in order to build their homes.…”