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ОглавлениеMismatches between incomes and housing costs: a global condition
In 2016, UN-Habitat, the United Nations Centre for Human Settlements, produced its first global review of the world’s urban settlements: the World Cities Report 2016.1 Housing was identified, rightly, as being key to the future of cities. It was reported that, in 2010, 980 million people did not have decent housing and 600 million were expected to be added to that total by 2030. Between 2000 and 2014, the population living in slums, as defined by the UN,2 had increased to 881 million. While there had been improvements over the preceding 20 years in access to piped water and electricity in most countries of the Global South (GS) (although less progress with sewerage) and the share of the world’s urban population in slum conditions had fallen from 39% to 30%, these improvements have been geographically very uneven. Sub-Saharan African countries generally still have very inadequate urban infrastructure for the majority of their urban populations while many South American countries have achieved water, sewerage and electricity connections for most of theirs. The physical inadequacies of much urban housing across the poorer parts of the world are widely acknowledged and reported, so, in a sense, these aspects of the report were unremarkable. Most data in the report’s statistical annex relate to housing quality (exclusively in the cities of the GS) and economic indices such as inequality and poverty (again, only for cities in the GS, apart from data on some eastern European countries), urban gross domestic product (GDP), employment and pollution. However, although poor-quality housing may be an indicator of ‘broken cities’, it is not the same as unaffordable housing – indeed, unfortunately they are often inversely correlated – so data on the incidence of inadequate housing do not necessarily provide much insight into the struggles many urban households face over housing costs. Nonetheless, in a short two-page section of the 264-page report there is a strong argument made that:
affordability is the crucible of housing policies … In many developing countries, despite all efforts to reduce costs, enhance efficiency and improve design, basic formal sector housing is too expensive for most households … [the] time has come to recognize that, especially in much of Sub-Saharan Africa, the main problem is not that housing is too expensive, but that incomes are too low to afford basic formal housing.3
This was radical and a step change from the broadly neoliberal and pro-market flavour of global agency analyses of urban housing problems over the past three to four decades. On the other hand, this section focuses mainly on the GS. Given the worldwide nature of the housing affordability crisis and the increasing prevalence of the issue in the largest cities of the Global North (GN), this uneven treatment is unwarranted. There is unquestionably a difference in the scale of the problems but the underlying issue of the mismatch between many people’s incomes and formal private-sector housing is the same. Reference to rising rates of housing unaffordability in New York is found in another section on urban inequalities, however, contextualised by the facts that one in five of the city’s population cannot afford to feed themselves without food assistance and that one in three of the children of New York live below the locally defined poverty level. The time might also be coming when tables on the incidence of slum conditions across the world should include data for GN cities, as more people find themselves in seriously overcrowded accommodation or faced with insecure tenure (either of these being sufficient to be classified by the UN as living in a slum). This would no doubt be highly contentious; such cross-country data are also always fraught with difficulties, given the different definitions used for parameters such as ‘overcrowded’ or ‘insecure’ and differences in the ways in which data are collected.
There are even more difficulties with measuring housing affordability, which, being a relationship between individual households, their incomes and their housing costs, makes the compilation of internationally comparative datasets covering all types of housing and income groups very problematic. The debates about the complexities of defining affordability in relation to housing are deliberately left to the concluding chapter as they are better understood once the historical and geographical parameters of the affordable housing dilemma have been established. Suffice it to say at this point that the comparative datasets available tend to focus on formally provided housing in the private sector and often fail to capture the income groups for whom housing costs are most onerous.
The purpose of this chapter is to set the scene with regard to the housing affordability crisis for the rest of the book. Case studies are used to introduce and illustrate key aspects of the housing dilemma. Drawing mainly on examples from countries in southern Africa and from London, it illustrates the scale and scope of the crisis as well as key policy aspects, especially the crucial importance of understanding affordability as a product of incomes rather than housing supply. The thorny issue of the influence of building standards (taken up in detail in Chapter 3) is introduced. It is shown how low-income housing projects are usually far too expensive for most of the households they were meant to help. Examples are given of common problems with ostensibly low-income housing projects, which are revisited in later chapters: how market forces cannot provide for the poor, how trends to involve the private sector in such projects make things worse, and how policies that are meant to assist the poor into formal housing – at least in theory – and that are often publicised as such can be hijacked by other groups or are simply unenforced. It is also shown how more realistic assessments of incomes and affordability can help produce a better understanding of housing affordability issues and therefore better policies.
In 1985 I conducted a survey of almost 1,000 migrant households in Harare, Zimbabwe’s capital city. This was the start of a long-standing research engagement with the country and the city. At that time, socio-economic conditions in Harare were among the best in urban Africa, with high rates of formal employment, rapidly improving social indices and falling poverty levels.4 By 2008, the entire economy had virtually collapsed and the country was experiencing hyperinflation – £1, worth Z$1.6 (Zimbabwean dollars) in 1985, was valued on the parallel market at Z$100 trillion. In the intervening period, Zimbabwe had implemented a full suite of housing policies, influenced by its own specific urban history and the zeitgeist of shifting global economic ideologies, including privatising public rental housing, maintaining high and expensive building standards, upgrading informal settlements, highly subsidised site-and-settlement schemes, and mass demolitions and evictions of ‘illegal’ informal housing. Due to its history as a white settler state until 1980, most urban and peri-urban land had been alienated and commodified, constraining the development of informal settlements. Along with the two other white settler states in the southern African region, South Africa and Namibia, it also suffered extreme forms of institutionalised racial discrimination and segregation. The political imperatives of the ruling white minorities meant that there were strict controls on migration to towns and on the nature of the housing stock, which distorted these countries’ urban demography. In large urban centres, high-income, low-density (and formerly exclusively white) suburbs, similar in many ways to those in cities of the GN, took up most of the space, with the majority black African population squeezed into smaller, segregated, high-density residential zones (‘townships’) of public rental housing and migrant hostels. These were legal and planned, characteristics that, along with the nature of urban land tenure, were atypical for colonial sub-Saharan Africa. When white settler rule finally ended (1980 in Zimbabwe, 1990 in Namibia and 1994 in South Africa), a wide range of new housing policies were introduced, partly reflecting the policy fashions of the times and also the need to address the racist legacies of the past.
As I travelled back and forth between southern Africa and Europe over the decades, it became increasingly apparent how key global trends in the ideologies influencing housing programmes and weaknesses in policy implementation were working their way through the cities in both regions. These processes, alongside its unusual mixture of housing types and a phenomenal series of changes in the nature of urban livelihoods and the scale of urban poverty, made Zimbabwe a compelling case study for housing research as the impacts unfolded of a very wide range of housing types and approaches and their interactions with income levels and household composition. Neighbouring South Africa also experimented with different types of housing policy after 1994. Its housing experiences include the mass (re-)emergence of informal housing in the last decade or so of white minority rule and a socially progressive attempt to address a severe urban housing shortage post-1994 via a major programme of state subsidies. However, other countries in southern Africa, such as Malawi and Zambia, had more typical colonial histories. Although their urban centres were influenced by racist and segregatory planning, there was less state control and land under indigenous tenure was often available, leading to housing outcomes more typical for countries of the GS, including mass informality. In sum, the southern African region provides an unusually wide range of housing policies and outcomes, shaped by different forms of land tenure, political imperatives, ideologies and policy fashions, making its experiences relevant to wider discussion and theorisation of global housing crises. For this reason, and also to demonstrate how such analysis can draw on cities in any part of the world, the following chapters frequently use examples from southern African to illustrate the causes and outcomes of the housing affordability crisis.
In Harare in 1985, after only five years of independent democratic rule, the legacies of almost a century of racist legislation were still imprinted on the urban landscape. The survey undertaken that year covered five low-income housing areas: Highfields, Glen Norah, Mabvuku, Kuwadzana and Chitungwiza. These were formal, planned and legal settlements with access to physical and social infrastructure such as roads, electricity, water, shops, schools and clinics. The vast majority of the city’s low-income residents lived in such settlements and only a small proportion in areas with illegal tenure. Squatting was rare, as the new independent African government maintained a vigilant battle against housing informality, as had its white minority and racist predecessor. These five areas represented very different phases of housing in the city. The first three were built by white minority governments to house African families. Africans were not allowed to own urban land or housing and the general policy was to discourage permanent settlement by Africans in the towns of Southern Rhodesia (as colonial Zimbabwe was called). Nonetheless, a constantly oscillating migrant labour force had its downsides as the urban economies matured since it restricted the availability of skilled labour. Thus, a limited number of family houses – for rent and not ownership – were built in ‘townships’ such as Highfields to allow an element of more skilled and permanent urban labour to emerge. At independence, the ownership of most of these small, one-storey houses was transferred to their main tenants. The history of the way in which this housing was costed to its main residents both before and after independence bore no relation to the forces of supply and demand; as such, it is discussed in Chapter 5 as an example of mass public housing provision. Chitungwiza and Kuwadzana were very different, both being site-and-service settlements where people were allocated land (called plots or sites in African housing parlance) and were then supposed to construct their own dwellings. These could then be connected to the water and electricity supply provided in the settlements; these supplies were metered, and households defaulting on their bills could be disconnected. Chitungwiza was begun by the white state in the late 1970s, just before independence in 1980. Kuwadzana (meaning ‘cooperation’) was begun shortly after independence with support from USAID. All the homeowners in these areas at this point had been significantly subsidised by the government or by aid programmes. Profit-oriented market forces had had little to do with their housing.
However, most interviewees in the survey were lodgers renting rooms from these homeowners. Their rents were set by market forces operating across the city and were completely unregulated, even though rent control legislation was on the books. The rents for one or two rooms were generally very similar, with some variation between settlements according to distance from the main employment areas of downtown Harare and its industrial zone. Many migrants were young, unmarried and lived alone in one room or shared with a friend. Married migrants usually lived with most of their immediate family in town for at least part of the year, in contrast to the situation before independence, but there was a significant proportion whose spouse and/or children were still living in the rural areas. Most of those divided from their families in this way aspired to bring their families to town and live together, but, as they often pointed out, the problem was money. They could not afford to support them in town, largely because their outlay on housing would increase or they would all have to live in one room together. This pattern of an entire household living in one room is common enough in the rental sector in African cities, but it is obviously neither desired nor desirable, being a response to the housing dilemma at the centre of this book.
When asked about their plans and aspirations for the future, it turned out (rather unexpectedly) that most of the migrants expected to leave the city eventually and return to rural areas, usually their birthplace, in a pattern similar to that previously enforced by racist legislation. There was no social security net in place and few had any expectations of a realistic pension. As they explained, what would they eat and how would they pay their rent if they became unemployed for any length of time or had to stop work due to old age or ill health? Staying in the city permanently, they argued, was possible only ‘for those with a house and a pension’.
The survey’s main aims had not included the issue of housing per se, but the key components of household budgets did emerge. And housing came up again and again during interviews, particularly in relation to family life and the risks of proletarianised life: unemployment, old age, illness. For this reason, during a subsequent survey in 1988, the residential area chosen was Glen Norah C: a new site-and-service settlement with access to water and electricity. Here, private-sector building societies had been brought in and incentivised via some new tax arrangements to provide loans to so-called ‘beneficiaries’ (homeowners). The shift from generous subsidisation of housing costs had begun, in line with trends across the world as the neoliberal phase of contemporary capitalism took hold. Precisely the same forces were at work in nearby Zambia and Malawi, for example. They were also in full swing in London.
In the hope of maintaining a reasonable rate of repayment from the new borrowers in Glen Norah C, a minimum income was set as a condition of eligibility for the scheme, as well as a maximum. This was in contrast to the situation in Kuwadzana in 1985, at which time only a maximum income was set, above which people were ineligible for the scheme. Kuwadzana was thus much more definitely a pro-poor housing scheme, although Glen Norah C was also promoted as such by the government and the World Bank. Applying a minimum income condition at Glen Norah C showed that it was realised that the poorest Harare households could not afford to service a loan for a basic site-and-service plot, let alone build anything on it. In other words, it was proof of the premise of this book: that it is impossible for the formal private sector to provide housing for the poorest urban groups. It is also proof that the World Bank knew this. The loans available at Glen Norah C presumed that most of Zimbabwe’s urban workers would not be able to pay more than 30% of their monthly income to pay back the building society over 20 years. This guideline of a 30% level of income as a maximum for housing costs for low-income households is quite common in such calculations across the world, although nowadays many renters and homeowners in the largest cities of the GN are paying much more. However, where incomes are very low in real terms, as in most of Africa, it is understood that the opportunity cost of paying another 10% or 20% or more of your income for housing does not mean setting aside meals in restaurants or new clothes, but cutting out some food altogether, taking children out of school, or leaving the purchase of medicines so late that a sick family member will suffer unnecessarily or even die. In other words, when people are really poor, the welfare losses imposed by increasing payments for housing can be very serious and potentially life-threatening.
It is worth noting that, unlike a mortgage for an already constructed house, the sort of housing loan made in Glen Norah (and in thousands of similar projects across the urban GS) did not provide any actual housing in the first instance – just access to a bare plot. Until something is built, the borrower has nowhere to live (or they must rent somewhere else, compounding the affordability issue). For those on the minimum income level applied at Glen Norah C, the maximum loan they could get covered the cost of the plot but not much else. In other words, there was no provision for the cost of building most of the actual house but they would already be paying out 30% of their income to service their loan. This is something of a dilemma, evidently.
But what housing loan could typical residents living in Glen Norah C actually afford? The 1988 survey collected data on household incomes and it turned out that the average income of the 227 migrants interviewed was almost identical to the average for beneficiaries of the programme. In other words, they were good proxies for the households living in the area. Many of Harare’s low-income households are from other parts of Zimbabwe and, in the 1980s, most worked in the formal sector, as did the rest of the city’s workers. Unemployment levels were low. The survey data were used to construct housing affordability curves (see Figure 2.1), which showed how many could afford the housing payments needed to actually build a house, even if gradually. Not many, it turned out. Based on the household head’s income, only 8% could afford the monthly payment of Z$141.20 that was necessary to repay the size of loan required both to buy and occupy their plot and then to build the minimum type of house required by local regulations. The average loan provided by the building society was thus completely insufficient to build the required house. This was also obviously problematic. Yet half the migrants were even too poor to borrow that amount. A third had incomes below the minimum required for the scheme. The affordability curve based on total household income, including income earned by other household members, was slightly more favourable, with about 19% able to build the minimum house. This would still have left four-fifths unable to build a house – and anyway, in practice, loans were based solely on the household head’s income.5
Figure 2.1 Housing affordability curves for households in a private-sector-financed scheme in Harare
In some ways, the scheme was smoke and mirrors. It was officially meant to be addressing the city’s critical housing shortage for those on lower incomes. However, the ideological turn towards cost recovery and the involvement of private-sector profit-oriented housing finance meant that the costs – which, it must be remembered, were on a site-and-service basis with no actual house at the start and no allowance for labour costs – were far too high for the vast majority of the groups for which it was intended (which, in this case, was most of Harare’s population, excluding the remaining white residents).
The construction of affordability curves for housing is sobering. The concepts were used in South Africa to provide insights into the constraints on future housing policy in the run-up to the final attainment of democracy in 1994. As is often the case for a new political force that has long struggled against the problems it is now faced with solving, and where class and financial interests in maintaining the status quo are not so entrenched, there was a moment of clarity and relative openness in policy circles. A government White Paper on housing published in 1994 was clear: although there were various constraints, ‘all of them are dwarfed by the single most significant constraint to the housing delivery process, that of affordability’. There were two sides to this issue: one was the need to recognise ‘limitations imposed by the State fiscus and macro-economic realities’. However, ‘of more significance and concern is the grinding poverty of such a large proportion of the South African population. This provides the single most important limitation on the housing programme. The resolution of this problem is something that a sustainable housing programme can significantly contribute to, but cannot remotely seek to solve on its own.’6
The White Paper contained various summary data illustrating the affordability problem. The total monthly income of 40% of all households was estimated to be under R800 and 70% had less than R1,500. But it was found that there was ‘almost insignificant’ provision of formal-sector loans for housing to any household with less than R3,500 per month. A housing dilemma indeed if it were hoped that the formal private sector would play a role in solving the housing crisis – since a mere 14% of households earned more than that. Even if some families with less could borrow something, albeit not enough for a completed house, as in the Zimbabwean example of Glen Norah C, it was estimated that 45% to 55% of South African households were simply not going to be able to borrow any housing finance at all, or afford to pay it back if they did. This group was going to be entirely dependent on its ‘own (limited) resources and State subsidisation’.7
The new South African government tried very hard to encourage and cajole local building societies and banks to become seriously involved in low-income housing and appointed one of the African National Congress’s (ANC’s) most senior members, Joe Slovo, to the Housing Ministry. But they refused to lend to households with less than R1,500 per month,8 thereby excluding 70% of families. The South African situation was a microcosm of the urban housing dilemma across the world – of the circle that cannot be squared by talking up either the need for more urban land or the efficiencies to be derived from profit-oriented private-sector housing delivery. In different countries and cities the figures will play out differently, and they also change over time (currently usually in directions that make the situation worse), but there is always a segment of the housing ‘market’ which is too poor to be reliably profitable for private-sector finance. The South African White Paper had put this problem up front, for once. Caught between a radicalised urban population with high expectations for housing, and the gimlet eyes of the International Monetary Fund (IMF), World Bank and international credit-rating agencies assessing their public finances, the ANC opted for a compromise. In a radical departure from other African countries, it introduced a one-off means-tested cash housing grant payable to any household earning under R3,500 per month. This could be used in various ways but its primary purpose, according to the White Paper, was to provide ‘security of tenure and access to basic services as well as possibly a rudimentary starter formal structure to the poorest of the poor’. The top grant was R15,000 for the poorest households on less than R800 per month, decreasing to R5,000 for those with R2,501–3,500, and it was to be increased in line with inflation.
The South African approach has been evaluated and analysed endlessly since then. There have been well-founded criticisms relating to, for example, the location of most housing schemes in areas too distant from areas with jobs – although unless land costs are subsidised in some way this is a depressing inevitability for ‘low-cost’ housing projects for low-income people in a free-market urban environment anywhere in the world. Housing quality and size are seen as problems. Many schemes received higher levels of subsidy than the limits theoretically set or they would never have been completed. There is still a significant housing shortage and many still live in unplanned settlements and/or are squatters. The idea of ‘incrementalism’ embedded in site-and-service approaches, whereby the poor provide ‘sweat equity’ on a bare plot, as in the Zimbabwean examples, often proved too contentious. At first, it had been highly unpopular in Zimbabwe too. By 2014, 20 years after the attainment of democratic rule, any couple living together or household head with dependants with a total household income under R3,500 per month could apply to go on the waiting list for what had become known as RDP houses. These were named after the short-lived Reconstruction and Development Programme; this guided South African policy from 1994 but was replaced in 1996 by a much more market-oriented approach, to the dismay of pro-poor activists. When they reached the top of the list, a small, basic but serviced and legal house was assigned to them for free (i.e. their housing grant had been put towards it and they were now ineligible for a further grant). They could not sell this house for at least eight years. The concept of receiving a grant to put towards housing had been rolled up into straightforward but basic provision. There were 17 other subsidy programmes operating for different income groups by 2014, but the RDP projects were much the largest.9 However, accepting at the start that typical incomes meant that market-based solutions were not going to work for the majority was crucial. Despite many problems, between 1994 and 2014 the government built 2.84 million RDP houses and provided 903,000 serviced sites10 and had much improved the lives of the beneficiaries (see Box 2.1).
Box 2.1 The benefits of RDP houses in South Africa
Research in Durban and Johannesburg has found that ‘[r]esidents living in RDP housing, particularly those who had moved from informal housing, were near-unanimous in their joy over the improvement in their everyday quality of life. These benefits related in particular to protection from the elements (specifically rain), security of tenure, and access to water, sanitation and energy.’ Florence in Johannesburg told researchers how her RDP house ‘means everything … Yes. Because now … when it’s raining, I’m sleeping comfortably. It’s not like when I was in the shack, you know when it’s raining … I have to move the things that side or what, what. It means everything.’ According to her son, ‘The day we opened this house, she even cried to see how happy she is.’ Early RDP houses were often very small and did not give much extra space over previous informal shelters but newer ones were better. Siyanda in Durban explained, ‘I’m so happy to own the house as I’m living with my children only … the children have their own room to make noise. We have space for cooking and the children are able to study in their room. If I’m thinking back in the informal settlement … we were sleeping in one bed with girls and boys because we did not have the space.’
Source: Charlton, S. & P. Meth. 2017. Lived experiences of state housing in Johannesburg and Durban. Transformation: Critical Perspectives on Southern Africa, 93, 91–115.
Urban incomes and hard limits on housing expenditure
The Zimbabwean and South African examples demonstrate the hard limits set by typical urban incomes on housing solutions if those solutions are bound by the norms of free-market pricing and financing. When these limits are recognised, the logical necessity of thinking about what determines incomes as the first building block of understanding housing issues becomes apparent. This is a complex topic but the essential element in relation to housing affordability is that urban people are caught between two sets of markets. Labour markets determine what people are paid and housing markets determine what housing costs. Crudely speaking, across the cities of world, the pay rates for millions of jobs or types of work are simply too low for the workers involved to pay enough for the types of housing that can be provided by private-sector markets that comply with regulations and have legal tenure.
The existence of such hard limits for individual families set by their incomes and the requirement to meet certain basic needs in order to survive are fully understood by poverty analysts working in the GS when they are working on food security. Indeed, this is the starting point. Obviously people have to eat, and they should eat every day. Food costs money. It is fairly straightforward to calculate the cost of a basic food basket needed for adequate nutrition and compare this to incomes. Much of this sort of food security work is done in rural areas in the GS where most people are often poor or very poor. Most national poverty datasets show that the incidence of poverty is much lower in urban than in rural areas in GS countries. However, the way in which such data are analysed is problematic. First, fairly obviously, most rich people tend to live in cities and so do most of the ‘real’11 middle classes. The number of middle-class people in countries such as Brazil, India and China is now very significant. These skew the figures. However, if the typical livelihoods, real disposable incomes after all necessary urban living costs, and lifestyles of most people living in urban low-income settlements are compared with those in rural areas, the seemingly large gap in ‘poverty’ narrows. Indeed, the underestimation of urban poverty levels in the GS is a key data problem for really understanding cities in these regions.12 As anyone who has worked on livelihoods in urban Africa will attest, there are very many households living day to day and hand to mouth, who spend most of their money on food. When things are tough, meals are missed. As already described above, this is a situation in which an extra few per cent of income spent on rent will cause real reductions in household welfare. This is poverty. As will be discussed in Chapter 4, if you cannot significantly increase your income in such a situation, then you may have to house yourself informally because that means your housing expenditure plummets. This ‘magically’ increases your disposable income and, depending on the local politics of urban poverty datum line setting, may make you apparently non-poor.
But suppose that urban poverty datum lines were set differently and in accordance with the frequently asserted view that capitalist property norms, functioning urban land markets and ‘legal tenure’ are essential to the functioning of efficient, productive cities. Let us say that the basic urban household income required for people to be classified as ‘non-poor’ in any city across the world must include an allowance for, say, current market rents for the cheapest types of housing but in a legal, planned dwelling with secure tenure and legal connections to water and electricity. (Let it be remembered that current definitions used by UN-Habitat label any other type of urban housing as ‘slums’.) In essence, this is the situation in most of the GN. The immediate political argument that ensues is over space – how many rooms per person in the household are being factored in. Yet, however that were worked out, the basic principle would reshape our understandings of the incidence of urban poverty, which would shoot up in most of the cities of the GS. The corollary, of course, is that poverty rates in the GN would, apparently but absurdly, decrease were ‘cheap’ illegal slums to reappear at scale in the world’s wealthiest cities, and if their inadequacy were not factored in to poverty measurement.
This approach has been used for years by the Jesuit Centre for Theological Reflection (JCTR), an organisation that, among other things, monitors prices and household budgets across the city of Lusaka in Zambia. At first they published food budgets based on the food needed for a family of six to keep them healthy. The diet is entirely in accordance with local norms, with mealie meal (maize) being by far the largest item. In 2002, the JCTR updated its budgets with the necessary other costs incurred in town, of which rent is by far the most significant. Information on the ‘basic needs’ basket is regularly used by trade unions and other groups when lobbying for wage increases. In the first quarter of 2002, the basic food basket cost 324,510 Zambian kwacha per month. The monthly ‘take-home pay’ of a selection of formal-sector workers could not cover this cost. For example, the lowest-paid secretaries, nurses and police officers at the time earned between K120,000 and K270,000. Even those at the top of their scales earned only K300,000 to K370,000. Primary school teachers could earn between K280,000 and K309,000, so even they could not afford the basic urban food basket. But this was only the start of the problem, because once other basic urban costs, including housing, were added, the costs rose to K823,510. Even secondary school teachers at the top of their scale earned only 60% of this amount. While this was startling enough, these budget figures relate only to those in the urban formal sector. The great majority of the urban population works in the informal sector where incomes are generally even lower, so the situation was actually much worse. The lowest-paid security guards recorded by the JCTR – on K40,000 per month in 2002 – were better surrogates for many in this sector.13 Surveys in markets in 2004, when the basic needs basket costs had increased by a further 25%, found that in Lusaka’s largest market, Soweto, 64% of customers were earning under K100,000 per month. If the small amount of meat, eggs and dry fish were removed from the 2002 budget, it went down to K278,110 – still far beyond the means of most and leaving a diet seriously deficient in protein. These depictions of poverty in the city are completely rejected by the government, however, which produces its own figures that show far less urban poverty. Yet a key reason for this is that the housing element of the government’s urban household budget is based on costs in informal settlements. The JCTR, on the other hand, used the costs of renting modest accommodation in formal, legal, ‘decent’ housing. This was because, while it was true that the government’s approach was using more typical housing costs, these were characterised by conditions that any multifaceted approach to understanding poverty would factor in to the measurement of who is poor and who is not. Such multifaceted approaches are strongly promoted by all poverty experts and agencies across the world. And the Zambian government is not above knocking down the occasional informal settlement because it is ‘illegal’.14 In other words, the JCTR’s approach was that being unable to afford anything except very inadequate and insecure housing is incommensurate with being ‘not poor’.
In cities across the GS, the truth of hard limits on housing expenditure can be seen in other ways. In Harare, the average rent for one room in Kuwadzana, the city’s largest low-income housing project, remained at around 10% of the average income of a formal-sector wage worker in both 1994 and 2001. Rents were seen as burdensome and people complained about them rising but in real terms the share of income spent on rent was not changing much. The proportion spent on food did rise after structural adjustment started in the 1990s. But despite a shortage of housing, rents only kept pace with incomes – there was a cap effect on rents set by what people could afford. A similar situation was found by the urban development specialist Philip Amis in Nairobi in the 1990s,15 and there is evidence of this effect operating in the low-income rental sector in Buenos Aires and in Mexican cities, according to Professor Alan Gilbert of the Geography Department of University College London, who has long championed the importance of the rental sector in the cities of the GS.16 As Gilbert says, ‘however grasping landlords may be, poor people can only be exploited to a certain point’.17
But so what, it might be asked? The examples so far come from the GS and we all know that countries there are poorer than the societies of the GN. So perhaps it is to be expected that many urban residents there will not be able to afford ‘decent’ housing and are too poor to be a viable market opportunity for formal housing finance and developers. Surely this is a problem of developing countries (or emerging markets, as they are now sometimes called)? But it is not. This is a global urban problem, from the UK to the USA, not just in African, Asian and Latin American societies. Let us look at the situation in England shortly after the global financial crisis. In 2011, research in England using Valuation Office Agency private rental market statistics showed that the median rent for a two-bedroom home was more than 35% of local median take-home pay for full-time employees in 55% of local authority areas. Let us recall that a level of about 30% of income on rent is often used in housing studies as an affordable maximum. In other words, private-sector rental accommodation in most of England was unaffordable for any family, even if they had only one child, if only one income was being earned and that income fell in the lower half of the income range. Any family on such an income with two children who needed three bedrooms would be unable to pay the much higher rent necessary. In Haringey, in north-east London, which has many working-class families and is very ethnically diverse, a three-bed home in that year would have taken up 75% of median income. This is completely unaffordable – food intake and necessary expenditure on items such as clothes, utility bills and transport would have to be sacrificed. In other words, precisely the sorts of issues that are central to investigations and analyses of urban poverty in the GS would become evident. The centrality of the issue of norms about space and privacy in housing also become clear; this will be returned to in Chapter 3.
The housing affordability problem is much worse in the south-east of England because higher pay levels are far outweighed by higher rents. Median monthly rent for a two-bedroom home in London in 2010–11 was £1,360, equivalent to 60% of the median take-home pay; in Oxford it was 55%. Even in some poorer towns the problem was worse than the average because local pay was so low: in Blackpool 42%, of take-home pay was needed. Private-sector rents in London were already rising much faster than incomes by 2011: in outer London they rose three times faster in that year. Over a quarter of London’s population were renting from private landlords in 2013, up from 14% in 1991, so the problem was affecting more and more households. Perhaps it might be thought that the problem was mainly confined to households where there was only one worker who had low educational qualifications and was unskilled. But in the aftermath of the global financial crisis of 2008, incomes fell in real terms for most people, including key workers with professional qualifications: for example, they fell in 2011 by 1% for nurses and teachers. Being skilled and having two workers was not proof against the housing affordability dilemma in London. Using the 35% of net income cut-off, a net household income of over £40,000 (equivalent to £50,400 in gross wages) was necessary to rent a two-bed home in half of London’s 32 boroughs in 2011. This would have been unaffordable for a two-earner family consisting of a full-time prison officer and a part-time teacher.
The impossibility of affording private-sector housing for the millions in the UK on much less than median incomes was obvious from these data. In 2011 there were 6 million people who earned within a pound of the minimum wage (£6.19 per hour in UK for adults at the time). Full-time workers on the minimum wage had annual net earnings of £10,740 (£825 per month). Even if it all went on housing, it would not have covered the median rent in 28 out of 32 London boroughs or in nearly a fifth of England’s local authorities. Even for a family with two full-time workers on minimum wages, in those localities the median rent for a two-bed home would have taken up over half of their budget.
Five years later, the housing dilemma had worsened. Figure 2.2 illustrates the situation, showing the proportion of net income required to pay for different types of rental housing in England overall, or in London, in 2016. The graph uses UK Office for National Statistics (ONS) data on housing affordability across England and median net monthly pay combined with calculations for net monthly pay for full-time workers on the minimum wage. The ONS uses the normal 30% of net pay on housing as the affordability level and calculates the ‘gap’ between that and market rents. This gives a monthly rent of £550 for those at the mid-point (median) of wage distribution (point A on the graph). For a two-bed rented home – the minimum ‘decent’ standard for a family with one child (or two of the same sex) and the largest type of accommodation for which data were provided – the average UK rent was £760, so the gap was £210. Evidently the problem is far greater for those lower down the income scales: for every percentage point on the income distribution scale they fall below the median, the larger the gap. For full-time workers on or near minimum pay rates, the gap is huge at about £410, nearly double that for those on median pay. They would have to pay two-thirds of their net pay in rent (point B).18 Even some better-paid workers above the median pay rate would also find housing unaffordable. The scale of the housing crisis and the contemporary housing dilemma in the UK is thus exemplified – by far the majority of working people are affected. Yet even this underplays the problem because the housing dilemma under examination in this book is mainly about the issue in large cities where rents may be above the average. In Manchester, the gap for a worker on median pay was about the UK average at £221.23. However, in London the average rent for a two-bed flat was £1,658, which exceeded the total net income of a worker on the so-called National Living Wage in 2017 by about 50%. Even for those on median pay, the ‘gap’ between this and an affordable rent was £1,057. And while, for obvious reasons, the unaffordability of private rental housing is most acute in the centre of the city, the general problem exists across it: average rents exceeded total minimum monthly net pay in 30 of London’s 33 local government areas (32 boroughs plus the City of London). In 16 boroughs the same was true for average rents for a one-bed flat, and in the remaining boroughs a worker on minimum pay would have to pay upwards of about 80% of their net income. Average rent for one room in a shared house was £607 – 53% of the net minimum pay income – ranging from £813 in the most expensive area to £460 in the cheapest. Of course, a one-bed flat, let alone one room, is below ‘decent’ standards for a family with children.
Figure 2.2 Typical wages and average rents in England and London in 2016: the housing dilemma illustrated
There is an additional housing cost that needs to be factored in to these equations in some parts of the world. Although there are obvious exceptions, particularly for cities at high altitudes, very generally speaking the societies of the GN are colder than those of the GS. This does mean that the issue of keeping houses warm becomes more crucial – it is another facet of poverty. In the UK, the housing affordability issue is compounded when energy bills are factored in. These averaged £1,356 per year per UK household in 2012. Research using average rents and energy costs in England in 2012 found that these totalled £10,248 per year. A minimum-wage worker would be unlikely to live in the average home, but, if they did, it was calculated that for that year their ‘disposable’ income to cover necessities such as food, clothes, transport and council tax would have been less than £1.50 per day. That would have been impossible.19
Similarly impossible situations face low-paid workers in the USA. The National Low Income Housing Coalition there found that, in 2017, ‘there is not a single county or metropolitan area in which a [full-time] minimum-wage worker can afford a modest two-bedroom home, which the federal government defines as paying less than 30% of a household’s income for rent and utilities. And in only 12 counties [mainly rural ones in the West] in the country is a modest one-bedroom home affordable.’20
Because data on incomes and housing costs in rich countries are often better and more available, it is actually easier to demonstrate the housing affordability dilemma there. Nonetheless, playing the devil’s advocate, let us think about the arguments that might be put forward against the analysis of the UK or US in the paragraphs above. It might be said that costing in extra bedrooms for families with children is too generous: why cannot everyone sleep in the same room or, less drastically, why cannot children, or even adolescents of the same sex, share a bedroom? Or why is there any discussion about the mismatch between incomes and rents for a one-worker multi-person household, or a family with a full-time and a part-time worker? If families want shelter, everyone must work full-time. Or perhaps people should not have families if they cannot afford to house them ‘properly’ and such people should remain ‘single’,21 living endlessly in cheap, shared lodgings. Well, that is precisely what happens in the GS. Whole families often do have to sleep in one room, no matter the mix of generations and sexes. And often everyone in the family – often including children and old people – does have to go out to work, no matter how exploitative or dangerous the conditions, and bring back cash at the end of the day or the week. Furthermore, these sorts of conditions were typical of the cities of the GN in the nineteenth century. But these were and are the conditions of poverty, and for a few lucky generations in the GN national wealth and public policy combined to determine that these conditions were unacceptable. In the absence of proper sanitation, the outcomes of such conditions can be epidemics, which have had a very definite impact on housing policies. But beyond the public health situation, decisions have been made in the past about what standards of housing are commensurate with the desired norms of a wealthy and safe society in which it is possible to live as a family.
These points bring up two key issues explored later in this book. The first is the role of policies on housing standards: both the type of house that can be built and expectations regarding a safe and healthy living environment for residents. This is the topic of the next chapter. The second is that the housing situation deemed acceptable for children is a very important influence on the outcomes of such policies. Children cost money, take up space and affect the kind of work, if any, that their primary carer can do. All these things in turn affect how the housing dilemma works out for different types of households.
It is important to note that none of the arguments made above deny that the supply of housing provided by the market is important. For those able to afford such housing a shortage will increase prices or rents, meaning that some will have to buy less housing than they otherwise might have bought. However, from the perspectives of those in the housing dilemma – the focus of this book – as they were already unable to afford such housing, what difference does it make? For those in the income decile closest to affording some type of decent housing, however, it does make their aspirations less realisable. For those in the decile just above, they may be driven down into the housing dilemma. As housing activists point out, cities frequently have empty housing and some live in houses with far more bedrooms than their household needs while many are unable to afford adequate accommodation or are homeless. Danny Dorling, Professor of Geography at the University of Oxford, in his book on the housing crisis in the UK, All That Is Solid: the great housing disaster,22 suggests that one solution would be somehow to reallocate excess accommodation to those in need. In theory, this could help; in practice, contemporary political realities make it impossible. Vigorous policies to reduce speculation on housing and land would help remove an egregious source of supply limitation. However, even politicians can be implicated in this.23 In sum, for most in the housing dilemma, only non-market or informal market solutions are likely to help.
It would be possible to outline the parameters of the sorts of housing dilemma detailed above for Zimbabwe, South Africa and the UK for most urban societies across the world.24 Yet so far the examples given here have been mainly about the rental sector. In nearly all cases the dilemma is greatly magnified for house purchasing, where costs tend to be much higher. In all countries and in both the rental and homeownership sectors, the essential element is the mismatch between earnings (the labour market) and rents or mortgage payments (the housing market). In most cases, the households unable to meet the housing payments include working adults.25 In other words, the problem is not one of unemployment, although that makes it worse, but pay levels that are incommensurate with the ‘requirements’ of contemporary, formal housing markets. These markets are influenced by the usual economic factors of supply and demand; they set the cost of housing. Additionally, as market forces determine the wages and incomes of urban workers, they in turn influence the pensions that older citizens might command (see Chapter 5), although in many poorer countries in the world pensions are non-existent for most and utterly inadequate in relation to urban living costs for many lucky enough to receive them. And those market forces, in almost every city across the world, not just in the GS, determine that some proportion – often a very significant proportion – of the city’s workforce and its older citizens are not paid enough to ‘demand’ the housing that the city’s formal housing market can supply. In other words, there is an inevitable and serious mismatch that is an outcome of the ‘invisible hand’ of market forces in the late twentieth and current twenty-first century. This is true whether you are in London or Lagos, Hong Kong or Rio de Janeiro, Los Angeles or Shenzhen.
