Guest Columnist
By Teodoro K. KatigbakOur new program for housing has been announced: Build one million homes a year for the next six years
How realistic and achievable is this?
As a reality check, we can look at our accomplishments over the last 28 years since the housing program was re-launched in 1987 following its collapse in 1986.
Quoting from a table marked households assisted and cost by key programs, 1987-2015, we find: Assistance through mortgage loans: 1,219,453 units at ₱406,314; CMP-assisted households 284,579, at ₱40,314; NHA assisted households: sites and services 47,975 HH at ₱59,003; Core Housing: 13,976 HH at ₱15,920; Settlement upgrading: 100,229 HH at ₱59,003. Total households assisted for the 28-year period: 2,786,313 or 99,511 per year. How can we target building one million house per year when our average accomplishment for all forms of housing assistance has been less than 10 percent of that.
Can massive construction of high-rise housing condominiums help us meet our million houses target?
Over the last 10 years, our top 40 developers have built over 50,000 units with a market price of over ₱40 billion. The smallest condominium unit is the 20 to 25 square meters, the so-called studio unit. This is currently selling at ₱5 million per unit. Assuming a mark-up of 250 percent of cost, the cheapest unit would cost the builder ₱2 million each. The total cost of a million of such units is therefore ₱2 trillion.
Even assuming this amount could be raised by private and public builders, how would the funds be repaid. At very favorable financing terms (20 percent down payment, six percent interest over 20 years), a monthly payment of ₱31,000 would be required for the cheapest studio unit. This can only be afforded by incomes in the top two decile groups. What can we offer for the lower 50 percent of family incomes?
Let’s look at what other countries have done to meet their housing targets. Sri Lanka, a third world country even poorer than us, put up a million homes program and claimed success. How did they achieve this? They defined housing to include not just the physical building structure but also, and sometimes more important, all that the family reeds to live safely and happily in their homes. This includes essential basic services like sanitation, safe access and potable water. Thus, the provision of running water to a community of 1,000 families is credited with the creation of 1,000 new homes. Adding up the government’s interventions that fulfilled the first immediate basic need of a million families results in the fulfillment of the targeted million homes for the country at a fraction of the cost of building new units.
The well-known housing conundrum goes: Affordable housing is inadequate while adequate houses are unaffordable. The Sri Lankan way out: Don’t build adequate but unaffordable housing; instead make inadequate houses adequate – by upgrading them.
Closer to our situation is Indonesia: 250 million population vs. our 100 million; 17,000 islands vs. our 7,000; 64 million housing units vs. our 20 million and with family income levels very close to ours. In their Roadmap for Housing, they identified 3.9 million household as living in slum areas and they bravely put forward as their number one target to clear all slum areas in five years.
A slum area is one with substandard housing: No potable water, no sanitation, substandard roofing, walling and flooring materials, overcrowding (less than seven square meters per person). Clearing all slum areas means correcting all substandard housing elements in each slum location. The following numbers show how great an effort is required in Indonesia: 3,236 slum locations, 34 provinces, 37,407 hectares in area, 2,906,003 households.
Following the Indonesian example and using, as an illustration, their data for substandard conditions, we can now have a workable agenda for action: Supplying potable water to the 24 percent of households without it– 800,000 households per year for; Providing sanitation to 14 percent of homes – 450,000 households per year; Providing sound building materials for roofing, flooring and siding 20 percent of households — 300,000 per year. A most important element is the securing of improved tenurial right to the housing plot occupied. Per official data (probably understated) this is required for 2.2 million households or 200,000 families per year. At an average of three types of assistance per household, this comes to 400,000 per year or 40 percent of the target million homes.
The challenge: solve the squatting problem in six years. The starting point: the lowest 40 percent level of incomes. The task: create livable homes by correcting present sub-standard features that make their homes inadequate. This means providing physical improvements like potable water supply, proper sanitation, safe access, and eventually tenure security and greater social access.
To recap: Let us build the million houses by providing the upgrades needed to make inadequate houses livable. For the poorest 40 percent this probably means providing potable water and sanitary facilities to start with, and all needed sites and services construction to follow; for the middle 40 percent let us find ways and workable subsidies for building and financing adequate or livable houses: and last, for the top 20 percent of family incomes, let us continue to motivate private developers and financiers to build attractive and affordable housing, both horizontal and vertical.
This is the challenging but achievable task we would like to lay before our new head for housing, Jose Rizalino “Jerry” Acuzar. From the little we know personally about him, he is probably the most qualified person we have ever had in this position. As witness to the following achievements: Successful housing developer, experienced in both horizontal and vertical construction, innovative builder (eg. Casa de Acuzar and the massive Iglesia ni Cristo arena), knowledgeable about mass transport-housing linkage with his brief South Rail experience.
We are confident that he will use his abilities, dedication and creativity in addressing the problems of housing for the urban poor.
(Teodoro K. Katigbak was the first head of the Housing and Urban Development Coordinating Council. He is currently chair of Urban Poor Associates and Foundation for the Development of the Urban Poor.)