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Cities with Affordable Housing: Fulfilling the New Urban Agenda

Working paper #829
Marja Hoek-Smit, Kyung-Hwan Kim, and Susan Wachter
The Wharton School, University of Pennsylvania

Shelter is a necessity of life and the building block of cities. Cities cannot be inclusive without affordable housing near transportation, jobs, and necessary public services like safety, health care, and education. Housing is the most important asset for the majority of households and anchors economic activity. Moreover, homeownership is key for building wealth. Housing is also fundamental in the construction and expansion of cities and the main driver that catalyzes sustainable and resilient territorial development through the land-use, infrastructure, and transport sectors. Location of housing relative to employment and other service centers has a direct implication for transport and mobility, and hence energy consumption and greenhouse gas emissions. The location and design of dwellings affect their vulnerability to natural disasters. Ultimately, housing policies and interventions are an integral part of a holistic vision of urban areas contributing to inclusion, resilience, and sustainability.
But, housing cannot be viewed in isolation. There is an interlinked triangle of land use, transit, and housing to provide access to job markets. Housing is expensive in good locations where there are plentiful jobs, which is made worse by an inadequate provision of developable land caused by natural factors, like water and topography, and man-made scarcity from regulations. Hence simple policy solutions of building affordable housing wherever it can be done at low cost will not be effective.
In light of the importance of housing, the New Urban Agenda recognizes the need for adequate and affordable housing within the framework of sustainable urban development. The New Urban Agenda provides an opportunity to achieve the overarching Sustainable Development Goals (SDGs), including Goal 1, which calls for eradication of extreme poverty by 2030 (currently measured as people living on less than $1.25 per day) and Goal 11, which calls for access to adequate housing and basic services and the upgrading of slums. The challenge is how to implement the recommendations of the New Urban Agenda. This is not the first effort to address the global housing agenda, as an earlier attempt, Habitat II, the Second United Nations Conference on Human Settlements held in Istanbul, Turkey, in 1996, did in fact lay out many of the requirements for progress in this sector in the Habitat Agenda. However, the extent to which housing goals were reached in the intervening 20 years has not been clearly identified. To make a real difference this time, we need clarifying principles, better strategies, and measurable outcomes. To that end, the plan for New Urban Agenda implementation can be improved. The document provides a list of principles and anticipated outcomes but lacks an implementable vision that can bring all parts together and inspire action across and within sectors to achieve the “provision of affordable housing options with access to quality basic services and public spaces for all” (New Urban Agenda, par. 99).
A major gap is the absence of a discussion on financing. No meaningful implementation of the housing component of the New Urban Agenda is possible without reference to housing finance, which is mentioned briefly and in a cursory fashion. Since housing finance is an integral component of the financial system, the linkages to the financial sector and capital markets are essential. Also, implementable strategies should specify who will do what and by what means. In this regard, the division of responsibilities between markets and government, and among the different layers of government, needs to be identified.
This chapter will elaborate on the housing component of the New Urban Agenda and suggest ways to ensure its effective implementation. The rest of the chapter is organized as follows: Section 2 looks at the structure of the housing component of the New Urban Agenda. It compares the New Urban Agenda with the Habitat Agenda from the Habitat II Conference in 1996 and explains how housing inequality is an even greater challenge for its implementation than it was 20 years ago. Section 3 provides guiding principles for achieving the goal of adequate housing for all through an integrated approach of urban management and land use mechanisms, expanded access to housing finance, and subsidy programs. Section 4 discusses how effective implementation of the housing component of the NUA can be strengthened with systematic data collection and analysis using indicators. Section 5 concludes the chapter.

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