Housing Affordability, Government Intervention and Housing Informality: An African Dilemma?

Abstract

The imperfections associated with housing markets have often been the basis for government intervention policies. The purpose of this article is to show the need for governmental responsiveness regarding local realities in structuring policies in specific sectors of the housing market. It shows how government intervention contributes to housing supply and the consequences of this in developed and developing countries. Conversely, it also explores how government intervention in co-operative societies has been utilised in various countries to address housing supply inelasticity, the outcome of this, and lessons that can be learnt. This study takes the form of a literature review and a quantitative survey of co-operative societies in Lagos, Nigeria. Its analysis is based on multivariate techniques. The quantitative survey is utilised to show a specific case of government inactivity in the co-operative housing sector, while the literature review is utilised to showcase government intervention in co-operative housing in four countries. The study argues that while government interventions (by way of planning regulations) often leads to house-price increases and unaffordability in developed countries, it has contributed to the emergence of informal settlements in several African cities.Additionally, while co-operative societies have been historically recognised to reduce inelasticity, improve supply and affordability in developed countries, they have yet to be recognised and supported in African cities like Lagos. It is concluded that while housing affordability is a dilemma that faces both developed and African countries, informality arises as a uniquely developing country response to unaffordability. It is recommended that, learning from history, African governments should recognise and integrate co-operative societies into their housing supply system. Furthermore, governments should implement appropriate policies to guide their activities towards reducing supply inelasticity, increasing affordability and the reduction of ever-expanding informal communities.