Neo-liberalism in low-income housing policy – problem or panacea?

ABSTRACT

The provision of decent, affordable and well-located housing for low-income communities has been an intractable problem, especially for developing countries. A recurrent issue in the discourse of this problem relates to the appropriate role of the state on one hand and the private sector on the other. The debate has been given renewed urgency in the current context of a growing critique of ‘neoliberalism’. Through rigorous literature review, this paper intends to review the successes and failures of neo-liberalism and explore the intricate linkages between neo-liberal housing policy and low-income housing provision. The raison d’être for the paper is that, despite the growing disenchantment with neo-liberal housing policy, the empirical basis of this criticism has not been established convincingly, and neither have that of potential alternative policies. This paper therefore fills a critical gap in the low-income housing policy literature.

KEYWORDS:

• Low-income housing provision
• neo-liberal housing policies
• private sector capital

1. Introduction

The provision of decent, affordable and well-located housing for low-income communities has been an intractable problem, especially for developing countries. With the development of the society and economy, urbanisation is the inexorable trend for human society (Acma, 2005; Winchester, 2005; Mashoko, 2012; Derossett, 2015), as is evidenced by a ballooning urban population. In Africa, the number of urban dwellers is projected to increase from 400 million to 1.26 billion between 2010 and 2050 (Van Waeyenberge, 2015). This exerts pressure on existing urban housing and exacerbates the scarcity of decent accommodation (Makinde, 2014), which has been a perennial issue, particularly for the low-income groups, often the most underserved in the housing market.

Neo-liberalism, an ideology that thrusts and supports market-led development (Fawaz, 2009; Lazzarato, 2009; Kitchin et al., 2012; Vanwynsberghe et al., 2013; Derossett, 2015), manifested itself in the political mainstream agenda in the 1970s. However, it was not until the 1980s that there was a transformation of the institutional landscape, with more emphasis on markets (Vanwynsberghe et al., 2013). It was at this point that neo-liberalism was established as the dominant political ideology (Theodore et al., 2011), and this period was characterised by deregulation, privatisation and welfare state withdrawal in first, second and third worlds (Stonehouse et al., 2015; Venugopal, 2015; Beer et al., 2016; Chelcea & Druta, 2016). The collapse of communism and socialism in the early 1990s catapulted the mass adoption of the neo-liberal agenda, and the role of the private sector began to be encouraged, with markets taking the lead. The mission under neo-liberalism is to facilitate conditions for profitable capital accumulation even in domains that have been formerly regarded as off-limits to the calculus of profitability (Harvey, 2007; Schipper, 2015; Hyslop, 2016), and one such contested area is low-income housing. The collapse of the financial system in 2007–09, which was mainly triggered by a complex interplay of housing policies that encouraged home-ownership, providing easier access to loans for subprime borrowers, and overvaluation of bundled subprime mortgages (Acharya et al., 2009), has however resulted in the pendulum swinging the other way. Questions are being asked, as seen through broad debates surrounding the pros and cons of neo-liberalism in housing, and hatred of capitalism is now resurgent.

The main contestation against neo-liberalisation in the housing sector, it has been argued, is the unrestricted rise of land and house prices (Buckley & Mathema, 2007; Fawaz, 2009; Bone, 2014), which purportedly prices out the low-income groups (Sivam & Karuppannan, 2002; Moss, 2003). This rise in land prices is said to be a direct effect of treating land and housing in general as a commodity which encourages speculative behaviour. Low-income groups would arguably be adversely affected by this speculative activity in contexts where there is a large and unmet demand for affordable housing, an absence of credit facilities for low-income groups (Fawaz, 2009), and little or no subsidy support from government, which implies that the target market has to compete for housing on the open market using their own savings and meagre income. According to Rolnik (2013), the market mechanism’s ability to provide adequate housing for all has been contested, implying that the neo-liberal agenda in housing would lead to social injustice (Craig & Porter, 2006; Marx, 2008; Pattison, 2009; Campbell, 2011), as the exercise of unequal power in the market diminishes accessibility of home-ownership for low-income urbanites and results in low-income urban dwellers being unable to participate in the production of space (Fawaz, 2009).

Despite these criticisms, there is no doubt that neo-liberalism is hailed as a hegemonic political ideology (Theodore et al., 2011; Vanwynsberghe et al., 2013; Bone, 2014; Nicholls, 2014; Larsen & Hansen, 2015; Venugopal, 2015). Housing sector research has shown that the production of housing, both formal and informal, never happens entirely outside the framework of the capitalist land market (Fawaz, 2009). Dwellers always pay some cost even for squatting, implying that the processes of land acquisition do not happen freely (ibid.). Despite all the criticisms of the neo-liberal agenda in the housing market, it is acknowledged that the state alone has failed to provide adequate housing to the low-income groups (Mayo & Angel, 1993; Ibem, 2011; Mosha, 2013; Stonehouse et al., 2015) mainly due to limited fiscal resources. The failure of states to provide adequate housing inevitably leads to the reliance on the private sector to satisfy that housing gap, be it for high-income, medium-income or low-income groups. It is also acknowledged that the private sector is the highest and most efficient producer of housing (Sivam & Karuppannan, 2002). What is of question in the face of resurgent neo-liberal criticisms is, are there alternatives to the neo-liberal agenda in the housing sphere?

Given this context, the paper seeks to interrogate what neo-liberalism means in housing policy. The aim of the paper is thus to detail what neo-liberal housing policies were responding to as seen through the evolution of low-income housing policy over time and to define the key characteristics of the current neo-liberal housing policies. The successes and failures of neo-liberalism will be also explored through two case studies with the aim of grounding the critique of neo-liberalism. There is a lot of criticism of neo-liberalism, especially in the housing sector, but what evidence is there to support this critique? Are the critics proffering any alternatives to neo-liberalism that can be considered in trying to solve the low-income housing challenge?

The rest of the paper is arranged in four sections as follows: The following section briefly reviews the evolution of low-income housing policy with the point of explaining how neo-liberalism got to be established as a dominant policy framework. Based on this review, the third section maps out the key elements under a neo-liberal housing policy and how it relates to low-income housing. Criticisms of a neo-liberal housing policy are detailed in the penultimate section where this paper examines empirical research in areas where a neo-liberal housing policy has been implemented with the aim of substantiating the criticisms. The final section draws on the above discourse and explores the implications of neo-liberalism in low-income housing as a potential panacea to the low-income housing challenge and also details suggestions for research.

2. Evolution of low-income housing policy: 1970 to present

There are leading multilateral organisations that influence housing policies such as the World Bank and UN Habitat. The way these international policy leaders conceptualise and support housing policy influences national housing policy for governments in the developing world (Keivani et al., 2005; Mooya & Cloete, 2007; Kitchin et al., 2012; Nicholls, 2014; Van Waeyenberge, 2015). Support for national efforts to meet the human settlement challenges facing developing world governments is usually given by supplementing the resources of governments by providing them with the necessary financial and technical assistance as well as support for evolving institutional arrangements as they seek new and effective ways to solve the housing challenge (Buckley & Kalarickal, 2004; Kitchin et al., 2012). A neo-liberal agenda in housing policy implies that the role of the state in the housing market should metamorphose in line with the ideological shift (Harvey, 2007), and the support rendered to states by multilateral organisations should also be modified accordingly.

During the 1970s, the main policy lending instruments that were utilised by the World Bank were sites and services and slum upgrading projects (Mayo & Angel, 1993). These programmes entailed the government directly providing land, housing and finance to the project beneficiaries. A critical analysis of the policy and lending instruments reveals that these programmes were largely unsuccessful. Problems that have been cited with sites and services programmes include: land acquisition problems, lack of financial sustainability, poor cost recovery and problems of replicability for the infrastructure and services provided (Mayo & Angel, 1993; Thahane, 1993; Mooya, 2009). Targeting errors coupled with fronting also resulted in most beneficiaries being mostly middle-income groups (Potts & Mutambirwa, 1991; Mosha, 2013), contributing towards the ineffectiveness of these programmes that were targeting the low-income groups.

From the 1980s onwards, there was a shift from reliance on sites and services to the emergence and establishment of housing finance projects and housing policy loans as the dominant lending instruments funded by the World Bank (Mayo & Angel, 1993). The role of the state, as suggested through the World Bank-funded projects, has thus been evolving from direct provision to technical planning solutions (Beer et al., 2007). The shift to housing finance sought to address two objectives: it provided opportunities for the World Bank – which includes the International Bank for Reconstruction and Development (IBRD), International Development Association (IDA) and International Finance Corporation (IFC) – to address broader economic issues and housing-sector performance issues. A well-developed financial sector is perceived to yield greater economic benefits that would also impact positively on the housing sector (Mayo & Angel, 1993).

Van Waeyenberge (2015) did an analysis of the World Bank Group activities and the conclusion was that during the period, 2001–07, there was a significant increase in housing finance and housing policy loans, which grew to over 60 per cent of all World Bank shelter activities and this increase was coupled with a decrease in investments in sites and services and slum upgrading programmes. This was of course in tandem with the ideological policy shift towards ‘making markets work’ that was being pushed by the World Bank (Mayo & Angel, 1993), with the housing policy loans meant to entice banks to lend to lower-income households by enabling governments to guarantee loans made to low-income earners. The government would then draw down on the housing policy loan in the event of default. One of the primary objectives pursued by the World Bank through these interventions was to demonstrate cost recovery and replicability of projects, which would then imply potential for profitable investment and possibly attract the private sector towards serving the low-income housing segment (Van Waeyenberge, 2015). Such private markets are the housing delivery mechanism that forms the backbone of all housing strategies in the World Bank and UN Habitat (Keivani et al., 2005; Kitchin et al., 2012).

The evolution in the role of the state was partly necessitated by recognised state failure in the provision of adequate housing to the low-income group. Public-sector housing delivery strategies have been marred by targeting errors, with little or no output filtering through to the low-income group (Ibem, 2011; Mosha, 2013; Stonehouse et al., 2015), and cost overruns due to inefficiencies in both design and subsidy allocation (Tipple et al., 1998; Klink & Denaldi, 2014; Yap, 2016). State efforts were also seen to be having a negligible impact on the housing challenge and the turn to technical planning solutions was in a bid to find policies with a potential to provide solutions at a scale that can make a significant dent to the housing challenge (Thahane, 1993). As such, the overall piecemeal effect in housing provision of sites and services projects and slum upgrading projects, representing the inability of these programmes to significantly contribute towards the housing challenges, also informed the ideological progression from direct provision to policy instruments skewed in favour of the markets (Keivani et al., 2005).

From a macro perspective, the shift from direct provision of housing to policies that are aligned to making markets work is in line with the broader political ideological shift that asserts the superiority of free markets (Kotz, 1999). The dismantling of the Keynesian welfare state in Western countries in the 1970s and 1980s (Vanwynsberghe et al., 2013) emphasised markets over nation-states through a transformation of the institutional landscape. This market enthusiasm received a powerful boost from the demise of the Soviet Union at the end of 1991, as the fall of the Soviet Union was interpreted, as in the words of Kotz (1999), as proof that ‘any effort to build a more just economy through collective action was bound to lead, sooner or later, to economic stagnation and eventual collapse’, thus vindicating adoption of the free-market theory.

Under a neo-liberal housing policy, the role of the state is to create and preserve an institutional framework that is appropriate and conducive for engaging the private sector in home-building programmes for the lower end of the market and providing serviced plots at affordable levels (Thahane, 1993; Harvey, 2007; Mooya & Cloete, 2007). If a market does not exist, in order to further the neo-liberal agenda, Harvey (2007) argued that the state should go to the extent of creating that market.

3. Neo-liberalism: The current policy landscape

Neo-liberalism is associated with a market-led development approach in which there is wide adoption of the principles associated with neo-liberal policies (Fawaz, 2009; Theodore et al., 2011; Derossett, 2015). It is postulated that if markets were allowed to function without restraint, they would optimally serve all economic needs, including housing, through efficient utilisation of all economic resources (Shaikh, 2005). The components of a neo-liberal housing policy are home-ownership, private property rights and binding financial commitments, and these components are the backbone on which the dominance of neo-liberalism in housing rests (Rolnik, 2013). Foci also commonly associated with neo-liberalism in the housing market are free trade or commodification of land markets (Mooya & Cloete, 2007), free capital movements (Campbell, 2011) and reduced government intervention in housing markets (Mayo & Angel, 1993; Mosha, 2013). Within the housing sphere, mechanisms of neo-liberal urbanisation, such as restructuring of urban housing markets through reduction in housing subsidies (Hedin et al., 2012) and erasure of public housing and other low-rent accommodation, have resulted in the creation of new opportunities for private players within the housing market. (Theodore et al., 2011)

Governments, according to Mayo & Angel (1993) have at their disposal three enabling instruments that address demand-side constraints – developing property rights, developing mortgage finance and rationalising subsidies. The three supply-side policy instruments that can be used to boost housing provision to the low-income sector are providing infrastructure for residential land development, regulating land and housing development and organising the building industry to create greater competition in the building industry. The aim of these supply-side instruments would be to remove constraints to the housing development process. Policies affecting the responsiveness of the supply side of the market to changes in demand, therefore, often offer the greatest potential for improvement in sector performance. In line with the neo-liberal principles, most countries now rely on a public policy approach that augments and complements market processes rather than substitute for them (Buckley & Kalarickal, 2004). In order to encourage and stimulate the supply of low-income housing by the private sector, the World Bank emphasises the establishment of a suitable regulatory environment for the delivery of housing. The recommended strategy is to bring together infrastructure agencies to coordinate infrastructure provision that creates an adequate supply of serviced land and a review of existing legislation to improve sector performance (Mayo & Angel, 1993).

4. Failings/ criticisms of a neo-liberal housing policy in the low-income housing sector

Neo-liberal goals, namely capital accumulation through reliance on the free market, shift of responsibility from government to civic society and rescaling of the state from central to local levels (Nijman, 2008; Fawaz, 2009), have been slated as they are perceived to marginalise the low-income group. Issues that have been at the fore of these criticisms are mainly around five themes as discussed below: social inequity which is attributed to be on the rise due to neo-liberal housing policies, challenges with the neo-liberal fix to the unaffordability problem, challenges arising from immature finance system, challenges that have met quasi government efforts and challenges arising from implementing a neo-liberal housing policy in less than ideal macro-economic conditions.

The market mechanism is assumed to be unable to provide adequate, affordable and equitable housing for all (Craig & Porter, 2006; Rolnik, 2013). It has also been noted that neo-liberalism promotes insecurity of tenure through adoption of imperatives for developing a housing finance system such as enforceable foreclosure for mortgage lenders (Mayo & Angel, 1993; Mooya & Cloete, 2007). A number of researchers concur that neo-liberalism and social policy are not compatible at all (Craig & Porter, 2006; Marx, 2008; Pattison, 2009; Campbell, 2011; Seisdedos, 2011; Derossett, 2015; Beer et al., 2016) since markets and market principles have a tendency to overreach themselves, undermining the social fabric in which they are embedded and consequently dependent on (Forrest & Hirayama, 2015). In addition, reliance purely on the private sector for low-income housing production is argued to result in a polarised society and gentrification (Hedin et al., 2012)

Despite these reservations, the World Bank endorsed neo-liberalism by expressing enthusiasm regarding the capacity and superiority of a market-oriented approach to housing (Van Waeyenberge, 2015). In the early 1990s, it was thought that the overall performance of the housing sector in developing countries would be affected through the broad instrument of housing finance system development (Mayo & Angel, 1993). Finance is a central issue and a very potent influence on any potential remedies to the housing challenge for the low-income groups (National Building Research, 1987). In order to extend home-ownership to the low-income segment, the neo-liberal fix for the affordability problem has been the development of new financial products to enable poorer households to take out mortgages (Forrest & Hirayama, 2015). This has also been termed the socialisation of credit (Rolnik, 2013). This route has however been fraught with challenges, with most low[er] income households failing to maintain mortgage burdens (Hodkinson et al., 2013). This socialisation of credit however comes with other challenges such as risk pricing and difficulties in measuring the repayment capacity (Aribigbola, 2008; Demirag et al., 2011; Rolnik, 2013), given that most of the low-income groups do not qualify for government guarantees (Mosha, 2013). For risk to be successfully transferred, the receiving party has to possess both the competence to assess it fairly and the expertise necessary to control or minimise it (Gallimore et al., 1997).

From the early 1990s, when the World Bank rolled out its making markets work strategy, countries are still grappling with how to implement a neo-liberal housing policy in the low-income segment, with housing finance systems not yet developed to the extent that was envisioned, especially in developing countries. This could partly be due to the characteristics of developing countries: macroeconomic instability; fluctuating inflation; foreign exchange risk and short-term investment horizons (Lea, 2005). The finance system of countries is indisputably linked to the macroeconomic environment, and volatilities within markets can destabilise the market, thus swinging the market far from the stability that is the cornerstone of long-term housing finance. Indeed, it is unlikely that the housing problem can be solved without solving the economic problem (Moss, 2003). Two basic difficulties continue to exist regarding the widespread adoption of market solutions for the low-income groups: the scarcity of medium- and long-range funds and insufficient development of financial markets (Winchester, 2005).

The World Bank is on the fence about state interventions in situations where the finance system is not mature enough to service all the mortgage needs. It advises that countries can institute directed credit schemes for housing by commercial lending institutions. At the same time, the Bank cautions that directed credit lessens incentives for resource mobilisation by lending institutions and works against the principles of a well-functioning housing finance system (Mayo & Angel, 1993). The result of directed schemes may sometimes be that lending volumes for housing may be reduced to a level that is below one under a more neutral financial regime which permits lending for housing to seek its own level based on market conditions (ibid.).

Detailed empirical evidence from countries where credit has been extend to the low-income groups for housing purposes has shown that government guarantees are one of the preconditions of success, given the risk exposure that accompanies lending to low-income groups (Winchester, 2005). But this condition presupposes a state which has enough fiscal space to accommodate even the low-income groups. This is not the case in most developing countries, where the low-income housing challenge is most severe. Most of these countries have huge fiscal constraints and large budgets that are not sustainable (Lea, 2005; Babatunde et al., 2012; Loxley, 2013).

Besides access to market-provided mortgages for housing, the major housing delivery models that have been used in most countries that have embraced neo-liberalism include public–private partnerships and private finance initiatives. These models have however yielded very low percentages of the required stock to the target group (Ibem, 2011; Mashoko, 2012; Makinde, 2014). The major problems that have been cited are the prohibitive cost of the final product resulting in an affordability gap. Contributors to this high cost have been cited to be the high cost of land, high cost of land registration and titling (Makinde, 2014), leading to a conclusion that a neo-liberal housing policy is unlikely to help solve the housing shortage.

In the context of developing countries, one important criticism of the enabling market paradigm is the appropriateness of the enabling strategy, especially where the macroeconomic conditions can put a damper on private sector ability and willingness to put capital at risk. Thus, according to Keivani et al. (2005), there is need to explore alternatives to the neo-liberal agenda. General movement towards neo-liberalism in an economy with inflation, economic recession, escalating building costs is not likely to yield positive results since a stable economy is a critical success factor for the engagement of the private sector in the low-income housing space (Moss, 2003; Keivani et al., 2005; Stein, 2008; Babatunde et al., 2012). Faced with little or no public housing, the low-income groups have no fall-back position. The turn to neo-liberalism in the housing sector has thus created an unserved niche market. Can neo-liberalism again come to the rescue?

5. Is there evidence of neo-liberal critique?

Given the criticisms of a neo-liberal housing policy that have been cited in the above discussion, the aim of this section is to review empirical research in areas where a neo-liberal housing policy has been implemented with the aim of understanding the framework in which the neo-liberal housing policy was carried out. This review will put the criticisms in context and enable lessons to be drawn from the cases. Two particular cases stand out, China and Ghana. These two countries embraced the neo-liberal agenda, resulting in the role of the state shifting from direct provision to taking on a supporting role by creating the required regulatory and economic framework for the formal private sector to work in (Arku, 2009). In China, the replacement of socialist welfare housing with a market-dominated system is hailed as probably the largest neo-liberal reform project ever implemented in the world (Wang et al., 2012). In both these countries, however, the low-income group is said to have been adversely affected, with the overall outcome of a neo-liberal housing policy being affordability problems and rising inequality. This section will analyse the two cases with the aim of detailing the nature and implementation of the policy, how context shaped the policy and the outcome of the policy.

5.1. Neo-liberalism in China

China adopted a market-oriented housing policy in the 1990s after the fall of the Soviet Union (Buckley & Kalarickal, 2004). This neo-liberal agenda is said to have led to affordability problems, as the low-income groups were priced out of the market, resulting in rising inequality between the higher-income groups and the low-income groups (Wang et al., 2012)

Historically, China's housing reform can be divided into three stages: the pilot stage from 1979 to 1991, during which experiments with preliminary reform measures were conducted in a small number of pilot sites; the transitional stage from 1991 to 1998, when nationwide housing reform was initialised, but housing marketisation had not yet formally begun; and the rapid marketisation stage which took off after the official termination of public housing allocation in 1998 (Chen, 2011). The 1998 reform led to the end of public housing provision for state employees and privatisation of the public housing stock (Chazovachii, 2011) and these reforms were followed by the market-enhancing policies of 2003 which established market housing as the dominant form of urban housing. The housing provision system envisaged in the 1994 policy was based on the neo-liberal premise of growth, which assumes that a market takeover of housing provision will result in sustained housing development and improved living conditions (Chen, 2011) and which comprised direct investments from private resources, the state and state-owned organisations (Cao & Keivani, 2014). China is now categorised as a housing system that has a mass home-ownership rate with a small public housing system.

Although by the end of 2005, 75.7 per cent of China's urban residents were nominal home owners, Chen (2011) asserts that empirical findings suggest that the ownership-based housing model was promoted among the poor in exploitative ways, which resulted in profound deprivation for the low-income groups. A review of China’s urban housing outcomes reveals housing price inflation and shortage of affordable housing in the fast-expanding housing market (Cao & Keivani, 2014). Low real interest rates on loans fuelled demand for housing, adding pressure on house prices, thus limiting affordability (Hoek-Smit, 2011). To encourage borrowing, the central bank reduced basic interest rates several times in the period, 1985–2002, with mortgage interest rates being gradually reviewed downwards from 15.5 per cent to 5.7 per cent, and mortgage repayment periods being increased from 20 to 30 years (Wang et al., 2012). China’s property boom showed that there were large capital flows into the sector, leading to price inflation even when supply was expanding, with commercial banks dominating the financial sector (Dübel, 2011; Hoek-Smit, 2011). In the face of rising inflation and absence of protection through fixed-rate mortgages, the low-income groups’ ability to access mortgage finance was curtailed, contributing towards their inability to afford housing (Dübel, 2011).

However, a look at the enabling instruments that were proposed by the World Bank shows that liberalisation of the housing markets in China did result in an increase in private-sector capital in the housing market. Since the 1990s, there has been extensive urban infrastructure improvement, including underground railways, which has resulted in more land being made available for residential development (Cao & Keivani, 2014). In addition, to ensure that there are no barriers to housing developments, roads, water and sewerage and electricity have been timeously made available before commencement of housing developments.

Despite these great strides towards creating an enabling environment, there were many non-market factors related to China's social and political institutions that were highly influential regarding inequitable housing distribution (Chen, 2011). Chief amongst these factors were distributive inequalities, which were carried forward from the public housing era. Higher socio-political ranks could afford better housing during the public housing era, and after the privatisation of the housing stock, these differentials were translated into substantial economic inequalities as the elites captured the benefits of the housing privatisation programme (Chen, 2011; Cao & Keivani, 2014). This is because sitting tenants were the beneficiaries of the deeply discounted public housing that was converted into home-ownership housing.

The World Bank sanctions the use of targeted, measurable, transparent subsidies that have little potential for distorting the housing market (Mayo & Angel, 1993). In China, production subsidies were offered to developers of Economic and Comfortable Housing (ECH). These production subsidies were meant to enable such housing to be sold at discounted prices to low-income households and were in the form of reduced taxes and waiver of land costs. However, these subsidies often benefited unintended users, with research findings indicating that there were serious targeting errors, resulting in most ECH being sold to relatively well-off government employees at a large discount to market prices (Cao & Keivani, 2014).

There was also rampant speculative behaviour in the market which pushed up house prices, which led to worsening housing affordability and housing shortages, particularly for the low-to-medium-income groups (Wang et al., 2012; Cao & Keivani, 2014). To compound this problem, there were no limits on multiple home ownership, resulting in artificial house shortages as the higher-income groups held on to housing, pushing up house prices. The state eventually reacted to these issues by imposing purchase restrictions, taxing multiple home ownership and tightening mortgage terms. Although these policy responses went against the neo-liberal idea of free markets, these interventions were necessitated by persistent speculative market behaviour, which resulted in price inflation and reduced affordability (Cao & Keivani, 2014)

5.2. Neo-liberalism in Ghana

In Ghana, the adoption of a neo-liberal housing policy has drawn a number of criticisms. Houses developed by the private sector are said to be unaffordable for low-income groups due to liberalisation of the land market, which has led to speculative activities and escalating prices, (Tipple & Korboe, 1998; Arku, 2009). In addition to these challenges, total supply of housing in Ghana is marginal compared to the potential housing demand, resulting in the greater part of the population being in critical need of housing (Arku, 2009). This marginalisation of the urban poor can be possibly due to the overemphasis on the formal market process in housing policies to the detriment of other existing modes of provision (Keivani et al., 2005).

Before 1970, the government of Ghana was involved in the direct provision of housing, but the housing programmes were skewed towards benefiting the upper- and middle-income groups to the detriment of the low-income earners. For example, in the period between 1964 and 1970, the state had a target of 60,000 units, with 31.3 million Ghanaian pounds budgeted for commercial housing and 13.3 million Ghanaian pounds for low-income housing (Arku, 2009). This implies that the formal public sector was typically focused on housing for the middle classes, and the formal private sector was focused on housing for the upper classes, leaving the low-income group uncatered for.

There has however been a fundamental shift in housing policies, with the state shifting from direct state provision and leaning more towards active participation by the private sector in housing production, financing and the production of building materials (Tipple & Korboe, 1998; Arku, 2009). This has seen the role of the state shifting from direct provision to taking on a supporting role by creating the required legal, regulatory and economic framework for the formal private sector to operate in.

A scrutiny of the institutional environment in Ghana however reveals that from 1970, successive governments have tended to adopt neo-liberal policies without altering them to local circumstances (Tipple & Korboe, 1998). One major issue which is a stumbling block in the success of the neo-liberal agenda is access to land (Buckley & Kalarickal, 2004; Chazovachii, 2011; Hoek-Smit, 2011). In Ghana, outside of a small government-controlled sector, land is generally not for sale and available only for occupation on leases and with titles of usufruct (Tipple & Korboe, 1998). The clouded nature of land titles and the lack of bankable titles over traditionally allocated land also inhibit access to mortgage finance (ibid.). Housing finance been recognised as an increasingly important vehicle in providing low-income housing under a neo-liberal housing policy (Bolnick & Mitlin, 1998; Buckley & Kalarickal, 2004). It is thus unsurprising that lack of finance has also been identified as an impediment in the provision of low-income housing in Ghana (Tipple & Korboe, 1998).

It can thus be concluded that when analysing the effectiveness of neo-liberal housing policies, context matters. As Cao & Keivani (2014) cogently put it, ‘[A] market enabling can only work effectively where government, public, and market institutions have sufficient scope and maturity and material resources to allow an effective market to function’ [p. 64]. They conclude that market enabling alone is inadequate in solving the housing challenge for low-income groups and advocates social housing for vulnerable groups, in addition to tighter market regulation in the face of market and state failures in low-income housing provision.

6. Conclusion: Potency of neo-liberalism as a panacea for the low-income housing challenge

Researchers are in consensus over one thing: neo-liberalism is not uniform, and its expression at the local level is contingent upon local circumstances and the macro environment (Beer et al., 2007; Fawaz, 2009; Altmann, 2011; Wang et al., 2012; Lin & Zhang, 2017). The implication therefore for low-income housing provision is that replication of neo-liberal housing projects based on successes in other areas will need to be supported by a lot of empirical work. Successful neo-liberal housing projects can only form the shell of any intended projects. In a different context, empirical evidence can then be used to fill in the finer details. There is thus need to look at each system in detail. As Theodore et al. (2011) colourfully put it, ‘the stubborn embeddedness of the neoliberal agenda and the circumstances of its dynamic evolution warrants serious scrutiny, especially in regards to processes of urban development’. Despite all the criticisms, the neo-liberal agenda does not seem to be retreating (Kitchin et al., 2012; Fernandez Milan, 2016), there is no sign of a U-turn (Hodkinson et al., 2013), nor is there any sign of any radical departures from the neo-liberal orthodoxies (Kitchin et al., 2012).

Within the neo-liberal camp, the response to these critics has been that neo-liberalism is a sound idea whose outcome is heavily affected by context-specific regulatory landscapes (Chelcea & Druta, 2016). The structure and functioning of housing markets are heavily dependent on the legislative and regulatory environment, which is under the ambit of the state (Buckley & Mathema, 2007; Bone, 2014). For example, land administration and local land-use regulations that restrict housing supply have been shown to have negative effects that more than offset the gains of a neo-liberal policy in housing (Buckley & Mathema, 2007; Hsieh & Moretti, 2017). Housing finance innovations also have to fit into a broader financial sector and into legal policies. Whilst acknowledging the role of the state in enabling markets to work, it is important that state intervention in markets be kept at a bare minimum because powerful interests will inevitably distort and bias state interventions for their own benefit (Harvey, 2007). This is more so in land markets as access to land can be extremely politicised, which can further complicate market formation and the efficiency and opacity of these markets.

Problems are likely to abound in adopting a neo-liberal housing policy in the low-income sector, chief amongst which is very low incomes among the targeted group to sustain mortgage finance. Volatile economies with high inflation, economic recessions and lack of primary mortgage instruments contribute towards hurdles in implementing a neo-liberal housing policy. Notwithstanding all these similarities in how neo-liberalism rolls out in the housing sector, there is recognition that neo-liberalisation is spatially and historically uneven globally (Hodkinson et al., 2013). It has a tentative character (Harvey, 2007; Derossett, 2015) which is heavily influenced by political forces and institutional arrangements (Beer et al., 2016; Fernandez & Aalbers, 2016), which begs for empirical evidence in the critique of neo-liberalism as a possible solution to the housing challenge for low-income groups.

But neo-liberalism in the context of housing, as has been detailed in the above case studies where it has been implemented, takes a slightly different form: it metamorphoses as agents in each economy adapt their strategies to shield themselves from any threats in the market. So, how adopting a neo-liberal policy will play out in any scenario in the provision of low-income housing should be a synthesis of ideal-type and contingent neo-liberalism ideas, and these neo-liberal ideas should be highly flavoured by contextual realities in the market in question.

In conclusion, neo-liberalism has resulted in a reduction in state involvement in low-income housing production, and gone some way in making markets work, but it is also capable of further alienating the low-income groups from partaking in the market if no proper policy stances are taken. Currently, there are no proffered alternatives by the critiques, thus neo-liberalism and the associated regulatory framework still need to be restructured for a better fit in the low-income housing delivery market, which begs for more research in this area.

Disclosure Statement

No potential conflict of interest was reported by the authors.

ORCID

Bridgit G. Taruvinga http://orcid.org/0000-0002-5793-2795

Manya M. Mooya http://orcid.org/0000-0002-9698-4715