Finance for incremental housing; current status and prospects for expansion

Appropriate finance can greatly increase the speed and lower the cost of incremental housing – the process used by much of the low/moderate-income majority of most developing countries to acquire shelter. Informal finance continues to dominate the funding of incremental housing. However, new sources have developed including housing microfinance, community-based finance savings and loan groups, and consumer credit for building materials. This paper examines informal and formal finance for incremental housing and makes recommendations for the vast expansion necessary to meet the affordable housing demand from the huge urban wave in developing countries projected over the next three decades.