6.3 Addressing constraints in land and housing markets

Although projects may have made little impact to date on the nature or behaviour of urban land and housing markets, increasing awareness of the need to consider this factor is influencing the latest generation of projects. During the last decades urban land prices have increased at a rapid rate in Sri Lanka. The MHP has thus not prevented an increase in the number and proportion of slums and shanties. In the city of Colombo, these now account for 53 per cent of the total housing stock (Jayaratne, 1990: 17). The main objective of the NHDA under Sri Lanka’s MHP has been to remove (not just address or reduce) the physical, economic and legal constraints obstructing access by poor people to housing (Jayaratne, 1990: 85). This ambition reflects a recognition that informal settlements are an integral part of the housing process. Nonetheless, the relaxation in regulations has remained as the exception and not led to a revision of such regulations in general terms. The removal of constraints thus appears to have been achieved mainly at the project level rather than by addressing the constraints in land-market behaviour themselves. Furthermore, the provision of legal title to residents in shanty settlements can hardly act as a deterrent for other low-income groups that consider developing new shanties. It thus begs the question of what happens when the limited reserves of public lands are exhausted. The costs of acquiring private lands are increasingly high, and procedures for land acquisition can take up to three years. As Jayaratne concludes, Sri Lanka lacks an overall policy regarding land tenure or land management aimed at the low-income groups (1990: 95).

The aided self-help approach adopted in Zimbabwe has apparently been replicated both in Harare and various small towns. This was partly because the approach was found appropriate, and partly because funds from the USAID package increased in value due to the devaluation of the local currency, enabling the existing funds to stretch further. This does not necessarily indicate a strong degree of replicability. The key constraints in Zimbabwe are the supply of serviced land, financial resources and building materials. The former is partly due to a chronic shortage of land surveyors, but also to the fact that many land-owners are unwilling to release land for development. This unwillingness stems from expectations of better future options. The fact that they are not required to pay tax on undeveloped land only further supports their unwillingness to release land for development. As a result, land prices have risen by at least 100 per cent during the last two years (Mutizwa-Mangiza, 1990: 50). The project approach has therefore failed to address this constraint successfully.

One problem that requires consideration is that attempts to increase the scale of land and housing supply significantly create pressure on all parts of the supply system, from land surveying and registration, to services provision, the building materials industry, labour markets, and on government administrations. Inevitably, the ability of each of these supply agencies to respond effectively to increased demand quickly and efficiently will vary and the weakest link in the chain will tend to delay progress in the others. In Sri Lanka, the sudden increase in demand for building materials generated by the MHP led to a rapid short term price increase, until supply rose to adjust. This suggests that some form of overall monitoring and evaluation capability should be established at an early stage in the development of innovative large scale programmes. Furthermore, it would be advantageous that this has the necessary authority to influence the subsequent activities of all the major actors involved.