Events
6th Global Housing Finance Conference
May 28-29, 2014Washington, D.C.

By 2030, 3 billion people, about 40% of the world's population, will need new housing and basic urban infrastructure and services. Breaking down the numbers translates to a current annual need for 14 million new houses and a conservative estimate of $420 billion in total investment needed. The urgency and magnitude of the need for affordable housing in the coming decades is clear. So where will the money come from for housing investment? How will it reach those people who need it the most, whilst keeping pace with rapid population growth and urbanization? Why do we still have market failures in the housing sector which are in plain sight of many emerging market cities in the form of slum housing? These were the key questions raised at the 6th Global Housing Finance Conference hosted by the World Bank Group, where over 300 government and private sector representatives came together to discuss ways to expand affordable housing for all.

By 2030, 3 billion people, about 40% of the world's population, will need new housing and basic urban infrastructure and services. Breaking down the numbers translates to a current annual need for 14 million new houses and a conservative estimate of $420 billion in total investment needed. The urgency and magnitude of the need for affordable housing in the coming decades is clear.

So where will the money come from for housing investment? How will it reach those people who need it the most, whilst keeping pace with rapid population growth and urbanization? Why do we still have market failures in the housing sector which are in plain sight of many emerging market cities in the form of slum housing? 
  
These were the key questions raised at the 6th Global Housing Finance Conference hosted by the World Bank Group, where over 300 government and private sector representatives came together to discuss ways to expand affordable housing for all. 
 
The keynote speaker, Ngozi Okonjo-Iweala, Nigerian Minister of Finance and Coordinating Minister for the Economy, highlighted three key benefits of pushing housing further up the development agenda (watch video):

  1. The Housing Sector is a significant contributor to economic growth and has multiplier effects on the broader economy. Studies suggest that in the U.S., every dollar spent on housing generates as much as $1.60 in the wider economy.
  2. Housing development creates jobs and supports economic inclusion. From direct to indirect jobs and skilled to unskilled jobs, the impact of housing on job creation is clear. In India, it is estimated that the impact of 2 million new affordable homes would be direct employment for 3 million people working in construction, indirect employment for 24 million people in linked industries and services (wood, steel, paint, electricity etc.), and a 2% growth in gross domestic product (GDP). There would also be a USD 17 billion rise in the demand for credit, a 16 million ton demand for cement, while the need for steel would rise by 6 million.
  3. Homeownership leads to increased social benefits. Studies have shown that stable housing and homeownership gives citizens a true stake in their communities.

Despite these obvious benefits, there are still global constraints in building more affordable housing, both on the demand and supply side. Demand constraints are usually related to finance. Housing finance has very low penetration in emerging economies – typically less than 5% of the adult population has a loan to purchase housing, compared to 25-35% in U.S., Canada, and Western Europe. On the supply side, there are constraints related to land and property rights limiting the development of large scale affordable developments, and regulatory obstacles that present difficulties in registering land titles and/or outdated building codes and planning regulations.

Some key takeaways derived from the conference and could also be a step towards overcoming these obstacles and pushing the housing finance/development agenda forward are:

  • Public-Private partnerships play a critical role in helping to deliver affordable housing. The mix of participants at the conference is indicative of the need for both the public and private sector to work together to create affordable housing finance solutions. The nature of the relationship may vary, but one without the other is almost guaranteed to fail.
  • Funds from institutional investors should be mobilized to address the housing gap. Long-term resources (accumulated savings, pension funds, investment funds) need to be connected to long-term investments. This is where capital markets can help intermediate through instruments such as covered mortgage bonds, mortgage-backed securities, as well as enhanced systems to incentivize longer term savings.
  • A holistic approach to affordable housing. We need to look at all the building blocks in a housing finance system – from raw materials to land, to skills, to finance – to give us the full picture of the issue and how to go about addressing it. This implies challenges in prioritizing, sequencing, coordinating with stakeholders, and linking different sectors of the economy.
  • Formal mortgages are not always the most appropriate financial instrument for every borrower. Traditional mortgages are not going to satisfy all the demand, especially for those on lower incomes. Housing micro-finance or rental housing may offer more affordable solutions in many cases. To address this, the World Bank Group is currently working with some countries towards ‘underwriting informality’. This means doing the extra work to better understand a borrower’s income stream and designing products that are better suited to their needs. It may mean smaller loans, shorter repayment periods and allows a borrower to buy materials in bulk, take on builders and have the work done to a higher standard.  Ultimately, it means getting access to better quality housing in a shorter space of time.

The theme of the conference - #housing4all - implies the need to communicate the importance of achieving the affordable housing agenda. Providing housing for 3 Billion people by 2030 is both a challenge and an opportunity. It is not an impossible feat, but one that can be overcome if we work together to develop financial systems that will increase access to sustainable housing finance in the developing world, and create opportunities for affordable housing for all. 

Download the conference agenda (pdf) and speaker biographies (pdf).

Wednesday, May 28th – Housing Finance Policy Focus

Welcoming Remarks: Jin-Yong Cai, Executive VP and CEO, International Finance Corporation 

  • Introduction by Klaus Tilmes, Acting VP, Financial and Private Sector Development, World Bank

Keynote Address: Ngozi Okonjo-Iweala, Coordinating Minister for the Economy and Minister of Finance, Nigeria

Session 1: #housing4all – Housing at the Base of the Pyramid 
How does housing and housing finance fit into the poverty reduction and shared prosperity agenda? What progress is being made? What are the most innovative new initiatives? How to meet the growing needs of urban cities in emerging markets with inclusive housing solutions? How are affordable housing needs being met post-subprime?

Session Chair: Loic Chiquier, World Bank 
Speakers:

Paloma Silva de Anzorena, Director General, CONAVI, Mexico
Ted Tozer, President, Ginnie Mae 
Eric Olsen, Executive Vice President Operations, Lafarge

Session 2: Affordable Housing Finance - The Role of Government
How can governments facilitate greater access to affordable housing and what are the policy instruments available to open up access for those on lower incomes? What supporting role can government play in fostering a dynamic private sector delivering sustainable mass housing developments? What is most effective: demand or supply subsidies, tax concessions, guarantees, PPP frameworks?

Session Chair: Simon Walley, World Bank 
Speakers:

Session 3: Housing Finance Projects Speed Dating (Download booklet with project descriptions)
Short presentations on diverse and innovative housing finance products, which will offer a broad range of ideas on the latest thinking and work being done on the ground in housing finance.

Session 4: Mortgage Funding & Regulation
Accessing long term funds remains among the biggest challenges in developing housing finance in emerging markets. What has been experience with different financial instruments ranging from covered bonds, MBS and mortgage liquidity facilities? In the post-subprime era, how do new regulations impact funding? What will the Basel III Net Stable funding Ratio mean for lenders? What is future role of securitization?

Session Chair: Alfonso Garcia Mora, World Bank 
Speakers:

Thursday, May 29th – Private Sector Focus

Key Challenges for World Bank Group Housing Finance Roadmaps

  • Michel Noel, World Bank and Douglas Grayson, IFC

Session 5: Housing Finance, Jobs and Growth 
The theme for the conference is "Housing for all", however, delivering on this theme is more challenging than ever.  Further, housing is more than supplying units.  Its benefits and opportunities make this an attractive area for both the private and public sector, as its benefits extend to jobs, social well-being, and even linkages with higher education.  The challenge in many emerging markets is how to deliver at a scale that can transform the market and capture these benefits.  The panel will explore innovative models where the private sector and public sector have joined forces to produce market changing results; its link to job creation and economic growth; and the promise to finally make progress on meeting the high demand and realize ‘housing for all’.

Session Chair: Roland Michelitsch, IFC 
Speakers:

Session 6.1: Islamic Housing Finance          
The volume of Islamic banking assets is expected to exceed the milestone of USD 2 trillion in 2014. This significant increase is driven by rising demand from Islamic investors as well as the growing Muslim population with increased financial needs. Housing finance presents a growth opportunity for Islamic lenders given the considerable housing deficits in many Islamic countries. The objective of this session is to discuss recent initiatives in product development as well as the options and challenges for funding shariah-compliant housing finance portfolios.

Session Chair: Zamir Iqbal, World Bank
Speakers:

Session 6.2 Low-Income Housing Finance           
The biggest challenge in many emerging economies is making housing finance inclusive and creating a true #housing4all system which is inclusive and open. Lending to workers in the informal sector or those as the Bottom of the Pyramid can create additional challenges and risks, but can also present an untapped opportunity. This session will explore some of the latest initiatives, product innovations and thinking in the field of low income housing finance.

Session Chair: W. Britt Gwinner, IFC
Speakers:

Session 7.1: Green Housing                      
Developing green housing finance globally: catalyst for increasing awareness and engagement in environmentally friendly housing in the world.  Establishing the necessary institutional frameworks and policies to facilitate energy efficient multi-family buildings. Case studies from the perspectives of a developer, a bank and an investment fund:

Session Chair: Marcia Yu, IFC 
Speakers:

Session 7.2: Mortgage Insurance                    
Mortgage Insurance (MI) can play a pivotal role in increasing housing finance affordability. The MI industry is at the intersection of banking and insurance regulation and supervision, and thus presents unique challenges in ensuring sustainable, prudent and responsible products. Which MI features and practices foster deepening of the market? What are the lessons from the recent crisis? What issues should market stakeholders consider before establishing a MI insurer in their country? This session presents a spectrum of views - from a global insurer to the international regulator to a just-established MI provider.

Session Chair: Roger Blood, International Housing Finance Consultant
Speakers:

Session 8: Housing Technologies and Sustainable Materials          
Displaying Global Housing Construction Technology Solutions: understand the available options and vendor profiles for specific markets; recognize advantages in terms of scale, speed and cost; identify the construction technology that best exemplifies #housingforall

Session Chair: Friedemann Roy, IFC
Presenters

  • Dan Ward, Western Forms
  • Stanley AdwellFRAMECAD
  • Olivia Caldwell, CEMEX
  • Cesar Ramirez Martinell, Barcelona Housing Solutions
  • Emma Imperial, Imperial Homes Corporation
  • Fan Fan, Taikong Panel Corporation, China
  • Richard NorthcoteBayer MaterialScience
  • François Perrot, Lafarge
  • Harry GoodallMoladi  

Session 9: Innovations and New Trends in Housing Finance
An exploration of current thinking about innovation in housing finance and 'old' ideas that market participants should revisit to increase access to housing finance in a responsible, sustainable way.  What are current ideas for solving the lack of long tenor, local currency finance for housing, underwriting techniques that expand the eligible borrower pool at an acceptable risk level? Is there any answer to providing housing finance in macroeconomic environments where volatility and interest rates are high? What 'new' products ideas are being piloted that hold promise to transform housing markets in emerging nations?

Session Chair: Simon Walley, World Bank 
Speakers:

Closing Remarks: Loic Chiquier, World Bank 



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