The Global Housing Shortage: A Crisis of Inadequate Shelter

Aug 7, 2023

The world is facing a pressing issue that affects 1.6 billion people – inadequate housing. This global housing shortage poses significant challenges, particularly for the poor and vulnerable populations. Disasters caused by natural hazards have directly claimed more than 1.3 million lives over the past 25 years, causing immense damage and ongoing suffering for millions more. From earthquakes in Latin America to cyclones in Southeast Asia, these disasters are becoming more frequent, damaging, and deadly. The World Bank’s Unbreakable Report highlights that the impacts of disasters and climate change are disproportionately affecting poor households, who often live in vulnerable areas with weak housing standards and limited access to credit or insurance.

The Urgency of Resilient and Sustainable Housing

With the fast urbanisation of developing countries, the number of people living in substandard housing is expected to more than double to 3 billion over the next 15 years. These homes are at risk from earthquakes, floods, hurricanes, and other disasters. Unfortunately, the supply of formal, affordable, and safe housing has not kept pace with urbanisation rates. It is crucial to address this housing crisis and prioritise resilient and sustainable housing solutions that can withstand disasters and protect lives and livelihoods.

The World Bank’s Lifelines report reveals that investing in resilient and sustainable infrastructure in developing countries can yield substantial net benefits. It estimates a $4.2 trillion overall net benefit over the lifetime of new infrastructure, with a $4 benefit for each $1 invested. 

A New Approach: Building Better Before

Traditionally, the main strategy has been to “build back better” after a disaster strikes, focusing on rebuilding homes and infrastructure. While this is essential for recovery, it can be a hardship for those in vulnerable areas and financially burdensome for governments. Moreover, existing solutions predominantly cater to families who can afford new homes or mortgages, leaving poorer families living in homes that do not meet modern building codes without adequate support. To address this gap, there is a need for a strategy that accounts for the value of their efforts and investments.

To complement post-disaster rebuilding efforts and improve preparedness, advancements in technology and policy design are necessary. Outdated census data or sample surveys collected by individuals have long been relied upon to identify substandard houses, a time-consuming and unreliable method. However, with the support of the Global Facility for Disaster Reduction and Recovery (GFDRR), a new program aims to revolutionise the approach to resilient and sustainable housing and help communities #BuildBetterBefore a disaster strikes.

A Win-Win

Governments can leverage World Bank loans to maximise finance for resilient and sustainable housing which is a win-win solution for all stakeholders involved. Families desire safe homes, and governments, banks, construction firms, and insurance companies share this objective. Resilient and sustainable housing offers a path to making homes safe from natural hazards and protecting each family’s investment. The Program facilitates the quantification of benefits, enabling governments to conduct rapid economic analysis to justify investments in making homes safer. By working with countries, banks, and other financial institutions, the Program develops home improvement subsidy policies informed by best practices.

This approach appeals to housing ministers responsible for disaster response and finance ministers who allocate funds for reconstruction. Investing in infrastructure strengthening beforehand can save up to $10 in reconstruction efforts for every dollar invested. The Global Program for Resilient Housing enables such investments by promoting home improvement programs that prioritise resilience.

The global housing shortage, with 1.6 billion people living in inadequate housing, requires urgent action. Resilient and sustainable housing is the key to protecting lives, safeguarding investments, and building safe communities.