Improving housing and urban development policies in Mexico

Title page

Contents

Abstract 4

Résumé 4

Introduction 7

The challenges of the Mexican housing market 8

Housing quality is low 8

House prices are high and housing costs are excessive for low-income households 11

The rental market is underdeveloped 12

Low-income households have limited access to housing credit 13

Land for urban development is insufficient to face the high demand 14

Many houses are badly located because of widespread urban sprawl 15

Mexico's new housing policy 18

Promoting good quality and affordable housing 21

Refocusing public spending on housing 21

Improving access to credit for low-income households and informal workers 23

Expanding the rental market 24

Reinforcing formalisation and avoiding the formation of informal settlements 31

Addressing urban sprawl 32

Enhancing coordination on housing and urban policy 32

Addressing urban sprawl and vacant housing 34

Improving urban mobility 39

Enhancing the public transport system 39

Re-focussing federal funding for mobility projects 40

Better coordinating mobility and urban development planning 41

References 44

Table 1. Most land in Mexico is used for low-density residential purposes 16

Table 2. Recommendations 43

Figure 1. More than half of private houses in the poorest regions are substandard 9

Figure 2. Housing overcrowding is prevalent 9

Figure 3. A large share of the housing stock needs home improvement 10

Figure 4. Access to an adequate house is associated with location, income and education 10

Figure 5. Real housing prices in Mexico increased but less than in some regional peers 11

Figure 6. Housing costs for low-income households are very high in Mexico 12

Figure 7. House prices have increased faster than rents 12

Figure 8. Most Mexicans are homeowners 13

Figure 9. Low-income households have limited access to housing credit 14

Figure 10. The demand for dwellings is high, especially in urban areas 14

Figure 11. Land for increasing housing supply is scarce 15

Figure 12. Many Mexicans are unsatisfied with the time-distance to access urban services 16

Figure 13. Many urban areas still grow faster than population 17

Figure 14. Most houses are single-family 17

Figure 15. Residential investment is high in Mexico 18

Figure 16. A stylised map of the housing policy framework 19

Figure 17. More than 60% of housing is self-build in Mexico 21

Figure 18. Public spending on housing support is low in Mexico 22

Figure 19. Mexico applies a preferential tax treatment to debt-financed homeownership 25

Figure 20. The average height of buildings is low 35

Figure 21. Transport is expensive in Mexico 40

Figure 22. The use of private cars is low in Medellín 42

Boxes

Box 1. Main socioeconomic factors associated with access to adequate housing in Mexico 10

Box 2. Housing policy in Mexico: governance and main programs 19

Box 3. The main housing subsidies programs 22

Box 4. Promoting affordable housing via the private sector: the case of Italy and France 26

Box 5. Promoting affordable housing for low-income households in the United States 28

Box 6. Funding strategies for social rental housing 29

Box 7. Social Housing Bond Financing 30

Box 8. Increasing the supply of land for affordable housing the case of Bogotá 31

Box 9. The Urban Improvement Program 35

Box 10. Densification and reurbanisation strategies: the case of Paris and Mexico City 36

Box 11. The tax on vacant housing in France 38

Box 12. Using land banks to address vacant housing in the United States 38

Box 13. Funding for sustainable urban mobility in Mexico: PROTRAM 40

Box 14. Reforming mobility for a more inclusive and sustainable city: the case of Medellín 42