Post COVID-19: Housing market for social goods, instead of the housing market for market

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Markets and economic growth as a means of wellbeing, not an ends

The world has restlessly run for more economic growth. Besides the growth, we started looking at other dimensions of development like environment, happiness and human development. However, economic growth has been of paramount importance. Initially, economic growth and markets are supposed to be a means for living well. But ensuring the wellbeing of citizens – such as healthy human ‘capital’ ­– became a means to achieve more economic growth and market efficiency.

The corona crisis, however, has forced the world to put health and safety as the paramount goal. For saving the lives and reducing the risk of infection to populations, many governments have willingly stopped a large part of the economy, and the majority of the citizens supported those measures. Financial measures are now focusing on maintaining the citizens’ basic livelihoods as well as on protecting the vulnerable groups from falling. It prioritises to prevent the collapse of the basic economic cycle that is necessary to sustain a decent life of the population, instead of the maximisation of the growth.

The question is, ‘housing market for what?

In the housing community, there is an emerging concern about the adverse impact of the COVID-19 on housing prices and real estate market, by recalling what happened in the 2008 crisis.  The uncertainty exists given the expected economic recession from the lockdowns and closed borders. Such uncertainty is clearly a challenging issue but could also be an opportunity to shape the housing market as we would need. The matter will be whether we want to recover housing market for the market itself and a driver of economic growth (as does the real estate industry), or whether we will focus on shaping the market for social goods.

Making people’s residency stable and resilient

Amid the COVID-19 lockdowns, the residency of some population groups unstable – such as the precarious workers like self-employees, temporary contract employees and informal labourers. The immediate challenge is how we can make sure their residency stable during the extreme measures of lockdowns, and right after the measures are relaxed. And the midterm challenge is to ensure that people’s residency becomes resilience to the second, third and more waves of the infection. Probably, after once the countries manage to control disease to some extent, such shut-down measures will be implemented for a limited time at a local scale where the infection has risen again. There, some groups’ residency can become vulnerable for the time being. Whenever another wave of infection rises, the residency stability of some groups will fluctuate. In the longer term, we may have to seriously think about how we can restructure the housing system to ensure resilience in people’s residency and so does in their livelihoods. The COVID-19 won’t be the last novel virus threatening public health, lives and economy.

Need for shaping the housing market for social goods rather than the market itself

For a long time, housing has been treated as a market commodity. However, during this crisis, the priority of housing measures become to focus on stable residencies – such as the promise of government not to increase the rental fee for social housing, to enhance regulations protecting tenants, or to allow delayed payment for mortgages. The immediate concern was placed at people’s residency, and the perspective ‘housing as a commodity’ has become a secondary subject. Perhaps it is time to shift our focus to ‘housing market for ensuring stable and healthy residency’ from ‘housing market for growth – i.e. shaping housing market in the way of allowing people to reside in affordable and adequate housing stably, and thus make their livelihoods resilient against any shocks and risks in the future.

Post COVID-19: Reimagining housing paradigms, building better housing systems

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The corona crisis has made the invisible housing inequality visible

Will the corona crisis increase inequality in housing in the coming months and years? In every sector of our society, people are discussing what the adverse impact of this crisis will be, and how we can minimise the impacts and quickly recover the damages on people’s livelihoods to prevent further growing inequalities afterwards. The housing sector is not exceptional, of course. The precarious workers, students, the self-employed, small café owners, seasonal workers, informal labourers……many people are facing the substantial decline of their income—even fall into a heavy debt— or losing their jobs. They are struggling for paying the monthly rent or mortgages. Their residency became extremely vulnerable. 

Migrant workers crowd up outside a bus station as they wait to board buses to return to their villages during a 21-day nationwide lockdown to limit the spread of coronavirus, in Ghaziabad, on the outskirts of New Delhi. [Anushree Fadnavis/Reuters]
As soon as a coronavirus lockdown was placed, thousands of migrants workers were forced to leave their rented homes as they are unable to pay rent.  (Source: Aljazeera)

In March, I saw the image of Indians rushing for going hometowns as soon as cities are locked down. Only one day of shut-down was already heavily impacting on their livelihoods and their residency security, while another population was much resilient to adapt to this crisis for the time being. Yes, it is well known that there is a huge informal sector in Indian cities, and informal labourers and their families are experiencing high inequality at every corner of society. But the scale of the problem was hardly conceptualised in our mind. The image was literally visualising the scale of underlying urban inequality that has long been existed.

As many countries started shutting down one by one, the extreme situation— a sudden stop of society—is making the invisible housing inequality visible. The Indian scene might be a too extreme story. But the situation in advanced countries like Western Europe is also revealing the inequality that has existed so far.  As economy stops, we can now see who do not have any struggles concerning their housing, who became so vulnerable in their residency within a couple of days, and who are even taking advantage of this crisis to seek for new housing investment.

The corona crisis is forcing us implement radical measures

Yes, it is vital to plan a quick response, prevent them from falling and support them for recovering as soon as possible. However, how about we take one step further and discuss how we can build the housing system and policies better than before? The discussion about emergency first-aid reactions is vital. Nevertheless, we may not have to confine the discussion only to the conception of ‘we need to bounce back to the status before the crisis’, presuming the system before was fine and correct.

We see that the government is implementing many radical measures. Some countries decide to give money to all citizens amid the corona crisis, regardless of their income level and damages they’ve got. We remember that the basic income idea has been a long debate subject, and now the government is forced to implement similar measures. Some countries seize the rental fee of social housing for the time being. For those who cannot make mortgage payments, some banks agree with governments to allow the extended period of payments, instead of putting people in accumulated heavy debts during their livelihoods’ downturn. In some society, landlords are offering lower rent to the tenants. Instead of the core market value of ‘profit maximisation’, those property owners chose to take more common goods.  In difficult times, there are many good initiatives of a shared economy and collective actions. Many experimental ideas are now forced to be implemented. The actions and measures made amid the corona crisis are ironically those that we have imagined and debated for reducing inequality.

Grasp the opportunity: proactively shape the housing system better

Perhaps, this crisis will allow us to understand the inequality in housing in multiple aspects that became much visible. It may also allow us to see the real case of the experimental policy ideas. Decision-makers may be able to see (if they have some willingness to do so) to what extent those radical measures can be adjusted, actually feasible to be implemented, beneficial to the people and society in the longer term, and thus be part of our housing system in the future. People are concerned about increasing inequality after the crisis. Yes, it seems very likely, but it will all depend on how we act and demand the government while overcoming this crisis. Instead of constraining our focus on how to recover back to where we used to be, it might be the right timing for reimaging and proactively discussing how to build society better together.

Coronavirus pandemic questions about our perception of “there is the value absolutely superior to other values — Freedom.”

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The coronavirus pandemic has substantially limited individuals’ freedom. In Europe, people have been shocked not simply because of the threat to lives, but also because of the threat to their freedom. Many governments prioritised public health and lives over freedom. There are still debates going on whether such lockdown measures are the right things to do: they argue with the perception that “individuals’ freedom” is the absolutely prioritised value than any other values. As the countries explore the exit strategy of the lockdown, there are now debates between the value of freedom, privacy and public health.

The question is whether freedom or public health (and saving lives) or privacy has a universal and absolute priority than another.  Are they values that we can make a complete rank regardless of which context you are?

In the political philosophy of social justice, liberty has often been considered as the priority among any other values. This view has been predominant in many European societies. For instance, according to Jonh Rawls’ Theory of Justice — the most prominent philosopher whose theory of justice has been influential in twentieth-century — the liberty value rules over any other principal values.

But, can we really rank one value over another, among freedom, privacy and public health? According to Amartya Sen’s  Idea of Justice, plural values can exist parallel, and not all values can be ordered in a complete rank.  The value of freedom, privacy and public health are not necessarily the values that we should define their complete order. Even if society agrees to define a complete ranking of those values, the rank is not necessarily static.

If we look at the issue of conflicting values between freedom, public health and privacy from Sen’s perspective, we need to perceive that the order of those values can be flexible. For instance, we may prioritise public health for the time being by limiting our freedom. However, later we can have both freedom and health by sharing some degree of privacy (of course, with citizens’ surveillance over the state instead of one-way of state’s surveillance over citizens). And later, when the crisis is over, the freedom and privacy value can be ranked up back parallel to the health value. The current social choice for public health does not mean that we degrade the precious value of freedom and privacy. Perhaps, the more important process we need is, public reasoning based on sufficient information and continuously make a social choice along with the changes we are facing.

Vietnam: When Communities Transform Old Socialist Housing into Adequate Housing – Part II

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You can read Part I of this post here.

Socialist-era apartment buildings in Vietnam’s cities, so-called KTT, are decaying rapidly. Tenants’ community organisations could help upgrade them and make the cities inclusive

Strong Communities in Multi-storey Apartment Blocks

“I’m very proud of my community people. In fact, about 40% of my residential group is newcomers. But we have a good community spirit. With our group funds, we manage the small repair of playgrounds and other common facilities outside. We help needy people. We take care of old people, we help people affected by a disaster even if they are not our residential group members. We prepare and organise activities for children such as Children’s day and Mid-August festivals…”

A residential group leader in Kim Lien KTT, Hanoi

Generally speaking, one would not expect a strong community culture in large multi-storey apartment blocks. But it exists in KTT. In each building block, or every two blocks, residents have formed strong social bonds. They take care of their members (especially elders, children, and poor families), handle common problems, organise community activities, and make sure their members follow informally agreed-upon community rules.

In combination with Vietnamese village culture, the unique history of KTT and Vietnam’s administrative system have formed a strong community culture. Historically, KTT residents used to work for the same companies or organisations. Today, they or their relatives are still living in the same building. Adding to this, the system of Resident Groups (called Tổ dân phố) has an influence. The Resident Group is the lowest level of the administrative unit in Vietnam. Generally, fifty to one hundred households form a group. In KTT, this group is the same as the resident community in each building block (or every two blocks). The group members discuss and make agreements on issues of shared concern.

@Boram Kimhur, open space between building blocks, Kim Lien KTT, Hanoi, 2013

KTT Communities Have Great Potential to Lead the Upgrading Process

Problems similar to those of KTT in fact appear in many former Soviet Union countries. Some cities reformed the management system of Socialist-era residential blocks by handing over control to residents’ organisations, such as Home Owners Associations (HOAs), or housing cooperatives. They developed policies that enable the residents’ organisations to improve the socialist housing blocks, and have since resulted in better building maintenance, reduced upgrading cost (due to the improvement of transparency), and increased trust between residents and the municipality.

In other countries, one of the key challenges was how to organise community-based decision-making. But as described above, many KTT areas already have a well-organised community structure. For instance, in Hanoi, some community leaders voluntarily monitor and manage the building repair process by a state-owned housing management company. Although there is no formal system, the leaders try to make sure that the assigned companies deliver good quality service and use the government budget in a transparent way.

In addition, KTT communities have played an important role concerning residents’ welfare and communication with the local government. The formation of HOAs in former Soviet Union countries was limited to the matters of housing maintenance. However, in Vietnam, we can consider a community-based system for more comprehensive goals. A community-driven KTT management can be a potential tool for community-based welfare, and for empowering the residents to become important stakeholders in urban planning. 

@ Boram Kimhur, local markets in Kim Lien KTT, Hanoi, 2013

Key Elements to Consider for Community-driven KTT Management

The first step will be to establish a system that enables KTT communities to become a legal entity. The communities should be entitled to be an official partner of the city, to manage financial resources, and to monitor the contractors’ performance quality. The government would also need to establish a responsible body for supporting and communicating with the communities. Direct partnership between communities and the government can increase not only work efficiency but also transparency and trust between them. 

The mechanism of community development funds (CDFs) can make the approach more successful. Communities can pool diverse financial resources not only from the government but also from national and international donors, microfinance programmes, and communities’ own saving funds. For instance, Kyrgyzstan launched a pilot project called “Metafinance” in late 2010. It was formed in partnership with Habitat for Humanity International (HFHI), a micro-credit finance institution, the city authorities, and a guarantee fund from a donor organisation. Various grants and loans for energy efficiency and other capital improvements were channelled to HOAs through a municipal fund.

A similar financial mechanism can be formed at the community level in Vietnam. When communities manage finance, they naturally develop a strong motivation for cost reduction while maximising construction quality. Furthermore, and perhaps more importantly, this mechanism can enable communities to participate in decision-making regarding the issues of KTT buildings and neighbourhood development.

The establishment of community-based organisations and CDFs for KTT is definitely feasible. Many communities (overlapping Resident Groups) already have small-scale group funds. These funds usually consist of regular contributions by households, fees from street vendors in KTT neighbourhoods, small business owners operating in the yard between blocks, as well as awards from ward authorities (granted for encouraging the Resident Groups’ community culture). The communities use these funds for various activities, ranging from maintenance to community activities and welfare for families in need.

The third important step would be to provide the necessary technical support. Simply awarding the status of legal entity to a community will not automatically make things operational and sustainable. The community organisations may need to learn how to assess problems, define concrete needs, negotiate with other stakeholders, and select proper companies for building maintenance, and monitor the contractors. Information dissemination and technical support centres will also be necessary.

Action is Needed as Soon as Possible

So far, low economic feasibility in connection with the complexity of legal issues has hampered redevelopment projects. Many were delayed or cancelled. However, residents will be under threat of losing their community and affordable housing at any moment unless we take alternative action very soon.   Summing up, KTT is not simply about apartment blocks: the blocks are intertwined with their respective neighbourhood’s social structure that is economically and socially inclusive, especially for low- and low-middle income groups. The system of Resident Groups and informally organised community activities are great assets and represent a comparative advantage of cities in Vietnam. Community-driven upgrading and maintenance of KTT can provide a socially sustainable and economically feasible solution. Additionally, this approach can place the quality of the residents’ life at the centre instead of focusing solely on the quality of the physical structure of the apartment blocks.

Note: This post was originally written for “URBANET Focus Weeks: Urban Development in Vietnam“. Published online at URBANET, and edited by the URBANET editorial team.

Vietnam: When Communities Transform Old Socialist Housing into Adequate Housing – Part I

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Socialist-era apartment buildings in Vietnam’s cities, so-called KTT, are decaying rapidly. Tenants’ community organisations could help upgrade them and make the cities inclusive.

The poor living environment in old apartment blocks is one of the major housing challenges in Vietnam. These blocks are called Khu tập thể (KTT), which literally translates to “collective districts”. KTT were built during the communist period, mostly in the 1960s-80s, as a socialist housing model. The buildings and utilities have since deteriorated. Individual units have become overcrowded as well. On the other hand, KTT provide affordable housing. They house lively communities that take care of each other and their neighbourhoods. The community-based approach can be a feasible and instant solution for transforming KTT into adequate housing.  

@ Boram Kimhur, 2015, informally extended units of KTT blocks, Hanoi

Socialist Housing: Informally Extended, Badly Dilapidated, and Overcrowded

Many KTT still exist in major cities such as Hanoi, Viet Tri, Hai Duong, Vinh, Ha Long, Nam Dinh, and Ho Chi Minh City. They are generally four or five-story walk-up apartment complexes. KTT were built for civil servants, state-owned companies’ workers, and military personnel. In the late 1980s, along with the market-oriented reform of the country, KTT were privatised. Housing units were sold at a very low price to tenants who were already living in the buildings. Current users and buyers are mostly low- and low-middle income people, but there is generally a good social mix.

Many building stocks are severely dilapidated. In addition, many housing units are overcrowded. The individual units were originally designed for a nuclear family. But many residents are living with their extended family members. In some cases, a family of three generations (6-8 people) share a space of 35m2. Residents have informally extended their apartments. The ground floor units were extended towards the street (often for small shops), and the upper floor residents built suspended balconies and occupied some common space (such as corridors) as additional living areas.

Currently, there are multiple obstacles to managing KTT efficiently and with high-quality standards. While individual housing units in KTT were privatised in 1994, the common areas remained in state ownership. Corridors, stairwells, roofs, and land plots between KTT blocks still belong to the government. Thus, the government is responsible for maintaining common areas, building structure, and common facilities such as sewerage, septic tanks, and water storage tanks.

However, cities have limited management capacities and financial resources. They usually hire maintenance and repair contractors, but their capacity to date is low. The contractors’ performance is not monitored, and institutional systems have limitations for ensuring transparent budget expense. The monopolisation of housing maintenance by state or municipal organisations has caused underinvested, delayed, and deferred maintenance.  

@Boram Kimhur, deteriorated building facades of KTT, Hanoi, 2014

Upgrading instead of Redevelopment

Run-down facades, poorly maintained corridors and stairwells, and the overall old style of buildings led several cities to plan a redevelopment project: a typical approach is to demolish the blocks, and construct higher, new apartment blocks for the investment cost recovery. In addition, the locations of KTT have become attractive for investors. When they were first built, KTT were located on the periphery of cities in the 1960s-80s. However, due to rapid urban expansion, they are now part of the central areas. This has triggered the cities to consider more market-oriented redevelopment projects targeting higher income people and enterprises, which often means that KTT residents are forced out.  

In response to such redevelopment plans, many KTT community leaders in Hanoi have expressed repeatedly that residents do not want to be relocated. In some cases, building blocks were assessed as structurally unsafe. But the residents do not have full trust in the government’s assessment. For the residents, living in their community is important for their livelihoods. A former community leader at C8 Building in Giang Vo KTT, Hanoi, puts it this way:

“Having to move to a new urban area is unfair for us. Schools, kindergartens, hospitals, markets—everything we need is nearby, unlike in places we are supposed to relocate to. Some residents are running their small business here. They have no idea what items they can sell there. They will become poorer. We don’t want to be dependent on the government’s little subsidy. Our neighbours know each other well, take care of each other, and share the cost for common problems. This community bond will be broken up.”

In 2014, Hanoi discussed the redevelopment of KTT and the relocation of residents. One major concern was how to make redevelopment projects feasible economically. Solutions other than demolishment and reconstruction are still largely absent from public debate and policy making, even today. As a consequence, maintenance and improvement of KTT building are not considered possible alternatives to redevelopment.    

This is regrettable since improving KTT and developing a good management system is a much more efficient approach than rebuilding, as long as buildings are structurally safe. Complete demolition and reconstruction often cause high social, economic, and environmental costs. It adversely impacts existing communities and residents’ quality of life. Before it is too late, we need proactive steps towards an alternative solution.

In Part II, I write more about community-led upgrading of KTT and why it would be a better solution than demolition and reconstruction.  

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