THIS IS THE latest volume in the series of Global Reports on Human Settlements that UN Habitat has been preparing since 1987. Its focus on financing urban shelter is, in part, to suggest the financing provisions needed to ensure that the Millennium Development Goals are met, especially those relating to significantly improving the lives of slum dwellers. This report also notes how most of the growth in the world’s population between now and 2015 (and beyond) is likely to be in urban centres in low- and middle-income nations.

The report is divided into three parts plus a statistical annex. Part I looks at how shelter financing systems fit within the overall context of macroeconomic policies and within the urban development context. This section includes a review of shelter policy and finance since 1972, and the institutional structures for financing urban development. Part II assesses trends in shelter finance, with chapters on mortgage finance, finance for social and rental housing, shelter microfinance and community funds. It notes how mortgage finance has been expanding with market-rate housing finance institutions now active in many nations that 20 years ago had no such institutions – but also how it is generally only middle- and upper-income groups that have access to such finance. With regard to subsidies and social housing, the report notes how governments have shifted away from the direct construction and management of public housing to a greater use of capital subsidies to help homeowners buy or build housing, and housing allowances to help low-income households to rent accommodation. The section on microfinance describes various initiatives that supported low-income households to build or upgrade their own homes, and how valuable it can be for such households to have funding that allows them to build incrementally. The section on community-based shelter funds notes their increasing importance and the growing interest of local governments in working with them. These community funds encourage savings through establishing and strengthening local savings groups, and provide funding for collective actions – for instance, as the savings group works as a group in land purchase, land preparation, infrastructure installation, service provision, and housing construction, extension or improvement. Community-based financing has been used for upgrading and for building on greenfield sites. It provides low-income households with the benefits of scale – both in what they can do together and in what they can influence and negotiate. Part III outlines what a sustainable shelter finance system requires – ending with a chapter on the ways in which shelter finance system can be strengthened. As with previous Global Reports, there are many boxes within the text giving examples of initiatives to illustrate the points made in the text.