The missing social infrastructure: financing housing justice as a strategy to advance global agendas
Currently, the housing crisis is a blind spot in the global finance for development agenda, and financing mechanisms for housing remain limited, unequal and inadequate. This year’s discussions about development and climate financing present a key opportunity to demonstrate the centrality of housing justice to a renewed global social contract and the need to advance more effective financing schemes to ensure access to adequate housing for all.
2025 will see a series of international meetings dedicated to raising more and better finance for development and climate efforts. These events are taking place against the backdrop of a worsening housing crisis that is disrupting the lives of millions of people across the world.
However, housing is rarely mentioned in multilateral financing spaces. This year presents a critical moment to address this blind spot and connect financing for development decisions with efforts to ensure access to adequate housing for all as a critical social infrastructure for development.
Discussions at the 4th Financing for Development Forum (FfD4), the G20, COP30 negotiations and World Social Summit, will strive to raise more and better financing to address climate breakdown, rising inequalities and a weakened sense of international solidarity reflected by Official Development Assistance (ODA) cuts or the dismantling of USAID.
Housing, far from being a separate issue, should be regarded as a critical social infrastructure to build resilience and capacity to tackle these pressing global challenges.
Investing in providing adequate housing is a particularly effective way of boosting economic growth, promoting sustainable ways of living, and strengthening resilience to climate, health and economic risks. Improving access to housing has substantial impacts on households’ income, health and education outcomes. It is also an important way of dealing with the impacts of the current inequality, climate change and health crises.
Current financing mechanisms for housing are limited, unequal and inadequate
Addressing today’s challenges requires mobilising finance to advance housing justice, which IIED and partners have defined as anti-discriminatory and democratic housing policy and practice that promote just and sustainable futures. However, current financing mechanisms for housing are unable to ensure housing for all.
Firstly, current financing flows directed at addressing the housing crisis are very limited. Public housing investment as a share of GDP is less than 0.1% on average. This investment is not only very low, but has also been decreasing. OECD data shows a 50% reduction in public capital expenditure on housing (PDF) since the global financial crisis.
In addition to public investment in housing not being prioritised, little effort is made to mobilise multilateral and bilateral support. UN-Habitat notes that “Most bilateral and multilateral funding institutions do not mention housing as their priority in their development programme reports” – as also pointed out by Habitat for Humanity’s global advocacy efforts.
In 2023, ODA disbursements from Development Assistance Committee member countries for housing policy and administration amounted to US$28.9 million and $55.2 million for low-cost housing. This is less than 0.05% of ODA disbursements.
Similarly, the OECD’s Private Philanthropy for Development database shows a decrease in both absolute and relative terms of private philanthropy disbursements for housing policy and administration and low-cost housing between 2019 and 2021 – from $7.3 million (0.08% of all disbursements) in 2019 to $2.6 million (0.028%) in 2021. As traditional ODA donors announce cuts to their ODA spending, this will further threaten these sources of financing.
Secondly, funds disbursed are very unequal. The regions with the greatest rates of population growth and urbanisation have the fewest resources available to address increasing housing demand.
Countries in the global South generally dedicate a much lower percentage of their GDP (already a smaller absolute number) to addressing housing challenges. This divergence is also present in other sources of funding.
UN-Habitat calculations for 2019 through 2023 show a wide disparity between multilateral and bilateral funding for housing in Europe ($21.8 billion) and funding in Africa ($6.4 billion). This will only further widen the gap between housing need and housing provision, deepening housing injustices.
This is reflected in the rapid growth of informal settlements, where residents are exposed to greater social and environmental risks, often including the threat of evictions and displacement.
Multilateral and bilateral support received by regions in US dollars for housing interventions (Source: UN-HABITAT)
Finally, these financing mechanisms are largely inadequate to respond to the global housing crisis. Multilateral and bilateral institutions are largely focused on market-enabling strategies (PDF). This approach concentrates resources on housing finance mechanisms that overlook the fact that the vast majority of housing provision, particularly in global South contexts, is led and done by the households that often do not have access to formal financing structures.
Crucially, this form of investment in housing is not only exclusionary but it also makes the problem worse, encouraging market dynamics that continue to deepen housing injustice. Finance for housing is therefore not going to where it is needed, nor to the solutions that are required.
Addressing the housing blind spot in the finance for development agenda
Conversations at FfD4 and other key international forums will seek to strengthen the ability of multilateralism to tackle global challenges, pursuing financial commitments that mobilise resources to where they are needed most.
They present a key opportunity to demonstrate the centrality of housing justice to a renewed social contract and the need to advance more effective financing schemes to ensure access to adequate housing for all. We suggest three actions:
- Align financial commitments with recommendations of the Intergovernmental Expert Working Group on Adequate Housing for All. At its December 2024 meeting, the working group showcased important policy tools and effective financing strategies beyond market-led approaches, including supporting collective and non-speculative housing provision, financing participatory upgrading of informal settlements through community finance and saving schemes (PDF), and enhancing tenure security of the most vulnerable to climate and socio-economic risks.
Ensuring that these solutions are properly backed by financial and capacity support, both from local and national governments as well as multilateral and bilateral partners, and that these resources reach those at the frontline of housing injustices, will be key for the working group’s success.
- Address the global housing crisis at the FfD4 and G20 forums. While housing is not mentioned in the draft FfD4 outcome document, prioritising adequate housing for all is an important enabler of many stated goals – from increasing communities’ climate resilience to reducing inequalities. Similarly, the themes of solidarity, equality and sustainability that South Africa has presented for its presidency of the G20 can all be advanced through housing financing policies.
The upcoming research by Habitat for Humanity calling for increased financing for housing by the G7 will also be useful to influence these spaces. In particular, recommendations by the Urban 20 group, which brings together cities from G20 countries, highlight the importance of housing finance to build more caring, equitable and prosperous cities.
- Strengthen multi-actor partnerships, including philanthropy. In the face of ODA cuts, there is increased attention on the role of philanthropic funds. While philanthropic actors cannot – and should not – be expected to cover the financing gap left by traditional donors, they are certainly a central partner with great potential to invest in housing justice responses. The mobilisation of philanthropy at the G20 and other international spaces demonstrates the sector’s willingness to step up in the fight against social and climate injustices.
IIED’s partnerships with philanthropy networks like WINGS or GIFE are exploring ways to strengthen philanthropic action for housing. We will be at this year’s GIFE Congress to discuss experiences of localising philanthropic action. This year’s International Conference on Community-Based Adaptation will also provide important moments for exchange between governmental, philanthropic, research and grassroots partners on strategies to address financing for locally-led action.
These steps seek to widen the opportunities for supporting locally-led and non-speculative finance mechanisms for housing. The high expectations around this year’s financing conversations reflect the demands by people across the world to transform international financing structures to better respond to local needs and aspirations. These steps also imply advancing finance mechanisms that go well beyond the construction of housing units.
Financing needs to support the full cycle of housing as a critical social infrastructure – from data collection and monitoring of rights violations, to housing policy, production and maintenance. If taken seriously, financing for housing justice will not just deliver more and better homes – it will make our societies more equitable, democratic and resilient.
Members of IIED’s housing justice team Camila Cociña and Anabel Bennett López contributed to this insight.
