The importance of policy differences in shaping housing sector outcomes is supported by recent data on 52 countries collected by the [Housing Indicators Programme], a joint programme of the UN Centre for Human Settlements and the World Bank. Among the most important of these indicators are physical measures, such as crowding or structural durability, and house prices, rents and the house price-to-income ratio, which often reflect the relative efficiency of housing markets. Comparisons of such measures indicate, for example, that the responsive housing market in Bangkok provides better, more affordable housing, even for the poor, than the heavily regulated market in Kuala Lumpur.
Supply-side distortions in these and other countries arise largely from policies affecting the inputs for housing: land, finance, building materials, or infrastructure with the legal and regulatory framework affecting housing suppliers exercising a dominant effect on the price and quality of housing. In Thailand, for example, where regulation is simple and efficient, housing supply is more than 30 times as responsive to shifts in demand than in either the Republic of Korea or Malaysia, where regulation is complicated and cumbersome. This is reflected in striking differences in housing affordability, measured by house price-to-income ratios, among the three countries.
Policies affecting the responsiveness of the supply side of the market to changes in demand, therefore, often offer the greatest potential for improvement in sector performance. Policies which constrain market efficiency and the responsiveness of the housing-supply system result in reduced investment, housing which is less affordable and of lower quality, and a lower-quality residential environment.
The UN Centre for Human Settlements recommends the following measures to improve the performance of the housing sector for the provision of low-cost housing: (1) developing skills in construction techniques; (2) promoting public/private partnership; (3) attracting private sector investment; (4) modifying/revising (if required) building regulations and by-laws; (5) improving maintenance and upgrading of housing; and (6) facilitating and encouraging the participation of small-scale contractors in shelter and infrastructure construction works.