of Housing and Urban Development (HUD)—and30 percent of their income. Households in possession of a voucher may choose to pay8Many other developed countries also provide preferential treatment of homeownership through their systems ofnational taxation (see Englund, 2003, for an international comparison, and the next sections).9 For an overview and historical perspectives of the programs, see Jafee and Quigley (2007).more than the fair market rent for any particular dwelling, up to 40 percent of theirincome, making up the difference themselves. They may also pocket the difference ifthey can rent a HUD approved dwelling for less than the fair market rent.(iii) Providing states and localities with funds to develop their housing programs:These policies consist of block grants that fund housing programs crafted by state andlocal governments. States and localities usually receive block grants on a formula basisand have the latitude to use the funds for a wide range of purposes. The oldest and largestblock grant program, the Community Development Block Grants (CDBG) gives statesand localities the most discretion in determining how funds may be used.
(i) Home ownershipThis is the most popular housing policy that has been implemented in Europe forthe last decades. There are, however, very large differences between countries.14 Forexample, Ireland, Spain, and the United Kingdom are a very diverse group of countries –demographically, economically, socially, politically, but, in each of these countries, andfor different reasons, owner occupations is the dominant tenure.15 Interestingly, the UShome ownership sector is relatively smaller than that some European countries likeIreland, Spain, and the United Kingdom but much larger than Hungary for example(Scanlon and Whitehead, 2004). If we, for example, compare France and the US, thenone can see that homeownership is more developed in the US where 68 % of householdsown their dwellings, versus 56 % in France (in 2001). Perhaps more importantly, theproportion of mortgage holders among owners is also much higher (62 %) in the US, thanin France (38 %).16 In most of the European countries, owner-occupied housing as beenvigorously promoted by government through the provision of subsidies and mortgage-taxreliefs.(ii) Public and social housingPublic and social housing are a much more important part of the Europeanhousing policies, with council housing in the UK, HLM in France, etc. There are alsovery large variations between European countries. The social rented housing stock isproportionally larger in the Netherlands, Sweden and Austria than in the EU in aggregate.Although in France the sector is marginally smaller than the EU average, the social12Interestingly, there is a relatively recently published report (November 2004), called the Kok report (after Wim Kok,former Prime Minister of the Netherlands), which focuses on growth of economies and jobs in the EU, that containsstatements about desirable housing outcomes. This report promotes a Europe with higher levels of home ownership andalso higher levels of private renting with reduced levels of social housing (Doling, 2006).13 A good overview of the housing policy in Europe can be found in Bachin (1996)14 See, in particular, Englund (2003) for a comparison of homeownership and taxes between different countries inEurope.15 For example, progra***ike “Mortgage Tax Relief” and “Right to Buy” in the UK (Gibb and Whitehead, 2007) aretypical programs promoting home ownership.16 See Table 10.1 in Laferrère and Le Blanc (2006).rented stock has experienced substantial growth in recent years as a result of proactivegovernmental and institutional policy. If we look at the different European countries,which differ considerably in term of size and demography, and in their economic, socialand political backgrounds, we can observe that each country has experienced serioushousing shortages after the Second World War, and each to a significant extent haslooked to the social-rented sector to satisfy its housing needs.17While the Netherlands has the largest proportion of social rented housing in theEU, 36 percent in 1994 compared to an EU average of 18 percent (Balchin, 1996), inSpain it is quasi non-existent. Spain is a typical example of a European country wheregovernment policies have favored home ownership at the expense of social housing. Thishas totally changed the picture of housing in this country (Eastaway and Varo, 2002). In1950, the percentage of dwellings to be rented was higher than the one representinghouses in ownership (see Table 1).

of modernhousing estates would have been impossible.Even if social housing policies have worked relatively well in Singapore andHong Kong, their applicability to China is difficult because of the very specificity ofthese countries in terms size, population, etc. As a result, we will now look at largerAsian countries, more similar to China.Since 1998, when south Korea21 was seriously affected by the Asian economiccrisis, the Korean government has put special emphasis on the social safety net becauseof a great increase in poverty and unemployment. In its housing policy in 2002, theKorean government for the first time established the Construction Plan for One MillionRental Housing Units from 2003-2012. The aim was to ensure a supply of good qualityaffordable rented housing for low-income families. Additionally, in 2004, the Koreangovernment establish the Korea Housing Finance Corporation to promote homeownership for low- and middle-income families by providing long term mortgages.22The main pillar of housing policy in Japan23 is to encourage the building ofowner-occupied housing by means of GHLC (Government Housing Loan Corporation)loans. The interest rates on the subsidized loans are 2 to 3 percent lower than the marketmortgage rate (Kanemoto, 1997). The amounts of subsidies involved in the GHLC loansare quite sizable. The GHLC loans are available also for rental housing construction, butsubsidies involved are much smaller. The GHLC loans therefore favor owner-occupiedhousing over rental housing. National government expenditures on housing programs are1.4% of the total budget of the Japanese national government in 1993. This is close tothat of the U.S. but lower than those of the U.K. and France and higher than that ofGermany (see Table 10 in Kanemoto, 1997).24The Japanese housing system, which concentrated public funds on middle-classfamilies and encouraged them to purchase their own homes, generated a large disparitybetween those on low incomes and those with higher incomes; between single and familyhouseholds; and between renters and home-owners. The government has neglected publichousing. It is a two-tiered system where there has been generous support for middle-classgroups on one tier, support for those on lower incomes has become increasinglyresidualized and the target group for the direct provision of public housing has beenstrictly limited on the second tier. The government created a system that defined homeownershipas the social norm and placed public housing provision as a marginal measure.The housing sector in India25 for several decades faced a number of set-backs,such as an unorganized market, development disparities, a compartmentalizeddevelopment approach and a deterrent rent control system. There was not even aconcerted attempt to understand the housing problem let alone promote it.The Government of India adopted a central planning model of development. ThePlanning Commission of India is the central think tank which prepares the five yearplans. These plans give a broad direction regarding the policy of the Government ofIndia. They also give the broad allocation of financial resources to various sectors of theeconomy. Based on the five year plans, annual plans are prepared by state governmentsfor implementation. A look at the five year plans reveals the manner in which theGovernment of India had perceived the housing sector in the initial years and the mannerin which it sees it now. Financial allocation for housing as a percentage of the totalinvestment in the economy was as high as 34 percent in the First Five Year Plan (1951-56) but has now come down to as low as 2.4 percent in the Tenth Five Year Plan (2002-2007). As part of the Five Year Plans, the Government of India had launched variousprograms for providing housing to the people.The post 1990 period can be seen as the era of housing sector reforms. Thesereforms have overturned the situation to a great extent. The designing of a shelter policy,the organization of the housing finance market, the introduction of fiscal incentives,increased public investment, legal reforms and others initiatives have brought about anumber of changes in the housing sector (Mahadeva, 2006). Interestingly, these changeshave been concerned with both reducing the housing shortage and increasing the numberof quality housing stock besides increased access to various other housing amenities likesafe drinking water, good sanitation and household electricity. But, at the same time,since these measures are in the process of taking roots and are in their infancy stages, thenumber of houseless 

people looking towards the state’s help are increasing, especially inbackward and rural areas. Most social housing schemes, which have been in vogue forover 50 years, have yet to address the housing and amenities needs of the vulnerablegroups. In the year 1981, there were 28 million slum dwellers in Indian cities and thisnumber rose to 45 million by the year 1991. The number of slum dwellers in the year2001 was still at 40 million. As a percent of the urban population, the figures increased24 The Japanese subsidy programs are mainly financed through national taxes on firms (Seko, 1994).25 India’s population is approximately 1.17 billion people (estimate for July, 2009) and consists of approximately onesixthof thefrom 17.5 percent in 1981 to 21.5 in 1991 and 22.8 in the year 2001 (Government ofIndia, 1997, National Buildings Organisation, 2003)