Does Housing Finance Promote Economic and Social Development in Emerging Markets?

International Finance Corporation

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Date Published 2007
Primary Author Hans-Joachim Dübel
Other Authors
Theme Housing and Wealth Creation


Assisted by growing capital supply, declining interest rates and legal reforms, in the past decade housing finance has grown dramatically in emerging markets. The study explores with evidence available from early emerging markets mainly from Latin America and Asia under which conditions the lending boom translated into a dynamic and sustainable economic and social development as measured by various indicators. The main finding is that despite early house price increases and boombust cycles in the early emerging markets, housing finance has in the longrun helped to build thriving construction and financial service industries, with some players starting to go global. It has also contributed to improved blue collar employment opportunities. Where housing supply moved downmarket and regional in parallel, sometimes with public policies assistance, greater availability of finance was finally able to contribute to declining housing deficits and indirectly reduce slums. The paper concludes with lessons for housing finance system development strategies.

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