If Habitat III wants to uphold the right to housing, it needs to address financialization


At the start of April, a number of civil
society groups, members of NGOs and activists from across Europe met in
Barcelona for the European meeting of the Global Platform for the Right to the City. This was in part to complement the Habitat III meeting on Public Space that was to take place later that
week. Habitat III will be the third instalment of the UN conference on human
settlements, held every 20 years. At this Global Platform meeting in Barcelona,
priorities relating to the ‘Right to the City’ in Europe and strategic aims for
Habitat III, to take place in Quito this October, were discussed.

European Regional Meeting of the Global Platform for the Right

One of the main issues that emerged in the Global
Platform meeting was the financialization of real estate. Financialization can
be defined as a “pattern of accumulation in which profit-making occurs
increasingly through financial channels rather than through trade and commodity
production” (Aalbers 2009, p. 284). The financialization of housing refers
specifically to the linking of housing markets with finance markets, where
housing is viewed primarily as a financial good. This is what allows banks to
speculate on land and housing, which causes house prices to rise far beyond
what most people can afford. The linking of mortgages with financial products,
especially in the United States, was a central factor in the 2008 economic
crisis that had catastrophic effects across the globe.

In a working group on the topic, participants
exchanged experiences of how financialization has manifested in their
respective countries. A member of the Plataforma de Afectados por la
(Platform for people affected by
mortgages) in Barcelona summarized the particularly dire situation in Spain,
where over 400,000 evictions have taken place since 2008. While each European
country has its own unique context, many common themes emerged, such as
speculation, inflated housing prices, empty homes, the selling off of social
housing, and an increase in evictions and displacement. These phenomena were
linked to a systematic eroding of regulations that have allowed the financial
sector to exploit housing for profit.

An open
to the Habitat III
Secretariat signed by members of the Global Platform points to the connection
between the 2008 financial crisis and its context of housing financialization,
a topic which it says is strikingly absent from Habitat III documents thus far.
The letter asserts that land and housing must be treated as goods for people
and not for profit. In this vein, the signatories call for a new Habitat III policy
unit to be set up that focuses on the global financialization of real estate,
to provide recommendations for the social and political regulation of real
estate markets and actors.

But at the moment, as the letter states, Habitat
III documents do not seem to be dealing with the issue. The Policy
Paper on Housing Policies
, an official input into Habitat III,
states that “Housing stands at the center of the New Urban Agenda”. It
re-affirms UN Member states’ commitment to the right to housing, which it says
must be adequate and affordable, with security of tenure. Yet in the 74 pages
of the document, financialization is not once mentioned. In a section on
affordable housing, there is reference to the financial crisis, and to the
increase in mortgage debt and repossession of homes, especially in Europe
(p.10). The global estimate that 330 million households are currently
financially stretched by housing costs is also provided. But this section
concludes with “Nearly half of the housing deficit in urban areas is
attributable to the high cost of homes, and to the lack of access to financing”
(p. 10).

In this sense, rising house prices are presented as
a natural and uncontestable process, with the core problem simply being that
many people do not have access to housing finance. There is no questioning of
why house prices are allowed to rise at such a rate in the first place, nor is
there acknowledgement of the role of the financial sector in inflating real
estate values. The report mentions how vulnerable groups are traditionally
excluded from home ownership and rental markets, implying that the solution to
the housing deficit is to get more people in on this market. (The paper seems
to ignore the phenomenon of sub-prime or predatory lending integral to the 2008
crisis, where vulnerable groups were not excluded, but explicitly targeted for
mortgage loans.) Overall, the focus is on the individual requirements needed to
access housing, and not on structural factors and the institutions responsible
for shaping access to housing.

Given the very limited diagnosis analysis of the
situation, the paper’s proposed policy solutions largely miss the point. The
report states that to “To provide affordable housing, the private sector
requires incentives (adequate capital and financial returns) and an enabling
environment (development process and public policy)” (pp. 22-23). In other
words, the financial institutions and private developers who are largely
responsible for the massive housing crisis do not need to re-examine any of
their practices; rather, the public needs to provide incentives for them to
build “affordable” housing because the relentless profit motive of private
developers and financial institutions cannot be challenged. In addition, the
public sector must provide an “enabling environment” for the private sector to
do its work, as if it has not already been doing so by implementing neoliberal policies
to slash regulation of lending and speculation.

To address the assumed core problem of people with
limited or no access to credit for housing, the policy paper states “housing
finance and microfinance should be integrated into the broader financial system
in order to mobilize more resources, both domestically and internationally”(p.
21). This statement ignores the extent to which housing finance has already been integrated
into the financial system, and what disastrous effects this has had. If
anything, the paper seems to be suggesting an increase in financialization,
rather than a re-thinking of this phenomenon that has been a major factor in
the housing deficit.

The housing paper does mention that policies are
needed to reduce property speculation and even mentions the “social regulation
of real estate”, and that these can be strengthened if “municipalities adopt
inclusive housing ordinances and appropriate property taxation policies” (p.
17). This is a start, but it is not enough for a global urban agenda. The
details of these policy proposals are not explored in any meaningful way in the
current policy paper, nor are they linked to address the current embedding of
real estate within the financial sector. Furthermore, this is not just a local
problem for municipalities to deal with; both national and international
institutions hold responsibility for our current situation, and need to be
targeted as entry points for intervention.

There are many forms of regulation that would at
the very least be a step in the right direction in terms of housing
affordability. But we need to address the now assumed linkage between real
estate and the financial sector if we want to get to the root of the problem.
For a conference aiming to come up with a “new urban agenda”, and that has
previously agreed on such rights such as the right to
adequate housing
, the issue of financialization, which
has put housing that much more out of reach for millions of people, needs to be
addressed at Habitat III.


Aalbers, M. B. (2009) “The sociology and geography
of mortgage markets: Reflections on the financial crisis”,I nternational
Journal of Urban and Regional Research
, 33 (2), 281–290.

Habitat III Policy Paper 10 – Housing Policies, 29 February 2016,
available at:

is an alumna of the
the DPU and currently works as a graduate teaching assistant for the MSc Urban
Development Planning
. She has been involved in research
looking at civil society engagement with Habitat III processes in various