ABSTRACT
This chapter reviews the lessons from experience and analyzes directions which policy makers should consider to restructure activities in shelter finance. One of the major lessons from experience in the shelter sector in Third World countries (TWCs) is that there is a crucial economic and functional relationship between housing and its related infrastructure. Policy makers and urban planners are often fond of saying that the problem with housing is the lack of financing, but in many countries serious weaknesses in the housing delivery systems also prevent the flow of banking funds into the sector. The difficulty of obtaining financing for financial institutions, together with other major constraints regarding physical and institutional infrastructure found in TWCs, generates a typical three-tier structure of the housing markets found practically everywhere. Nonfinancial constraints appeared to be quite important because households had difficulty finding affordable houses to buy once they had accumulated financial savings.
