Affordable Housing Policies and Urban Land Markets in Peru

This paper examines affordable housing policies and the behavior of urban land markets in Peru. Specifically, it analyzes a public housing program entitled: Techo Propio/Adquisición de Vivienda Nueva (Own Roof/New Housing Purchase in English), or AVN, from the economic and political science perspectives. The analysis considers the current state of the economy and the housing market in Peru, and examines the development and location of AVN homes and the business strategies of the developers involved. The study is based on in-depth interviews, and on a household survey of program beneficiaries. The results show that the Peruvian affordable housing policy achieved only 30 percent of its stated goals. The program faces developer’s profitability issues associated with increased land prices. The higher land prices reflect the growth of the Peruvian economy and the concomitant construction boom, the reduction of poverty and a larger middle class, and the configuration of the real estate market and land rents.

Keywords: affordable housing, housing subsidies, land rents, Peruvian cities