Skip to main content
← Back to I Definitions

Incremental housing, building

What Is Incremental Housing?

Incremental housing refers to a housing development process where households build or expand their homes gradually over time, typically starting with a basic core unit and adding rooms, finishes, or infrastructure connections as resources become available. This approach is often adopted by low-income households, particularly in rapidly urbanizing areas of developing countries, as a primary method of achieving homeownership and improving living conditions. Within the broader field of Real Estate Finance, incremental housing represents a decentralized, demand-driven solution to shelter needs, contrasting with conventional large-scale, top-down housing projects. It aligns with principles of financial inclusion by enabling individuals to invest in their homes according to their means, transforming informal dwellings into more permanent structures.

History and Origin

The practice of incremental housing has deep roots in the organic growth of cities, especially prevalent in the Global South following rapid urbanization in the latter half of the 20th century. As rural populations migrated to urban centers in search of economic opportunities, formal housing markets often failed to keep pace with demand, leading to the proliferation of informal settlements. In these contexts, households often began with rudimentary shelters, gradually investing their savings, labor, and borrowed funds into expanding and improving their homes.

International development organizations and urban planners began to formally recognize and advocate for incremental housing strategies in the late 20th century. This shift was largely driven by the understanding that conventional approaches were insufficient to address the scale of housing deficits and often excluded the most vulnerable populations. The World Bank, for instance, published works advocating for this approach, emphasizing its potential to provide safe and healthy dwellings more affordably than conventional methods by enabling households to co-invest in their homes and neighborhoods.5 The "New Urban Agenda," adopted at the Habitat III conference in 2016, also explicitly recognized and supported "incremental housing in all its forms" as a key strategy for sustainable urban development.4 This marked a global acknowledgement of its legitimacy and role in addressing housing challenges.

Key Takeaways

  • Incremental housing is a phased construction process where individuals or families progressively build or upgrade their homes.
  • It is a common approach in developing economies, often driven by financial constraints and the need for adaptable shelter solutions.
  • This method allows for self-financing and personal labor contributions, enabling asset accumulation over time.
  • It contributes to addressing housing deficits, particularly in informal settlements, by transforming temporary structures into more permanent and secure homes.
  • Support for incremental housing often involves providing access to serviced land, basic infrastructure, and appropriate housing finance mechanisms.

Interpreting the Incremental Housing Process

Interpreting the incremental housing process involves understanding it not merely as a construction method but as a socio-economic strategy. It highlights a household's capacity for self-reliance and long-term planning, even within challenging economic conditions. The pace and scale of incremental building can reflect a household's fluctuating income, access to credit, and evolving family needs. Unlike a one-time purchase, incremental housing represents an ongoing investment and a dynamic engagement with the built environment.

For policymakers and urban planners, the prevalence of incremental housing indicates a significant gap in formal housing provisions and a need for policies that support, rather than hinder, this organic growth. It underscores the importance of secure property rights and access to essential services for residents undertaking such developments. Recognizing incremental housing as a legitimate form of development can lead to more effective urban planning and community development initiatives.

Hypothetical Example

Consider Maria, who lives in a rapidly growing city. With limited initial capital, Maria could not afford a completed house in the formal market. Instead, she acquired a small plot of serviced land in a peri-urban area through a government-supported program. Her initial investment covered a single-room concrete core with a basic roof and shared toilet facilities. This served as her primary shelter.

Over the next five years, as Maria's income from her small business grew, she incrementally expanded her home. In year two, she saved enough to add a second room, which she used as a dedicated living space. In year three, a small microfinance loan allowed her to connect to the municipal water supply and construct a private bathroom. By year five, she had added a small kitchen, plastered the exterior walls, and installed more secure windows. This step-by-step approach allowed Maria to build a more substantial and comfortable home without incurring a large, unaffordable debt all at once, demonstrating effective capital formation at the household level.

Practical Applications

Incremental housing is a vital strategy in countries experiencing rapid population growth and high rates of informal economy participation, particularly in the Global South. It is commonly applied in:

  • Slum Upgrading and Prevention: Programs aimed at improving living conditions in existing informal settlements often support incremental improvements to structures, combined with the provision of basic infrastructure development like water, sanitation, and electricity. This contrasts with forced evictions or complete demolition and reconstruction.3
  • Affordable Housing Programs: Governments and NGOs increasingly adopt policies that facilitate incremental housing, providing residents with tenure security, access to affordable land, and technical assistance to build their homes in phases. This approach acknowledges the financial realities of low-income households.
  • Post-Disaster Reconstruction: Following natural disasters, communities often rebuild incrementally, starting with basic shelters and gradually strengthening and expanding them as resources and stability return.
  • Sustainable Urban Development: By promoting localized, flexible construction, incremental housing can contribute to more resilient and sustainable development patterns, especially when integrated with broader urban planning efforts. The International Monetary Fund (IMF) highlights housing's transformative role in shaping national economic outcomes, underscoring the importance of robust housing sectors for overall economic stability and growth.2

Limitations and Criticisms

Despite its advantages, incremental housing faces several limitations and criticisms. A significant challenge is the lack of proper planning and regulation in many informal settlements where it occurs. This can lead to overcrowding, inadequate provision of public services, and unsafe building practices. Structures might be built without adherence to building codes, increasing vulnerability to natural disasters or structural failures.

Another criticism revolves around the potential for urban sprawl if incremental development is not guided by strategic land use planning. Uncontrolled expansion of informal settlements can strain municipal resources and hinder the provision of efficient public transportation and utilities. Furthermore, while it fosters economic development at a micro-level, the lack of formal recognition or clear property rights for these developments can limit access to formal credit markets, thus restricting larger-scale investment or preventing households from leveraging their accumulated housing wealth. The Brookings Institution highlights that in the Global South, where much of the world's urban growth is occurring, cities often struggle to raise the revenue or make the necessary investments for adequate infrastructure and services, which can exacerbate the challenges associated with informal and incremental housing.1 Managing the risk management aspects of informal and incrementally built housing, particularly concerning health and safety standards, remains a complex policy challenge.

Incremental Housing vs. Affordable Housing

While often working towards the same goal of providing shelter, incremental housing and affordable housing represent different approaches, though they can overlap.

FeatureIncremental HousingAffordable Housing (Conventional)
DefinitionA process where homes are built or expanded in phases over time, as resources permit.Housing units priced at a level that is deemed affordable for households with a median income or below.
Construction ModelPhased, self-managed, often with self-labor; "start small, grow big."Typically completed units, built by developers or government agencies.
Primary BeneficiaryLow-income households, often in informal or semi-formal contexts.Households meeting specific income thresholds, across various income levels.
FinancingOften self-financed through savings, small loans, or remittances; flexible.Relies on formal mortgages, government subsidies, or rental assistance programs.
Key AdvantageAdaptable, financially flexible, fosters ownership and personal investment.Provides immediate, complete housing solutions; can achieve economies of scale.
ContextCommon in developing economies, addressing informal settlements and rapid urbanization.Found in both developed and developing economies, addressing market failures and inequality.

The confusion often arises because incremental housing is frequently a means by which low-income populations achieve a form of affordable housing, especially when conventional affordable housing options are scarce or inaccessible. However, "affordable housing" as a policy term often refers to finished housing units provided through formal market or public sector mechanisms.

FAQs

What is the primary benefit of incremental housing for low-income families?

The primary benefit is that it allows families to build or improve their homes gradually, aligning investments with their fluctuating incomes and savings. This makes homeownership more accessible and reduces the need for large, upfront financing, which is often unattainable.

Does incremental housing only occur in slums?

No, while common in informal settlements and for slum upgrading efforts, incremental housing can also occur in planned or peri-urban areas where land is secured, but families still need to build their homes in phases due to financial constraints. It is a process driven by financial capacity rather than solely by the legality of land tenure.

How do governments support incremental housing?

Governments can support incremental housing by providing serviced land, establishing secure property rights, offering technical assistance or standardized building plans, and facilitating access to tailored housing finance options like microfinance loans or progressive payment schemes.

Is incremental housing a sustainable solution for urban growth?

When properly supported by urban planning, infrastructure development, and access to basic services, incremental housing can be a highly sustainable solution for urban growth. It allows cities to absorb population increases organically, promoting resilience and allowing communities to adapt and evolve over time, contributing to broader sustainable development goals.