Convergence Trends in Formal and Informal Housing Markets: The Case of Turkey

Abstract

This paper highlights the economic and policy significance of informal institutional arrangements (ignored in past research) governing housing transactions citywide that permeate both formal and informal sectors, blurring the conventional formal/informal distinction. It documents the convergence in formal and informal housing markets in Turkey by focusing on the "build and sell system," an institutional arrangement between land owners and small scale contractors/ entrepreneurs governing multistory housing construction. Other informalization trends in formal subdivisions such as noncompliance with building codes (induced by amnesty laws), and formalization trends in gecekondu settlements such as commercialization and densification (accelerated by municipal regularization programs and land pressures) depict the convergence.

A market without the ‘right’ property rights

“…Some scholars have questioned the effectiveness and appropriateness of policy reforms focused primarily on distributing legal title through regularization projects. Many studies of housing markets in developing countries have investigated how transactions can occur with informal property rights, some arguing that informality provides more affordable housing (Payne, 1997; Sanyal, 1996; Pamuk, 1996). A recently active area of research debates the evidence over legal title's ability to increase access to credit for the urban poor (Payne, 2001; Galiani and Schargrodsky, 2003; Field, 2004).…”

Intermediate levels of property rights and the emerging housing market in Ho Chi Minh City, Vietnam

“…Some argue that informality provides more affordable housing and that it creates a flexible approach for poor people (Payne, 1997;Pamuk, 1996). The provision of titles, furthermore, is unlikely to increase access to formal credit for the poor in developing countries.…”

The Role of the Public Sector in the Provision of Housing Supply in Turkey, 1950-2009

“…The process was based on consensus and coalition between small and medium‐scale building contractors, middle‐class landowners, subcontractors and rural migrants working in the construction industry ( ibid. : 44–5), with land owners providing land to a builder for the construction of multi‐storey apartment buildings and contractors receiving an agreed share of ownership rights (Pamuk, 1996). In 1965, the enacted Condominium Law became the cornerstone of the build‐and‐sell model because it ‘spurred a rapid process of urban renewal in the planned subdivisions’ ( ibid.…”