minimum plot size is 500 square meters, but the authorities are discussing whether to raise it to 700. In East Asia, authorities took a more independent view. For example, in the 1980s Thailand reduced minimum housing standards.<sup>7</sup> How out of line were the standards of the 1947 British Town and Country Planning Act with African incomes? They were ambitious in relation to British incomes as of 1947, and during the 1980s some aspects of them were seen as so excessive that they were revised down. In purchasing power parity terms, African per capita income is less than a twentieth of British incomes as of 1970 (a date by which the standards were probably reasonable). How long it will take Africa to raise per capita incomes 20-fold is not amenable to forecasting, but it is far longer than any reasonable horizon for the durability of basic housing.

Perhaps a more reliable indication that regulations are excessive is that housing construction has bifurcated, with regulations being ignored in the informal market, which caters to ordinary households. Elite homes are individually designed and adhere to building standards. Ordinary people live in informal housing, which does not adhere to costly building standards, and the design of which is in consequence idiosyncratic. An important consequence of informality is that such housing is hard to price. It is nonstandard, and key aspects of its quality, such as the depth of foundations, cannot be observed. In turn, being hard to value impedes the resale market and means that it would need to be heavily discounted before it could be used as collateral.

There have been several attempts around Africa to use formal firms for low-cost housing. In Mozambique, the “low-cost” housing ended up so expensive that it became upper-income housing. In South Africa, housing costs were kept low, but this was achieved using land that was remote from centers of employment and therefore cheap. In Angola, the government resorted to Chinese firms to construct a new city. However, even with Chinese workers and methods, the homes ended up costing between $50,000 and $100,000 and so were beyond the reach of ordinary households. Yet the costs of decent housing need not be so high. In Mexico, where per capita incomes are much higher than in Africa, mass housing—typically around 800,000 units a year—has been provided by the private sector at a unit cost of around $35,000. A pilot project by Tanga Cement in Dar es Salaam, using modern techniques of precasting and four-story construction, suggests unit costs of around $15,000.

# **_Unit costs of inputs_**

The key inputs into housing are land, material inputs, skilled and unskilled labor, and finance.

In the absence of market imperfections, the cost of land should be determined predominantly by three fundamentals: its distance from the city center, the population of the city, and per capita income.<sup>8</sup> However, African cities abound in market imperfections for urban land. We discuss land rights in a later section, but here we note that because very little urban land is fully marketable, markets are thin and prices are inflated. Further, in many countries there are few other inflation-protected domestic assets, so asset demand is disproportionately skewed towards