Housing finance is the provision of finance or capital for housing. There are three ways of interpreting this: housing finance can be taken to mean the capital required for the construction of housing or housing projects, the resources required to acquire or access housing by households, or the credit supplied by (housing) finance institutions.
The first of these interpretations is project finance, except that it happens to be for housing projects. The third interpretation could best be termed financial institutions, focusing on those that supply or deal with housing. In this Manual, we shall not be dealing directly with either of these sorts of housing finance except insofar as they influence and interact with housing finance in the sense of capital for access to housing.
To purchase housing, households might have to lay out as much as four times their annual income, and, therefore, few are in a position to buy a house from their current resources. One obvious solution is to accumulate or save small amounts of capital and defer house purchases until the required total is reached. Even assuming that 20 percent of current income could be devoted to such savings, this procedure might imply a wait of 20 years or more, provided that costs do not inflate more than the interest accrued on savings in the meantime.