An Impact Evaluation of Chile’s Progressive Housing Program

This paper evaluates Progressive Housing Program; a public housing program that facilitates the purchase of a new home. The evaluation finds that the program’s package (savings requirement, voucher and mortgage) design is inappropriate if the program is targeted to the poor. In fact the pro-poor targeting of the program was poor with high under-coverage and high leakage. Further, the benefit, a minimum quality new house, was not sustainable as many households slipped back into the housing shortage category overtime. An impact evaluation reveals that although the program had significant positive effects on materiality conditions (access to water, sewerage, and electricity), it had a negative effect on overcrowding, and had no discernable effects on welfare indicators (poverty, school attendance, occupation ratio, etc.). This could be due to high residential segregation that resulted from attempting to maximize the number of housing solutions on the cheap. The study also cautions against the mechanical use of cost benefit calculations for policy decisions: the program’s internal rate of return was higher than the official cut off rate of 12%.