Low-cost housing is defined as housing that is of good quality and suitably located, without imposing financial strain on its occupants, allowing them to meet other essential living expenses and uphold basic human rights. In many developing countries, accessing appropriate and affordable housing is an increasingly urgent issue. Often, the problem is not a lack of housing but insufficient income. In some cases, even with relatively high incomes, limited housing supply and financing make housing unaffordable. Self-help housing programs, though widespread, have shown limited effectiveness in these regions. Popular self-construction and grassroots development methods have not provided a long-term or large-scale solution to the substantial housing demands.

The high costs of land and building materials are the main reasons housing remains unattainable for the urban poor. Building materials, often the largest tangible input in housing construction, can account for up to 80% of the total cost of a simple home. This cost factor significantly hinders sustainable construction because building materials are essential for the structural integrity of housing. If the price of building materials doubles compared to other commodities, the time required for a household to afford these materials also nearly doubles. This issue is exacerbated by the insistence of many central and municipal governments on using conventional building materials and techniques, mandated by building codes and regulations that are often colonial relics or imported from other countries. These restrictions prevent the use of locally available, cost-effective, and environmentally friendly building materials and technologies.

Policies are needed to improve access to affordable and suitable building materials and support the research and development of innovative construction techniques. Promoting and making accessible environmentally friendly construction methods, energy-efficient technologies, and those that reduce pollution is crucial. Researchers have explored various materials for low-cost housing, including natural fibres, earthen materials, and industrial building waste. Natural fibre materials such as rice husk, sisal fibre, and banana leaves are commonly used in panel boards, reinforced composites, and insulation. Lime and mud are increasingly used for non-structural components like bricks, with further advancements in creating blocks from raw mud without burning. Recycled materials from construction waste, like steel and rubber, and industrial by-products such as fly ash, are ideal for reducing environmental impact and costs. Additionally, non-biodegradable waste like plastics can be recycled into low-cost building materials.

Innovative construction techniques such as compressed earth blocks, dome construction, rammed earth, and vault construction have been developed. Advanced technologies, including intelligent construction sites, simulation, modelling, digitalization, and virtualization, are being incorporated into the construction process, often with private sector involvement.

In Indonesia, as in other developing countries, low-cost housing has been a major concern for the past three decades, with urban populations growing at a rate of 4.1% per year. It is estimated that 68% of Indonesians will live in urban areas by 2025. However, the benefits of urbanization are limited due to problems like the rise of slums caused by a lack of affordable housing. Rapid urban population growth has strained land availability, increasing housing demand and land prices. Indonesia faces two significant challenges: housing demand and waste management. There is a substantial gap between the annual demand for 780,000 housing units and the supply capacity of 400,000–500,000 units, leading to a yearly backlog of around 300,000 units. This backlog affects approximately 30% of urban residents who live in non-owned housing.

Despite government programs prioritizing housing provision, the availability of building materials is limited. In Indonesia, concrete, bricks, wood, and ceramics are the most commonly used construction materials, as required by building codes and regulations. However, these materials present environmental concerns, such as high embodied energy, carbon emissions, and eco-costs associated with clay bricks and tiles.