Affordable Housing in the World’s Cities

Housing is an essential part of cities and a key driver of urbanization because it determines urban form and density, provides access to employment opportunities and services, and contributes to economic growth. However, over the past few decades, national and local government policies have failed to promote adequate and affordable housing for the growing urban population. Cities around the world are experiencing an affordability crisis, with rising house prices, low incomes, and barriers to supply. The scarcity of affordable housing in turn contributes to the unsustainable expansion of urban areas, which brings significant social, environmental, and economic consequences. Among them are constraints to the productivity and efficiency of cities, which limits the economic development potential of entire countries. This article explores the challenges and solutions related to affordable housing.

The affordability crisis is characterized by rising house prices and rents, which outpace wage growth. This trend is particularly pronounced in urban areas, where demand for housing is high, and supply is constrained. The result is a significant gap between housing costs and household incomes, making it difficult for many families to afford decent housing. For example, in the United States, nearly 60 percent of Black renters and 30 percent of Black homeowners are moderately or severely cost-burdened, well above national averages.

The lack of affordable housing has far-reaching consequences. It limits access to quality education, healthcare, and employment opportunities, as families are often forced to live in areas with fewer resources. Additionally, housing instability can lead to poor health outcomes and lower educational attainment. Economically, the housing crisis reduces productivity and economic mobility, as individuals struggle to find affordable housing near job centers. This, in turn, affects the overall economic health of cities and regions.

Providing adequate housing to millions of households—and doing so in ways that guarantee sustainable development—requires shifting housing policy and practice. This involves a comprehensive approach that addresses both the supply and demand sides of the housing market. On the supply side, policies should focus on increasing the availability of affordable housing through incentives for developers, land-use regulations that promote higher densities, and investments in public housing. On the demand side, measures such as housing vouchers, rent control, and affordable housing mandates can help make housing more accessible to low-income families.

Cities are at the centre of the solution to the housing crisis. They can design comprehensive strategies tailored to their specific needs, leveraging local resources and partnerships. For example, cities can implement inclusionary zoning policies that require a percentage of new housing developments to be affordable. They can also invest in transit-oriented development, which integrates housing with public transportation, reducing commuting costs and improving access to employment opportunities. Additionally, cities can work with community organizations and non-profits to develop affordable housing projects that meet the needs of local residents.

Addressing the affordable housing crisis requires collaboration between national and local governments. National governments can provide funding and policy frameworks that support local initiatives. They can also invest in research and development to identify innovative solutions and best practices. Local governments, in turn, can implement these policies and adapt them to their specific contexts. This collaborative approach ensures that housing policies are both effective and sustainable.

The affordable housing crisis is a complex issue that requires a multifaceted approach. By shifting housing policy and practice, leveraging the role of cities, and fostering collaboration between national and local governments, we can create more sustainable and equitable housing solutions. This not only improves the quality of life for millions of families but also contributes to the economic growth and development of cities and countries. The time to act is now, as the consequences of inaction are far too great.