Dharavi, one of Asia’s largest informal settlements, in Mumbai, India. Image: Reuters/Niharika Kulkarni Across continents, housing affordability has moved from a local grievance to a global economic fault-line. Both ownership and rental markets are under siege, a situation driven by persistent structural barriers and political inertia. Housing affordability is more than an equity concern. It is a first-order economic challenge with the potential to constrain growth and destabilize communities. When teachers, nurses and other essential workers cannot afford to live in the communities they serve, the entire scaffolding of urban prosperity weakens. The range of services offered narrows, economic growth slows, inequality deepens, talent attraction is impact, and cities risk devolving into enclaves of wealth surrounded by zones of exclusion. In ownership markets, the United States stands as a cautionary tale. Elevated mortgage rates, restrictive zoning and a resulting scarcity of buildable land have made homeownership a fading dream for many in the middle class. In Miami, the median home price now exceeds seven times the median household income , according to the National Association of Realtors, surpassing levels observed during the US housing bubble that preceded the Great Financial Crisis. Emerging markets tell a parallel story. In Mumbai, rural-urban migration and soaring construction costs have overwhelmed supply, forcing millions into precarious informal settlements with little prospect of formal ownership. In many markets, acquiring homes at higher bases reduces the potential for appreciation, limiting the prospect for wealth-building and intergenerational wealth transfer, especially when factoring in increasing ownership costs, such as taxes, mortgage interest, insurance and energy, along with any capital expenditures needed to renovate or repair. These maths are fundamentally changing the notion of home ownership as a path to economic security. Rental markets may offer little reprieve. In the United States, rents have soared faster than wages in nearly every metropolitan area, exacerbated by the twin forces of undersupply (both in the owner-occupier and rental markets) and a range of construction bottlenecks that delay addressing these supply shortages. Halfway around the globe, in South Africa, where decades of inequality have left deep economic scars, rental affordability has deteriorated further. A growing chasm exists between the housing that is available and the housing that people can afford, fostering cycles of displacement and informality in housing tenure. As noted in World Economic Forum report Reimagining Real Estate: A Framework for the Future , governments at all levels have long recognized housing affordability as a critical issue. Yet despite years of policy experimentation, meaningful progress has been elusive. Structural barriers to new supply – from outdated zoning laws to politicized development processes – have proven stubbornly resistant to change. Moreover, what constitutes “affordability” or “adequacy” is not universal. In New York or London, debates centre on housing costs relative to income and tenant security. In Nairobi or Dhaka, the battle is often for basic services, legal tenure and protection against environmental hazards. Any serious policy response must be rooted in local realities, while recognizing the common thread: Too many people are priced out of decent shelter and place-based amenities. The causes of the affordability crisis are manifold and market-specific. In the cities of advanced economies, exclusionary zoning, glacial permitting processes and entrenched opposition to new development have throttled supply. In emerging markets, the challenges are different but no less acute: insecure land tenure, limited access to finance, and the high cost of skilled labour and materials all serve as formidable obstacles. Rapid urbanization and demographic shifts have outpaced governments’ ability – or willingness – to plan for sustainable growth. Without aggressive action, the affordability crisis will only deepen. Policy solutions must focus on liberating supply, not choking it further. Governments should streamline land use approvals, greenlight higher-density development, and embrace innovations that reduce construction costs. Flexible zoning, faster permitting and support for mixed-use development are critical enablers – steps underscored in Reimagining Real Estate as necessary for future-proofed and liveable cities. Critically, there is no viable solution to the affordability crisis that does not involve attracting private capital and investment into affordable housing. Affordability cannot be achieved through public spending alone; it requires mobilizing the vast resources of institutional and private investors who increasingly see real estate not just as an asset class but as a channel for broader value creation and economic growth. As Reimagining Real Estate emphasizes, progress depends fundamentally on aligning public goals with private incentives. Governments must create the conditions that make such investments feasible and scalable – reducing risk, ensuring transparency and offering tools such as tax incentives and streamlined regulatory processes. Public-private partnerships, innovative financing mechanisms and capital markets that reward the delivery of affordable, sustainable housing are essential pillars of any long-term solution. What is the World Economic Forum doing to support the Future of Real Estate? While investable real estate has grown by more than 55% since 2012 (PwC), the COVID-19 crisis has underscored weaknesses in relation to human and planetary health along with drastic inequalities, leaving a stark reminder of the influence the built environment has on societies and the vulnerabilities that exist in times of crisis regarding how spaces perform. As the real estate industry looks towards recovery, the need for transformation is clear. Portfolios must be rebalanced, and distressed assets repurposed. Technology must be fully embraced, and sustainability and wellness must be at the core of design and operation. The affordable housing crisis that already existed pre COVID-19 must be systemically approached to ensure access to adequate and affordable housing. If the Real Estate industry is to deliver transformation, it is more important than ever to ensure that policy, financing and business solutions are aligned in delivering better buildings and cities. The World Economic Forum has brought together CEOs from the Real Estate industry to develop a Framework for the Future of Real Estate to help drive the industry’s transition to a healthier, more affordable, resilient and sustainable world. The housing affordability crisis is not confined to any one city, country or region. It is a systemic challenge that requires a concerted and sustained response. Policy-makers must recognize that fragmented or piecemeal efforts will be insufficient. Only by addressing the underlying barriers to housing supply and creating the conditions for private investment at scale can cities preserve their competitiveness, support inclusive growth and meet the evolving needs of their populations. Create a free account and access your personalized content collection with our latest publications and analyses. 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