Bridging the global housing gap..

Every day, some 200,000 people are moving into cities across the globe. Finding an affordable place to call home is not just a worry for young people in the developed world. It has become a global problem, affecting everyone from the least advantaged to the middle-classes.

In fact, housing inequality may well be the biggest contributor to rising economic inequality.  The main catalyst to housing inequality comes from the growing gap within cities and metro areas. Factors such as safety, schools, and access to employment and local amenities lead individual actors to value one neighbourhood over the next.

In Africa, annual home completions have increased by just over 10% in the last 20 years, falling far short of demand and driving prices five times higher. This will eventually constrain economic growth.

Chronic shortage
As cities become more economically powerful, the demand for urban land is leading to escalating housing costs and competition. With housing as an investment vehicle, there is an oversupply of luxury housing and a lack of affordable housing in many cities across the world. 

The global housing crisis is defined by a chronic shortage that could lead to urbanization without growth, something that has happened before in history. But there are actions we can take to prevent housing from being the main obstacle to growth.

Demand side efforts such as subsidies and financing solutions cannot close this housing gap alone. Instead, cities urgently need to ramp up home building to ensure that housing shortages do not become a drag on economic growth. However, this is easier said than done, as shown by efforts over the past decades in most of the world’s growing cities.

Public-sector property
Every city has to address three common challenges: finding available land, removing barriers to development, and making the construction sector more productive. Local governments are sitting on part of the solution to grow supply, given the vast portfolio of real estate owned by the public sector in every city. Urban real estate owned by the public sector has a value equivalent to annual urban GDP, and represents a quarter of the total value of the urban real estate market.

With a consolidated list of assets in hand and a proper understanding of their market value, it would be possible to design a business plan for how best to use these assets, and to evaluate which of them could be better redeployed for housing. 

Pointing out that governments themselves are actually sitting on what is the biggest source of available land may sound like a simplistic solution to the problem of how to increase supply.