Countries Struggle With Affordable Housing

Access to affordable housing – a basic human need and central dimension of well-being – has become increasingly challenging in many countries, says the OECD in its ‘Brick By Brick: Building Better Housing Policies’ report. House prices and rents have been rising; thus, housing costs have been absorbing an increasing share of household income relative to other spending items, such as health, education, or transport. During 2005-15, this share rose by five percentage points on average, amounting to 31 per cent of income for middle-income households across most OECD countries. Disadvantaged social groups are being particularly affected, many of whom find it difficult to afford quality housing, even more so in areas that are close to jobs. To a large extent, the affordability challenge has its roots in the housing sector’s failure to supply enough dwellings where demand is strong, such as in job-rich urban areas. In part, these supply-demand mismatches stem from geographical constraints and regulatory restrictions in many cities, including those related to land-use and zoning provisions. Other factors, such as rental market restrictions and landlord tenant regulations, also have a bearing on the efficient functioning of real estate markets, as they can discourage investment in the construction and upkeep of dwellings. A third key challenge alongside affordability and efficiency is related to environmental sustainability. The residential sector accounts for 17 per cent of energy and process-related emissions of greenhouse gases and 37 per cent of emissions of fine particulate matter globally. Therefore, efforts to meet agreed emission targets require ambitious initiatives to reduce the carbon footprint of construction and improve the energy efficiency of the existing building stock. Because dwellings have a long lifespan, efforts in this area have long-lasting consequences for the environment. These and other challenges and associated policy choices will need to be considered against a background of sizeable shifts in technology, tastes, and preferences, as well as evolving demands that are shaped by secular trends, current policy settings, and future reforms, it says.