A lack of affordable housing has long been a major global issue both in the developed and developing worlds. This crisis doesn’t just stem from a person’s ability to rent or buy a home, but also the long-term affordability of being able to live in it comfortably. Of course, we think of big cities where vital workers are priced out of the rental market, let alone homeownership. A 2019 survey of 200 cities around the world found that 90% were unaffordable for low- and medium-income workers. With the average price of a home in Hong Kong being more than 20 times that of the average household income.
Many economists have blamed the ‘financialization’ of property as an investment opportunity for the wealthy, leading to the oversupply of luxury housing and a tangible lack of affordable housing options in the largest cities. Yet, even away from these cosmopolitan hubs, those on lower incomes are struggling to survive with the lowest-paid workers in America having to put more than half of their wage towards rent.
Addressing the problems
Many factors contribute to this lack of affordability. Housing costs have been rising, even with the cost of house building materials like aluminium and steel soaring. This impacts the price point of a finished development, and these prices are rising much faster than potential buyers’ incomes. Demographic changes like population growth and ageing along with a scarcity of land for new builds is also proving a problem.
Yet no problem is insurmountable and already we are seeing the introduction of innovations in construction and the development of new financial models designed to bring affordable housing within reach for many millions of people. Cities across the world have been working on new solutions that could be adopted far and wide. To tackle one root cause, in India a new, much cheaper construction material, glass fibre reinforced gypsum (GFRG), is being utilised to cut costs from the start – savings that will be passed on to buyers.
The first steps on the ladder
As the housing industry and government-backed schemes gain momentum, so the opportunities for low-income workers and first-time buyers have opened up too. In the UK, there is already a completely free mortgage advice service from Trussle, an organisation dedicated to making homeownership available to all regardless of credit history, low or fluctuating income. Their experts consider each person’s circumstances before finding the mortgage products that will be most suitable to allow them to buy an affordable home as well as ensure they can enjoy homeownership in the long run.
This service is a step in the right direction and one which could be adopted in other global economies to make buying more accessible. Other infrastructure concerns would need to be addressed, such as the availability of public transport and services and the development of safe, secure living spaces in proximity to employment markets. But it seems the world has woken up at last to tackling this crisis head-on, and sooner rather than later the hard workers on low incomes will be waking up in their own, affordable homes.
