In many major cities, an average salary can no longer buy an average home. This essay will analyse the causes of unaffordable housing and then propose measures governments should take.
Two causes stand out. The first is that demand has been swollen by forces beyond people simply needing homes: decades of cheap credit, investors treating apartments as financial assets, and short-term holiday rentals have poured money into housing precisely as populations concentrate in a handful of successful cities. The second cause is restricted supply. Planning rules, slow permits and resistance from existing homeowners mean far fewer homes are built than these cities need, and much of what is built is luxury stock aimed at investors rather than residents.
Governments can act on both sides of this imbalance. To cool speculative demand, they can tax empty properties and second homes, restrict short-term rental platforms in housing-starved districts, and give first-time buyers priority over investors — steps cities from Vancouver to Amsterdam have already begun taking. To expand supply, the state must make building easier and build itself: simplifying approval for dense housing near public transport, releasing public land, and constructing social housing on the scale of Vienna, where publicly built homes accommodate much of the city affordably and well. Singapore shows what sustained public building can achieve: roughly ninety per cent of its citizens own their homes.
In conclusion, housing has become unaffordable because speculative demand has raced ahead of deliberately constrained supply. Taxing speculation while building boldly attacks both causes at once, and the cities that have done so prove the crisis is a policy choice, not a law of nature.