The world is in the grip of a housing crisis and its impact is being felt in every corner of the globe. From San Francisco’s sprawling tent cities to Hong Kong’s infamous cage homes, millions are struggling to meet that most basic of human needs - a safe and secure place to live.
But this isn’t just a human tragedy - it’s also an issue of crucial importance to investors. As the housing crisis deepens, its ripple effects are being felt across industries and markets, creating a new landscape for property investment and development that is being shaped by everything from a changing political climate to new advancements in 3D printing and construction robotics.
How can property investors understand and navigate the intricacies of the housing crisis to not only position themselves for success but also contribute to the search for long-term solutions?
Housing crunch: the fundamental imbalance behind the crisis
The phrase ‘global housing crisis’ has made the headlines across the world, but what does it actually mean?
Simply put, it refers to a mismatch in the demand and supply of affordable and appropriate housing, which in turn can lead to profound and cascading economic, social and political problems.
On the demand side, one of the most significant - and intractable - causes is relentless, explosive population growth. Last November the world’s population topped 8 billion and, according to the United Nations, is set to grow to 9.7 billion by 2050.
At the same time rapid urbanisation, shifting demographics and widening income inequality are exacerbating the demand-supply mismatch by changing the composition of households and making it more difficult for those on lower incomes everywhere to afford a home.
On the other side of the coin - the supply side - several factors have stifled the construction of new housing units. Scarcity of land, lending and labour - along with restrictive planning laws - are all contributing to a scarcity of supply worldwide. The problem is particularly acute in urban areas where land availability is low supply and planning regulations can be high.