Knight Frank has just released a new report called Urban Futures, which looks at affordable living solutions for economic longevity. Below is a brief summary of the report.

Affordability for prosperity
The Economist magazine reported in 2016 reported that 60m rich-world households spent more than 30% of their income on housing; and in the emerging world, 200m households lived in slums. With rapid urbanisation, these numbers were only set to grow. In the three years since then, global house prices have been rising by 6% more than incomes.

Liam Bailey at Knight Frank says: “The issue of affordability is not just limited to one or two cities globally. While Hong Kong, San Francisco and London might spring to mind as the cities at the sharp end, the issue of how to ensure workers can access housing is relevant to almost all successful urban centres. In many cases it is economic success itself that worsens the situation, attracting workers and pushing up the cost of accommodation as demand outpaces the ability of cities to provide new housing.”

The most common definitions of affordability look at the relationship between house prices and rents against income. The Demographia International Housing Affordability Survey, for example, defines ‘affordable’ locations as those where house prices are no more than three times average household incomes. The UK charity Shelter believes that affordability entails spending 35% or less of your net household income on accommodation.