Housing markets worldwide have been facing significant pressure in recent years. Rising prices and shrinking supply have created persistent affordability tensions, especially in advanced economies, fuelling deep societal and economic challenges.

Despite significant regional differences, real global house prices are roughly 20% above levels in the aftermath of the great financial crisis in 2007-28. Though monetary policies tightened in response to the post-Covid inflation surge, price adjustments have been relatively modest. 

In 2024, advanced economies registered a 1% increase in house prices, led by the euro area, but these gains were offset by falls in emerging markets, with Asia dropping by 5.7%. 

Research from the Bank for International Settlements highlights the decline in housing supply elasticity over the past 50 years as a central factor driving price increases. This amplifies volatility and magnifies the effects of demand shocks and monetary policy on prices, especially in markets constrained by regulatory and geographic factors.

Looking ahead, the United Nations estimates that approximately 3 billion people will need access to adequate housing by 2030 – around 40% of the global population. That translates into a demand for roughly 96,000 new, affordable and accessible units every day. 

However, the World Economic Forum points out that the challenge is not a global housing shortage but rather a mismatch between supply, demand, affordability and access. Economic migration has resulted in surplus properties in depopulated areas alongside overcrowded cities.

Access to land is typically the biggest constraint for housing development and one of the major drivers of cost, representing as much as 80% of a home’s price in extreme cases. The McKinsey Global Institute estimates that unlocking land to the fullest extent could reduce the cost of owning a standard housing unit by up to 20%.

The housing affordability crisis has worsened significantly since the Covid pandemic, driven by soaring prices, vastly higher mortgage rates and ongoing supply shortages. It should be tackled urgently, as it has negative short and long-term consequences on social cohesion and economic growth.

Wider negative economic consequences include job market distortions as high costs push low-wage workers away from cities, exacerbating urban productivity losses and social inequality. 

Young people are disproportionately affected, with 60% of adults aged 18-39 reporting housing affordability concerns and staying with their parents for longer.

The situation where couples are unable to fund their own place to live even impacts fertility rates – indeed, housing is the second most cited barrier to childbearing in most countries in the Organisation for Economic Co-operation and Development (OECD).

There is no simple recipe to resolve this crisis but supply side reforms that remove or loosen restrictive land-use regulations and accelerate permitting processes would help.

More could be done to foster investment through public-private partnership programmes, especially for the development of social or affordable rent homes, while promoting construction productivity would boost industrial construction.

Other effective tools to increase supply involve incentivising urban regeneration, widening the housing stock to varying demand needs – such as smaller house for smaller households – and facilitating downsizing.

On the demand side, setting measures to target social problems is crucial. One of these is enabling vulnerable and young people to access the market.

Finally, leveraging technology helps enhance market data. This is especially vital in emerging markets, particularly for informal housing sectors, helping improve tenure security and access to finance. Blockchain land registries, digital platforms and geographic mapping reduce transaction costs and broaden affordability.

Global housing markets are at a crossroads and integrated policy responses are urgently required. Only through multi-faceted and coordinated strategies can policymakers build housing markets that sustain economic growth, social equity and financial stability.