How we got here: the forces behind today's housing conditions

Most arguments about housing begin too late. They start with last year's prices, last month's interest rate, or last week's political target. Those facts matter. They do not explain how the world arrived at a point where UN-Habitat can say that 2.8 billion people lack adequate housing[1] while, in the same decade, average real house prices across OECD countries rose by more than 40%.[4]

The Housing Future Project uses a simple discipline. The past is for causes. The present is for evidence. The future is for scenarios. This essay is about causes — and about the temptation to pretend there was only one.

Several crises sharing one name

In Nairobi, Lagos, or Dhaka, the housing problem is often the absence of an adequate dwelling: secure tenure, water, sanitation, enough space, a location that does not lock a household out of work. UN-Habitat places 1.1 billion people in slums and informal settlements inside the wider 2.8 billion estimate.[1] In Toronto, London, or Los Angeles, almost everyone is housed, and the crisis arrives as a ratio: prices and rents against pay.

The world population reached 8.2 billion in 2024.[2] About 57.7% of people now live in urban areas as nationally defined.[3] Urbanization is not new. What is new is the combination of urban concentration, slow housing production in the most productive cities, and a financial system that treats dwellings as stores of wealth.

Land, rules, and the right to add homes

Housing is not manufactured like electronics. It is attached to land, and land is governed. In many high-income cities, the decisive historical force of the late twentieth century was not a lack of bricks. It was a tightening of what could be built on the most valuable land: height limits, single-family zoning, Green Belt designations, parking minimums, heritage overlays, and slow permission systems.

Those rules had reasons — amenity, environment, incumbent homeowners' interests, distrust of developers. Reasons are not the same as costless choices. Once a city makes it hard to add homes where jobs are, prices become the rationing device. OECD work in 2026 again lists restrictive land-use policy among the supply-side drivers of the affordability gap.[5]

Finance made housing a better asset

Cheap credit, tax treatment of owner-occupation, and the growth of housing as a household wealth engine changed demand. When incomes, population, and credit grow faster than permitted homes, the extra buying power bids up the existing stock. That is why a fall in mortgage rates can improve a monthly payment and still leave the next buyer facing a higher price.

Construction did not become a high-productivity industry

In many countries, housing production remains local, cyclical, and exposed to weather, land assembly, and on-site labour. When costs rise — materials, labour, finance — private builders slow down rather than lose money. That is rational for a firm. It is brutal for a housing system that needs a steady flow of completions.

People moved. Homes did not.

Households form where work, safety, and services are. If those places refuse growth, people either overcrowd, commute farther, or bid against each other. The UN's population work is unambiguous about continued urban concentration even as global population growth slows.[2] A slower-growing world can still have ferocious local housing shortages.

1. Post-1945

   Large high-income countries expand homeownership and suburban stock. Many lower-income cities grow faster than planned infrastructure.

2. 1970s–1990s

   Land-use containment and local opposition harden in many wealthy metros. Housing becomes a larger share of household wealth.

3. 2000s

   Credit expansion, then the global financial crisis, leave a long construction scar in several countries.

4. 2010s–2020s

   Urban job growth, low rates, then pandemic price spikes. OECD real prices end the decade far above where they began.[[4]]

What follows from the history

If the causes are mixed, the remedies will be mixed. More social rental housing will not by itself open exclusionary land. Faster factories will not by themselves rewrite a Green Belt. Cheaper mortgages will not by themselves house 1.1 billion people in informal settlements. The past is useful when it stops us from selling one lever as a complete story.