Blog
28.1.18

Housing Affordability and Smart Cities

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Only a few decades ago there were just a handful of megacities around the world. Now there are already more than one thousands cities with between one and two million inhabitants and forty megacities with more than ten million.

If we look at population growth in these megacities, it is interesting to note that in general there are more urban deaths than births. The growth is totally driven by migration. In China alone, six hundred million people will move into cities over the next ten years. A similar trend will take place in Africa, where the population will double to two billion by 2050.

Looking towards the future, the largest cities are continuing to grow the fastest. These are also the cities that are hosting the poorest people.

Another interesting statistic, that is relevant to housing affordability, is the fact that one in one thousand people are making long journeys to get to the cities. This means that approximately seven million people are continuously on the move, so it’s no wonder that services such as Airbnb and Uber are flourishing. This massive amount of travel also makes it possible for airlines to offer very affordable air tickets, which only further increases the level of people movement.

All of this has its effect on housing affordability, which has been sharply decreasing over recent years in the larger cities. While there is a stark difference between those large cities in the developed world and those in developing economies, housing affordability across all of them is decreasing.

Across the world, we see that those who cannot afford the high house prices in and around the centres are pushed further and further out. Megacities are also notorious for poor mobility, where travelling to and from work from the outer areas can take up to three or four hours each way. This is unsustainable. In order to maintain a city’s sustainability, all levels of labour need to be available. Yet the way housing affordability is dropping, large numbers of workers can no longer afford to live in the city or even close to where the work is. This, in turn, will make work and life in cities increasingly less economically viable for everybody.

Several cities are now implementing policies to manage this situation with Amsterdam, Venice and Barcelona being some of the leading cities to address this situation in a strategic and structural way. However, most cities have no strategic plan in place, whilst others resort to temporary band-aid solutions. In general, governments are doing a poor job of addressing the issue of housing affordability.

For real housing affordability solutions, we have to look at projects developed in smart city environments, for example in London, Copenhagen, Amsterdam, New York City and Barcelona. These cities have exactly the same problems as many other metropolitan cities around the globe, with average house prices close to or even above the one million dollar mark. It is innovative organisations, rather than government policies, that are succeeding in addressing this issue.

Some projects are driven by local communities and are often facilitated by local governments that lean more towards the left of politics. We also see some innovative projects led by universities and large companies. In both situations, we are looking at campus projects, many of which are based on smart buildings with zero-net energy and water use.

At the upper end of the market, we also see developers coming up with new solutions due to customer demand for more ‘smart’ developments. This can free up housing in the suburbs and we do see these projects trickling down to social housing estates as well.

Sydney is addressing the situation by creating three different economic centres, each with their own mobility solution in order to prevent everybody moving into the heart of the ‘old’ city.

However, there is still a very long way to go before we see more balanced policies in relation to housing affordability for all levels of income.

As smart cities require a holistic approach, it offers a far more integrated opportunity to address all of the problems these large cities are facing, including housing affordability.

Global Seven News

Paul Budde