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The Cities Of The Future Will Be Great If We Figure Out How To Make Them Affordable

While cities increasingly become out of reach for all but the wealthiest, there is a raft of solutions from around the world to make more housing and make the apartments that do exist cheap enough to live in.

The Cities Of The Future Will Be Great If We Figure Out How To Make Them Affordable

[Photo: scalatore1959/iStock]

No aspect of living in a city causes more misery, divides communities more deeply and is easier to fix than the cost of housing.

In places like Melbourne, Munich, Paris and New York—among the richest, most technologically and socially developed cities in the world—there is talk of crisis. The simple fact is that every year it becomes harder to live there, especially for the young, the creative and the working class.

There are shocking statistics aplenty. Here is one: in 1995, the average house in London cost around four times the average salary. Today, it costs 12 times the average salary. In Europe, there are only two major cities—Athens and Manchester—where more than half the residents think housing is affordable.

Expensive housing means less money in your pocket, a longer commute from further away, a constant pressure pushing the standard of living down towards mere subsistence. And for cities, it means the emergence of financially defined ghettos, where previously diverse neighborhoods become inhabited solely by the rich.

At its worst, this becomes the Paris problem: a rich but sterile center encircled by a ring of poverty and disadvantage that nurtures terrorism and can explode into appalling violence.

But there are things that can be done. One thing campaigners often talk about is bringing the many hundreds of thousands of homes standing vacant back into the market. Vancouver has just announced that it will impose a tax on unoccupied property to encourage owners to rent or sell (as well as a 15% levy on foreign buyers, to discourage property speculation).

[Photo: Janifest/iStock]

Paris wants to double taxes on its 92,000 second homes and quintuple them on the 100,000 homes that sit permanently empty. Even tax-averse Saudi Arabia has announced a punitive levy on undeveloped urban land whose rich owners are waiting for it to go up in value.

Nevertheless, the number of empty houses is far too small to solve the problem in itself. Paris, for example, has more than 100,000 people on its waiting list for government housing alone, to say nothing of all the millions more who do not qualify.

So some cities, Paris included, have tried to directly control prices. The French capital last year legislated that new rental contracts cannot cost more than 20% above an officially determined average. Since then prices have dropped in 30% of new contracts.

Berlin passed a similar law last year (limiting contracts to 10% above the government average), but has also added another element: landlords must now publish what they have charged in the past for any given property, in an attempt to stop wild price hikes.

Meanwhile, an unglamorous area of London, Haringey, is trying to slash one of the associated expenses by setting up its own government-run rental agency. The idea is to offer the service at cost price—i.e. half of what some estate agents are charging. The problem is that landlords haven't been signing up and at the moment there are only three flats available to view.

All of these approaches, however, are essentially trying to control the price of a limited number of houses by regulating demand. And any economist will tell you that the way to lower prices is to flood the market with supply.

So lots of cities are trying to do the obvious thing: build. As many houses as they can. As many extensions as they can. Anywhere they can.

In Ireland, all state-owned land, like bus depots and railway sidings, is now being assessed for whether it can be turned into housing. Munich has found another source of space—parking lots—and has started building apartment complexes on stilts above the tarmac. Paris is turning government buildings into social housing in some of Europe's most expensive neighborhoods. And Seattle is looking at a proposal to build apartments and green space above the 10-lane motorway that cuts like a canyon through its downtown.

Moreover, numerous North American cities—like San Francisco and Vancouver—have been encouraging the construction of "laneway houses" and "granny flats," tiny homes built in alleys, back gardens and basements, basically anywhere there's enough space for a human.

To speed up construction, Saudi Arabia is developing technology to 3D-print houses and wants to make 1.5million available in the next five years. The tech sounds fantastical but is real: Dubai wants 25% of its buildings to be 3D-printed by 2030 and the Italian firm WASP —which has the world's biggest 3D printer, Big Delta—plans to print an entire village near Bologna.

[Photo: MKHP/iStock]

But the country with the most impressive building scheme is Singapore (where homes remain expensive). From the 1960s onwards, the government has put up so many apartment blocks that four out of every five Singaporeans live in a state-built home. Not only that, but Singapore also came up with a clever plan to help people buy their homes: they can dip into their state pension funds decades early to get together enough for a deposit.

So why aren't all these expensive cities running huge construction programs? Well, there is an argument that we're not experiencing a housing crisis at all; we're experiencing intense housing inequality. After all, as prices skyrocket, it benefits all those who already own homes, at least in the short term.

And the failure to build houses is often a failure of the will to do it. London, for example, has determined the minimum number of houses it needs to build to stop the situation worsening (around 200,000 each year) and is presently falling 50% short. Meanwhile, planning rules in the adjoining country, Surrey, a wealthy commuter belt, mean it now has more land dedicated to golf courses than to housing.

If we're to stop house prices making cities unlivable, and bring about a situation where everyone can afford that minimum need—a decent place to live—we don't need a brilliant new scheme; we need to collectively decide to actually do it.

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