In many large cities, the cost of buying or renting a home has risen far beyond what ordinary workers can afford. In my view, this problem stems mainly from a shortage of new housing and the treatment of property as an investment, and governments can address it by increasing supply and regulating the market more effectively.
The most fundamental cause is that housing supply has not kept pace with demand. Cities attract people because they offer jobs and services, but planning restrictions, a shortage of available land and slow approval processes often limit the number of new homes that can be built. When many people compete for a limited number of properties, prices inevitably rise. A second cause is that property has become a popular investment. Wealthy individuals and companies buy homes in desirable cities not to live in but to rent out at high prices or to sell later for a profit, and some properties are left empty for long periods. This reduces the number of homes available to local residents.
Governments have several tools to tackle these causes. Firstly, they could simplify planning rules and release public land for construction, particularly near public transport, so that more homes are built more quickly. Secondly, they could fund the construction of social housing with rents linked to local incomes, ensuring that essential workers such as nurses and teachers can live near their workplaces. Thirdly, higher taxes on empty homes and on owners of multiple properties would discourage speculation and encourage owners to rent out or sell unused housing. Finally, regulations limiting sharp rent increases could give tenants greater security.
In conclusion, unaffordable urban housing is largely the result of limited supply and investment-driven demand. By increasing construction, building social housing and discouraging speculation, governments can make city homes more accessible to ordinary people.