Housing Crisis: Why Are Homes Becoming Unaffordable?
Looking for a place to call home in the city? Be prepared as both buying and renting are taking a bigger bite out of household budgets. The UN World Cities Report 2026 paints a stark picture: homes today are less affordable than they were 20 years ago, and the squeeze is being felt most by young people, female-headed households, migrants, visible minorities, and other vulnerable groups.
While soaring property prices have boosted the wealth of homeowners, they have left many tenants struggling to save as a significant portion of their earnings goes towards rent. The report notes that housing prices rose from 9.5 in 2010 to 11.7 in 2023. In Southern Asia, the price-to-income ratio climbed sharply from 9.7 to 16.8, highlighting the growing affordability challenge, even as Europe and Northern America have largely managed to avoid a similar crisis. Experts attribute the worsening housing situation to a combination of rapid urbanisation, population growth, the formation of new households, and restrictive regulations, all of which continue to put pressure on housing supply and affordability.
Cities are growing faster than the homes. Rapid urbanization and sustained population growth are driving fierce competition for land and housing. Yet supply is failing to catch up. The global housing shortfall grew from 251 million units in 2010 to 288 million in 2023. Limited serviced land, high construction costs, and regulatory delays are all slowing delivery.
Renters are bearing the heaviest burden. Nearly half of all rental households worldwide, around 44%, spend more than 30% of their income on housing. The strain is sharpest in Sub-Saharan Africa, where low and irregular incomes, limited formal rental supply, and rapid urban growth collide. For millions, rent is no longer a manageable expense but a monthly crisis.
Inequality is making a bad situation worse. Where income inequality is high, housing affordability tends to collapse further. Higher inequality is directly linked to steeper rents, more overcrowding, and shrinking access to adequate housing for low-income groups. The gap between those who own and those who rent continues to widen.
Subsidized housing is reaching only a few. Most households are left to navigate a market that is increasingly unaffordable, with little public support to fall back on. Without broader intervention, the gap between supply and need will only grow.
India's housing reality: A closer look. The affordability crunch is especially severe in India's biggest cities. In Mumbai and Delhi, the price-to-income ratios stand at 14.3 and 10.1, respectively, putting formal homeownership out of reach for many households earning median incomes, the UN stated in its report. Limited access to formal mortgage financing further compounds the challenge, leaving many families to depend on personal savings, informal loans, or financial support from extended family members to buy a home. Global housing affordability has reached a crisis point, and the report suggests that governments must align housing with transport, employment, and social protection strategies if they are to make a real dent in the problem. Supply reform is urgent: planning bottlenecks, soaring construction costs, and weak land management have allowed demand to outstrip supply in cities worldwide. Finance must be directed at low-income families, young adults, migrants, and informal workers. Also, the cart must not be put before the horse; more homes must be built before providing rental subsidies and buyer support. Meanwhile, unchecked corporate investment is quietly pricing out ordinary households, and regulators are struggling to keep up.
