The Global Housing Crisis: Why Homeownership is Slipping Out of Reach in India and Beyond
Have you ever felt that you might not be able to afford to buy your own house? If yes, you are not alone. Across countries, housing prices are slipping out of the budget of most ordinary people. The world is in the midst of a housing crisis as more people move to urban areas and not enough houses are being built, according to the United Nations’ recently released World Cities Report 2026: The Global Housing Crisis: Pathways to Action. The report also flags financialisation as one of the major factors behind this crisis.
Up to 3.4 billion people — four out of every 10 people worldwide — lack access to adequate housing. Of this, more than a billion live in informal settlements such as slums, according to the report by the United Nations Human Settlements Programme (UN-Habitat), the highest recorded number. It was released at the Thirteenth World Urban Forum, which was organised by UN-Habitat in Baku, Azerbaijan.
At the same time, housing affordability pressures continue to intensify. If a household spends more than 30% of its budget on housing, it is considered housing stress-burdened. Globally, 44% of households spend more than 30% of their income on rent.
For prospective buyers, affordability is measured using the house price-to-income ratio: housing is considered affordable when the median house price is no more than three times the median household income, while ratios above five indicate severe unaffordability.
Central and Southern Asia, including India, have seen the sharpest relative rise in price-to-income ratios of any region — up 73% between 2010 (9.7) and 2023 (16.8).
In 2018, more than half of the new housing units built in the eight largest Indian cities were in the affordable housing segment. This has declined to fewer than two out of every ten units built by 2025, the report notes. Developers prioritise luxury units due to higher margins and demand, placing homeownership out of reach for most families.
The roots of the crisis go back to the post-World War II period, the report notes. Facing severe housing shortages and economic depression, governments invested heavily in public housing. But international agencies, including the United Nations, International Labour Organization (ILO) and World Bank, rarely supported this model. Instead, they advocated greater private sector involvement, arguing that mass public housing was too costly, especially for newly independent and transitioning economies.
This critique of public housing laid the foundations for two dominant approaches that continue to shape housing policy: ‘aided self-help’ — where households build or improve homes with support — and the ‘enabling approach’, under which governments facilitate construction by private players, community associations and others. Yet these programmes often failed to reach the poorest households and sometimes displaced the very populations they intended to support, the report states.
The state has not only built fewer homes but has also often built them in the wrong locations. A detailed analysis of annual DDA reports by the Centre for Policy Research’s Cities of Delhi project, directed by Partha Mukhopadhyay and Patrick Heller, found that the agency consistently fell behind housing targets and that construction skewed sharply toward higher income groups. “We calculate that of the 979,073 houses built between 2003 and 2010, fewer than 23,000 (2.3%) were built by the DDA,” it said.
The report also notes that housing must be developed where livelihoods and social infrastructure, such as parks, exist; otherwise, people are unwilling to relocate. More than 50,000 government-built flats remain unoccupied on Delhi’s outskirts due to poor connectivity, lack of livelihoods and political tussles.
According to the report, financialisation is one of the major drivers behind the crisis. It refers to the increasing involvement of financial actors, investment instruments and large pools of capital in housing and land markets. Mortgage lenders, private equity funds and corporate landlords have expanded their role in rental and ownership markets, often seeking long-term income and asset appreciation.
In India, access to home loans increased after liberalisation in 1991 made homeownership more widely accessible. However, the report states that globally, this increased availability of credit allowed lending to grow faster than the construction of new homes. This created feedback loops in which easier access to credit pushed up prices more quickly than supply could respond. In some cases, well-intentioned housing subsidies also contributed to price increases by raising purchasing power without expanding supply. Declining interest rates from the 1980s further encouraged investment in real estate, intensifying demand and price growth.
The effects of financialisation vary depending on local conditions, regulation and supply. In markets with limited supply, informal incomes or weak tenant protections, increased capital flows can lead to evictions, rent hikes and speculative redevelopment. In India, Non-Resident Indians (NRIs) and investors purchase luxury housing as a form of investment. The Supreme Court even flagged the issue last year, calling speculative activity a slow poison for the residential real estate and the middle class as it artificially inflates demand, fuels asset bubbles and prejudices genuine home buyers.
The report also notes that in better-regulated environments with stronger planning systems, investment has supported new construction, upgrades of older housing and professionally managed rental stock.
