In the Age of Cities: The Impact of Urbanisation on House Prices and Affordability

Abstract

Rapid urbanisation as well as demographic and technological changes are among the trends reshaping the cities in which we live, work and play. This paper explores how these trends, the growing diversity of household types and demands, and the development of residential real estate as a mainstream investment sector impact the housing market in major cities. These factors are contributing, in many cities, to rising house prices, affordable housing shortages and inflexible housing stock. These problems in turn threaten not just financial market stability, but also quality of life and integration, as well as city competitiveness on the national and international scale. In response, the Urban Land Institute (ULI) recommends that cities should focus on creating more housing, including a more diverse range of options so that the housing stock can better meet the needs of different household types and income levels. By applying the principles of “good density”-mixed, use, well-connected environments with high-quality placemaking-integrated urban environments can be created that cater to a range of income and population groups and contribute to the vibrancy and authenticity of a city.