By Mari Hansen The math is unavoidable if you stand on any street in central Sydney. $1.156 million is the median price of a home. Rent is over $3,000 per month on average. The median household income is far from both. If you walk the same exercise in Miami, London, Munich, or Auckland, you will essentially reach the same depressing conclusion using slightly different numbers.
Particularly in American media, the housing affordability crisis has been loudly framed as an American issue, resulting from regional supply constraints, specific policy failures, and the unique dysfunction of the U.S. mortgage markets. Although not wholly incorrect, that framing ignores the bigger picture. It is not an American crisis. Despite years of declared policy responses that have yielded very little, it is a global, structural issue that is becoming quantifiably worse in a number of countries.
Key information — global housing affordability crisis
| Scale of crisis | Affordability has declined across 40 countries over the past three years — worse today than during the pre-2008 global financial crisis housing bubble, per IMF research |
| Global housing need | UN-Habitat estimates the world must build 96,000 affordable homes every day to house the 3 billion people who will need adequate shelter by 2030 |
| U.S. affordability collapse | U.S. housing affordability index fell from approximately 150 in 2021 to the mid-80s by 2024 — Miami median home price now exceeds seven times median household income |
| UK affordability decline | UK affordability index dropped from 105 in 2021 to the low 70s in 2024 — similar deterioration recorded in Austria, Canada, Portugal, and the Baltic countries |
| Japan’s success model | Tokyo median dwelling price sits around $680,000 vs. Sydney’s $1.156 million — achieved through 12-zone flexible planning that lets supply respond rapidly to demand without site-by-site approvals |
| Vienna’s social housing | Austria funds Gemeindebauten (communal buildings) and rent-controlled flats through a 1% housing income tax — no deposit required for public housing, making Vienna consistently the world’s most livable city |
| New Zealand experiment | Auckland’s 2016 zoning reform — removing density restrictions across suburban areas — dramatically increased housing supply, then was largely reversed by incoming government in 2023 following NIMBYism pressure |
| Emerging market crisis | In Mumbai, rural-urban migration and rising construction costs have forced millions into informal settlements — in South Africa, rental affordability has deteriorated sharply, deepening cycles of displacement |
| Common structural barrier | Exclusionary zoning, slow permitting, and entrenched opposition to density — labeled by researchers as among the most powerful forces driving up home prices globally |
| Economic consequence | When essential workers — teachers, nurses, emergency staff — cannot afford to live near the communities they serve, urban economic growth slows and cities risk becoming enclaves of concentrated wealth |
Housing is now less affordable throughout the developed world than it was during the pre-2008 bubble that preceded the global financial crisis, according to the IMF, which tracked affordability across 40 countries using a mortgage-based index that assesses whether a typical household can make mortgage payments without sacrificing essential needs. It’s a powerful analogy. One reason for the housing crisis of 2007–2008 was that prices had risen significantly above what people could afford.
These costs decreased. They then rose once more over the next ten years, and in many cities, they even went farther. By 2024, the U.S. housing affordability index had fallen from roughly 150 in 2021 to the mid-80s. During that time, the UK dropped from 105 to the low 70s. Austria, Canada, Portugal, Hungary, and the Baltic states all experienced similar declines. The structural issues were not brought about by the pandemic or the subsequent interest rate cycle. They simply made it impossible to ignore them any longer.
Housing economists tend to be both impressed and a little irritated by the one nation that has avoided much of this: Japan. Tokyo had the most expensive real estate in the world thirty years ago. Then there was a catastrophic market crash, and while other nations recovered their prices, Japan did not. Instead, Japan continued to build so steadily that supply satisfied demand rather than chasing it. Tokyo, a city of about 14 million people, has average monthly rent of about $2,500, which is less than Sydney’s. Social housing is not the mechanism.
The percentage of socially rented homes in Japan is less than 5%. It’s more straightforward: Japan’s national zoning system, which is based on 12 categories determined by nuisance tolerance rather than permitted use, allows developers to swiftly replace older, smaller buildings with denser ones if demand increases in a neighborhood. No long-term planning conflicts. No site-specific authorization. Demand is almost always followed by supply. It sounds clear. The opposite has been done by nearly all other developed nations.
In 2016, Auckland, New Zealand, attempted a miniature version of the Japanese strategy by allowing higher-density development and lifting density restrictions in some suburban areas. It was successful. In those areas, supply grew more quickly than in any other part of the nation. It was then made a national law by the Labour government. After a new government was elected in 2023, the majority of it was reversed due to pressure from suburban residents who did not want denser neighborhoods close to their existing homes. According to the officials, it “got it wrong.” It’s difficult not to interpret that incident as a case study of how housing policy operates in reality—a successful intervention that was abandoned due to pressure from those who are most at ease with the status quo, namely homeowners.
A completely different tradition is represented by Vienna. For almost a century, the city of Vienna has used the 1% income tax that Austria levies on housing (employers also contribute) to construct and maintain what are known as Gemeindebauten, which are publicly owned communal buildings where residents pay no deposit and rents are kept well below market rates.
Approximately 60% of Vienna’s population resides in housing that is either publicly regulated or subsidized. The city is frequently rated as one of the most livable in the world, but housing economists tend to add an asterisk to this ranking, pointing out that the model was developed over many generations and is practically impossible to quickly replicate anywhere that hasn’t been doing it since the 1920s. For legislators who would prefer not to try, that observation is both true and somewhat convenient.
All of this is motivated by an urgent need. Something more than a real estate market goes wrong when emergency responders, nurses, teachers, and bus drivers can no longer afford to live close to the cities where they work. Services become scarce. The length of commutes is increasing. Younger workers decline jobs in pricey cities, and companies find it difficult to fill open positions.
According to the IMF’s research, housing has surpassed healthcare and education as the top priority for households in all of the countries surveyed. That is not a typical outcome. For a significant and increasing portion of the population, the fundamental expectation of stable, affordable housing—which is so fundamental that most policy frameworks treat it as a background assumption rather than a live question—has started to truly fail.
What actually breaks the political impasse in the majority of nations is still a mystery. Part of the reason Japan’s model works is that it developed its planning standards prior to the period of widespread homeowner activism. The 100-year institutional foundation of Vienna’s model makes it difficult for any one government to overthrow. The experiment in New Zealand demonstrated that reform is both feasible and reversible in a single election cycle. The crisis is worldwide. Thus far, the solutions are dispersed, sluggish, and heavily reliant on political circumstances that are absent in the majority of the areas that most urgently require change. Regardless, the calculation of the daily need for 96,000 affordable homes continues.