Affordable Housing: The $11 Trillion Problem

The world’s current supply of affordable housing won’t be enough to keep up with the demands of tomorrow, says Bloomberg in a recent article, citing data disclosed at the 2014 CityLab Conference.

Replacing the world’s substandard housing and building affordable alternatives to meet future global demand would cost as much as $11 trillion, initial findings in a McKinsey & Co. report to be released in October show.

But the shortage of decent accommodation for as many as 1.6 billion people also presents an opportunity for construction companies and mortgage lenders.

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By 2025, the the market for affordable-home loans could be worth as much as $400 billion a year.

“The global consulting company says governments should release parcels of land at below-market prices, put housing developments near transportation and unlock idle property hoarded by speculators and investors,” Bloomberg says.

About 330 million households — about 1.2 billion people — now struggle with substandard housing, a number that may increase to 440 million in 11 years, McKinsey forecasts.

“In Lagos and Bombay, two of the world’s fastest-growing cities, the issue of inadequate housing is particularly grim as both emerging metropolises are poverty-ridden,” Bloomberg days, noting that the affordable-housing gap amounts to more than 10% of each city’s economic output.

Read the full story here.

Written by Cassandra Dowell

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