THE GLOBAL CRISIS OF URBAN HOUSING AFFORDABILITY

Edward GoetzUniversity of Minnesota

IACP

Beijing

2

July

2016

The unaffordable city

https://nextcity.org/features/view/sao-paulo-housing-crisis-master-plan-zeis-haddad-habitat-iii

From McKinsey Global Institute, Blueprint for addressing the global affordable housing challenge, 2014.

A sampling of (Un)affordability rankings

Monthly rents £

1 Monaco 5931

2 London 5683

3 Bermuda 4182

4 New York 4057

5 Hong Kong 4013

6 Tokyo 3856

7 Paris 3787

8 Moscow 3749

9 Singapore 3159

10 Geneva 3050

A sampling of (Un)affordability rankings

Monthly rents £

What US$1m will buy

Square meters

1 Monaco 5931 Monaco 15

2 London 5683 Hong Kong 20

3 Bermuda 4182 London 22

4 New York 4057 New York 27

5 Hong Kong 4013 Geneva 40

6 Tokyo 3856 Sydney 40

7 Paris 3787 Singapore 42

8 Moscow 3749 Shanghai 48

9 Singapore 3159 Paris 57

10 Geneva 3050 Beijing 58

A sampling of (Un)affordability rankings

Monthly rents £

What US$1m will buy

Square meters

Median Multiple

Med price / med inc.

1 Monaco 5931 Monaco 15 Hong Kong 19.0

2 London 5683 Hong Kong 20 Sydney 12.2

3 Bermuda 4182 London 22 Vancouver 10.8

4 New York 4057 New York 27 Melbourne 9.7

5 Hong Kong 4013 Geneva 40 San Jose 9.7

6 Tokyo 3856 Sydney 40 Auckland 9.7

7 Paris 3787 Singapore 42 San Francisco 9.4

8 Moscow 3749 Shanghai 48 London 8.5

9 Singapore 3159 Paris 57 San Diego 8.1

10 Geneva 3050 Beijing 58 Los Angeles 8.1

Rise in housing prices variable across cities

Ghost cities

Demolition of unused apartment building in Xi’an, November 2015

http://en.people.cn/n/2015/1116/c90000-8977146.html. CRI on-line

from, Housing for Inclusive Cities: The Economic Impact of High Housing Costs, Global Cities Business Alliance

“The great cities are becoming elite citadels…Global cities are turning into vast gated communities where the one percent reproduces itself.”

Simon Kuper, Financial Times (2013)

Nomenclature of extreme wealth

“alpha territories” Global power brokers

Voices of authority

Business class

Serious money

One Hyde Park, London

Kensington Palace Gardens

15 Central Park West

Jakarta

Nomenclature of extreme wealth

“alpha territories” Global power brokers (GPB)

Voices of authority (VA)

Business class (BC)

Serious money (SM)

Ultra High Net Worth Individuals (UHNWIs) (net worth > US$30 million, excluding primary residence)

Nomenclature of extreme wealth

“alpha territories” Global power brokers (GPB)

Voices of authority (VA)

Business class (BC)

Serious money (SM)

Ultra High Net Worth Individuals (UHNWIs) (net worth > US$30 million, excluding primary residence)

High Net Worth Individuals (HNWIs) ( > US$1 million investible assets)

Nomenclature of extreme wealth

“alpha territories” Global power brokers (GPB)

Voices of authority (VA)

Business class (BC)

Serious money (SM)

Ultra High Net Worth Individuals (UHNWIs) (net worth > US$30 million, excluding primary residence)

High Net Worth Individuals (HNWIs) ( > US$1 million investible assets)

61%

Nomenclature of extreme wealth

“alpha territories” Global power brokers (GPB)

Voices of authority (VA)

Business class (BC)

Serious money (SM)

Ultra High Net Worth Individuals (UHNWIs) (net worth > US$30 million, excluding primary residence)

High Net Worth Individuals (HNWIs) ( > US$1 million investible assets) 70%

61%

Beijing

Shanghai

Rate of growth of UHNWIs in China greater than global average

Rank City # of UHNWIs

1 New York 5600

2 London 4905

3 Moscow 3457

4 Los Angeles 2820

5 Singapore 2360

6 Beijing 2073

7 Tokyo 2035

8 Chicago 2030

9 Zurich 1754

10 Seoul 1750

Where UHNWIs live, 2016

Housing habits of the super rich Residential property is roughly 30% of wealth

Average 3.7 homes

“housing as such an incidental adornment of wealth that it is barely or never lived in…” (Atkinson, Burrows, &

Rhodes, 2016)

“property is not just a place to live”

Urban

Pay in cash

Loss of housing stock to short term rentals

Airbnb

San Francisco – up to 40% of rentals taken off the market for short term rental

Paris – 20,000 to 40,000 listings

Loss of housing due to demolition & redevelopment

Loss of housing due to demolition & redevelopment

Expensive v. expansive cities

San Francisco

Tokyo

Social housing in the 1st arrondisement

(Photo: Getty Images)

Preservation of “naturally occurring affordable housing”

http://neworleans.indymedia.org/news/2006/06/7855.php

Thank you

Resources Global Cities Business Alliance (2016) Housing for inclusive cities:

The economic impact of high housing costs.

Hay & Beaverstock (2016) Handbook on wealth & the super rich.

Knight Frank (2016) Wealth report.

Knight Frank (2014) Wealth report.

LaVecchia and Mitchell (2016) How rising commercial rents are threatening independent businesses, and what cities are doing about it.

McKinsey Global Institute (2014) A blueprint for addressing the global affordable housing challenge.

Webber & Burroughs (2015) “Life in an alpha territory” Urban Studies

From, Knight Frank, Wealth Report, 2014.

Sao Paulo. https://nextcity.org/features/view/sao-paulo-housing-crisis-master-plan-zeis-haddad-habitat-iii