Global Housing Affordability Crisis: 6.5 Million Units Needed Worldwide

Global Housing Supply Shortfall Exceeds 6.5 Million Units, Reports Hines

According to a recent analysis by real estate giant Hines, the global housing market is facing a significant shortfall, with an estimated need for over 6.5 million additional housing units to meet current demand. This severe shortage is exacerbating the affordability crisis in major economies, pushing property ownership further out of reach for many potential buyers. The findings indicate a stark trend toward renting, with over 80% of households in key markets displaying a preference for renting over buying. This trend is particularly pronounced in developed regions where housing markets have tightened significantly.

U.S. Housing Market Faces Stagnation Amid Affordability Issues

The U.S. housing market is emblematic of the global affordability crisis. According to J.P. Morgan Research, house prices in the U.S. are expected to rise by 3% in 2025 despite a slight easing of mortgage rates to 6.7% by year-end. This price increase, combined with stagnant demand and a creeping inventory, highlights the affordability challenges. The inventory of new homes for saleref="/for-sale/morocco/sale">sale is at 481,000, the highest since 2007, yet still insufficient to meet the demands of a growing population. The market remains largely frozen, indicating that high mortgage rates are a principal factor in restricting buyer activity.

Predicted Moderate Growth in U.S. Housing Prices Through 2029

According to a report from Norada Real Estate, the U.S. housing market will experience moderate growth over the next few years. Experts predict home prices will cumulatively increase by nearly 20% from the start of 2025 to the end of 2029. This growth rate, estimated at an average of 3.7% annually, contrasts sharply with the explosive growth witnessed during the pandemic. Such predictions underscore a stabilization in the market, implying slower but steady appreciation that could help balance supply and demand dynamics.

International Market Dynamics: Asia Pacific as a Growth Leader

The Expert Market Research report highlights the Asia Pacific region as the fastest-growing real estate market globally, driven by rapid urbanization and increasing middle-class incomes. The region's real estate market, valued at USD 4,295.21 billion in 2024, is predicted to grow at a CAGR of 6.40% through 2034, reaching USD 7,987.31 billion. Such robust growth in the Asia Pacific contrasts with the slower growth rates projected in Western economies, offering lucrative opportunities for international investors seeking diversification and higher returns.

Renting Becomes the New Norm as Buyers Face Financial Limits

As the global housing market continues to grapple with affordability issues, renting is becoming an increasingly dominant trend. According to CBS News, many regions, particularly those that saw sharp price increases during the pandemic, are beginning to cool. This cooling is attributed to buyers reaching financial limits, compelling them to favor renting. The shift toward rental properties reflects broader economic pressures, including high mortgage rates and stagnant wage growth, which have doubled potential monthly payments for buyers compared to pre-pandemic levels. This evolving preference for renting over buying aligns with the findings from Hines and other market analysts.

Future Implications: Navigating the Global Housing Landscape

Looking ahead, the global housing market presents both challenges and opportunities. As Savills notes, house prices are expected to rise by 22.2% over the next five years, with peaks in 2028 and 2029. RealEstateAbroad.com analysis suggests that investors may need to adapt by focusing on emerging markets with higher growth potential, such as the Asia Pacific region. Moreover, the trend toward renting offers opportunities for investment in rental properties, potentially yielding high returns in the face of ongoing affordability challenges. As the market evolves, strategic insights and adaptive investment strategies will be crucial for navigating the dynamic real estate landscape.