In 2026, a mounting housing crisis in Western nations has finally forced its way onto the agenda of some of the world’s richest governments.

In the UK, a landmark renters’ rights law took effect in England and Wales on May 1, ending “no-fault” evictions in one of the country’s biggest private-rental reforms in decades.

Across the Channel, the European Commission and Parliament have launched a new push on housing affordability, while in Washington, the United States Senate has advanced a rare bipartisan bill aimed at loosening barriers to new construction and expanding affordable housing supply.

Experts say the lack of affordable housing is becoming a widespread problem in the Western world. From London to Toronto, Berlin to Sydney, as the rise in rents and home prices has outpaced wages, younger buyers are being locked out of ownership altogether, and governments are under growing pressure to decide whether housing should be treated primarily as a basic need or a financial asset.

“In Canada, and in some other Western European countries, from the onset of neoliberalism, which really started to take hold in the late ’70s, early ’80s, it was chipping away [at public spending on housing],” Leilana Farha, global director of THE SHIFT, an international human rights organisation focused on housing, told Al Jazeera.

“If there was an affordability crisis before the global financial crisis [of 2008], it was really for the lowest-income people. And that’s because the chipping away that neoliberalism did was very pointed against social housing [while] privatising and eliminating [existing] social housing.”

In February, Dutch Prime Minister Rob Jettan pledged to build 100,000 homes per year, with 30 large-scale new housing developments spread across the Netherlands. During his 2025 election campaign, he stated: “Every pig in this country has a roof over their head, but a student or a young person can’t even find an affordable broom closet.”

But what does “unaffordable housing” actually mean in real terms, for renters, homeowners, and the people shut out of housing altogether?

What does ‘affordable housing’ mean?

The lack of affordable housing relates to the fact that, for some time, the cost of basic housing has been rising faster than people’s incomes, forcing households to spend so much on rent, mortgages, utilities and related costs that there is increasingly too little left for food, healthcare, childcare, transport or savings.

Internationally, housing is often considered unaffordable when costs exceed 30 percent of household income, according to the United Nations Human Settlements Programme (UN-Habitat), which focuses on sustainable urbanisation, while the OECD uses a stricter “housing cost overburden” measure that captures households spending more than 40 percent of disposable income on housing.

But in many cities, that threshold no longer captures the full scope of the cost of housing – both for rented accommodation and home ownership. Families may be paying considerably more than that 30 percent threshold, living in overcrowded homes, moving farther from jobs and schools, delaying homeownership, or relying on debt simply to stay housed. Experts worried that unaffordable housing was not just a financial squeeze, but a driver of inequality.

According to the June 2025 State of the Nation’s Housing report by the Joint Center for Housing Studies of Harvard University, not enough houses suitable for families are being built: “The boom in multifamily construction is ending. The slowdown in new construction, combined with high demand for rental housing, suggests rental markets are likely to tighten further in the near term.”

Was housing ever affordable?

For much of the 20th century, housing affordability in richer and Western nations was supported by a mix of social housing, rental accommodation construction and lower-cost homeownership. Experts say this was because housing was regarded more as a human need than an investment tool.

“In Canada, in the ’60s and ’70s, there was a real understanding of how essential a home was to existence, and there was an understanding that there should be a whole swath of housing opportunity. There was social housing, there was rental housing that was being built, there was homeownership options and new mortgage products,” said Farha.

For the first half of the 20th century, governments of wealthy countries were largely expanding access to affordable housing: The UK used the 1919 Addison Act, and later grants to local authorities, to expand council housing. The US created a federal public-housing framework through the 1934 National Housing Act, and the 1937 Wagner-Steagall Act created the US Housing Authority. In 1938 and 1945, Canada institutionalised federal housing intervention through the National Housing Act and the Canada Mortgage and Housing Corporation (CMHC), which provides access to funding for lenders. Singapore’s Housing and Development Board (HDB) made public housing a central state project in 1960.

As a result, housing was significantly cheaper in wealthy nations during the 20th century than it is now. According to data from the investment bank Schroders, the average house price was four times the average annual income in the UK in 1957.

But the housing affordability crisis began to deepen as many governments scaled back public and social housing investment later in the 20th century, leaving private markets to increasingly determine not just housing prices, but access to neighbourhoods, cities and opportunity. By November 2022, the average house cost nine times annual income, according to Schroders.

Over the past 50 years in the US, housing prices have also increasingly outpaced wages. Harvard University’s 2025 The State of the Nation’s Housing report show that the US national price-to-income ratio reached 5.0 in 2024, compared with 4.1 in 2019 and an average of 3.2 in the 1990s.

According to Farha, “neoliberal” policy in the UK and US “hollowed out” public housing. In the UK, Prime Minister Margaret Thatcher’s Right-to-Buy programme in the 1980s gave council tenants a route to home ownership but simultaneously reduced the UK’s social-housing stock, while Reagan slashed federal housing support in the US. This financial liberalisation changed housing from a social good into something increasingly shaped by markets and private capital.

How government policy shifted from public to private housing

The gradual privatisation of housing in the late 20th century has lingered on into the 21st century. According to the OECD’s 2024 affordable housing overview, public investment in housing development across OECD countries was “nearly cut by 90 percent between 2009 and 2016″.

As policy shifted away from large-scale public housing construction and towards vouchers, tax credits and incentives for private developers, this increasingly opened the door for institutional investors to participate in the housing market.

According to the 2024 OECD housing report, the following statistics demonstrate how governments in OECD countries are pulling back from housing investment:

• Total public investment in housing and community amenities dropped by nearly 50 percent between 2009 and 2016
• Total public investment in housing development alone was cut by nearly 90 percent between 2009 and 2026

These drops show how housing has been transformed from shelter into an asset class, experts say.

“There is also evidence that institutional investors increasingly use the high demand for private rental apartments and engage in providing homes under overpriced and insecure circumstances,” the Leibniz Institute for Research on Society and Space (IRS) reported in 2023 in its study of housing policy under conditions of financialisation. “Summing up, it can be stated that institutional investors have hardly helped to reduce affordability pressures, at the best. At the worst, they have contributed to growing housing costs and made profit from exploiting the existing housing shortage.”

Since the global financial crisis of 2008, huge flows of capital have moved into residential real estate, turning rental housing into a major investment target across Western nations, generally, Farha said.

When profit-driven investors focus on housing, profitability becomes the priority. That creates pressure to move out existing tenants in affordable apartments, especially where landlords can reset the rent once a unit becomes empty.

Can the housing affordability crisis be fixed?

According to the UN-Habitat 2025 Adequate Housing For All report (PDF), more than 2.8 billion people are facing some form of housing inadequacy, including 1.1 billion people living in informal settlements and slums. In places affected by conflict and displacement, the shortage can become extremely challenging for those in high-housing-deficit locations.

In many Global South economies, the housing crisis is about access to basic shelter, infrastructure, land rights and displacement. In many wealthier OECD countries, however, it is more often about affordability, rising rents, financialisation, homelessness, and the decline of public or social housing.

The evidence there suggests that the housing crisis won’t be solved by more homebuilding alone.

The 2024 UN-Habitat report stated: “Without a long-term strategy to guide investments, the rapid production of new housing may lead to a mismatch between the housing stock and actual housing needs. Without a long-term strategic framework and a focus on appropriate density, the production of new housing units may lead to poor spatial planning and increased socioeconomic inequalities.”

According to Farha, a starting point would be treating housing as a basic human right rather than an investment opportunity.

“Government plans to address the housing crisis will always miss the mark if they don’t identify housing as a human right and follow through on what that means,” she said.

Even US President Donald Trump appears to agree with this. In his speech at the G7 summit in Davos in January, he said: “Homes are built for people, not for corporations, and America will not become a nation of renters.” The same day, he signed an executive order called Stopping Wall Street from Competing with Main Street Homebuyers, with several provisions.

The executive order directs federal agencies and government-sponsored enterprises to stop, to the extent legally allowed, approving, insuring, guaranteeing, securitising, facilitating or selling single-family homes to large institutional investors when those homes could otherwise be bought by private owners or occupants.