About 40% of the world’s population, nearly 3.4 billion people, are affected by a housing crisis that includes affordability, shortages and poor quality of housing, as well as poor access to clean water and sanitation, a UN report released on Tuesday.
As cities are expected to accommodate an additional two billion people by 2050, the World Cities Report 2026, released by UN-Habitat at the World Urban Forum in Baku, Azerbaijan, highlighted the intense pressure on housing, which is already under pressure from urbanization, rising land prices, widening inequality and climate change.
The report indicates that housing prices have risen faster than income globally.
Price-to-income ratios rose from 9.3 in 2010 to 11.2 in 2023, reaching 16.8 in Central and South Asia, including India. Rental affordability is also deteriorating, with 44% of households worldwide spending more than 30% of their income on housing.
Citing reports by real estate consultancy Knight Frank and real estate services provider Magic Bricks, the UN report noted that the affordable housing segment in India’s eight largest cities has declined from 52% of new construction in 2018 to just 17% in 2025. This is due to developers prioritizing mid-range and high-end units where profit margins are higher.
The price-to-income ratio in Mumbai and Delhi is 14.3 and 10.1, making home ownership unaffordable for middle-income families. Only a small number of people have access to formal mortgage financing, preventing families from buying homes or relying on savings, informal borrowing or extended family networks.
The scale of displacement is very large
Citing data from the Global Homelessness Institute, the report highlighted homelessness rates of 21 per 10,000 people in China, 13 per 10,000 in India, 20 per 10,000 in the United States, and 11 per 10,000 in Brazil.
Climate change: a looming threat
The report indicates that in 2023 alone, natural disasters caused global economic losses worth $280 billion, most of which were uninsured.
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By 2040, climate shocks could destroy 167 million homes.
However, the housing sector has great economic potential.
And in India additionally $100,000 residential construction demands generate an estimated 2.61 new informal jobs and 0.04 formal jobs, rising to 4.06 jobs (3.95 informal and 0.11 formal jobs) when induced effects are added. This is much higher than in the United States, where construction of a typical single-family home is estimated to support 2.9 jobs, while an average rental apartment generates 1.25 jobs.
The report also highlighted that while many parts of the world suffer from high or rising construction costs, costs per square meter in India and China are lower, due to economies of scale, compared to Chad, Zambia or Ghana, where construction industries and supply chains are less developed.
There are also indirect impacts through supply chains that provide materials, services and intermediate inputs. And the effects resulting from the re-expenditure of income resulting from direct and indirect activities. In South Asia, for example, every US$1 spent in the housing sector can generate up to US$5 in income.
The report stressed the need for the state to provide affordable housing for all.
During the COVID-19 pandemic, India, Australia, Canada, France and New Zealand have implemented housing-focused initiatives as part of their fiscal responses.
According to the report, in India, the national Pradhan Mantri Awas Yojana (PMAY) program expanded subsidized housing from 0.3% of households in 2010 to 7% in 2023, highlighting supply-side measures mainly beneficiary-led construction and affordable rental housing scheme, while sanctioning 12 million homes.
The Ahmedabad Slum Networking Project was an effective demand-side measure, demonstrating how microfinance contributions and on-site upgrading can enhance ownership and reduce the need for public subsidies.
“A new social contract is needed for adequate and affordable housing – a sense of shared responsibility between governments, the private sector and local communities to mobilize investment and align the social and economic functions of housing,” said Annaclaudia Rosbach, Executive Director of UN-Habitat.
Commenting on the findings, Parul Agarwala, former country program director at UN-Habitat in India, said the report makes a good case for several measures yet to be tested in India, such as pay-as-you-go, rent-to-buy, community cost-sharing, non-profit affordable rent, and others, to move from informal to formal housing. Policymakers and practitioners in India must recognize the importance of community-based institutions that support housing provision, which may lack scale but have the potential to help bridge the growing housing gap, she said.
