The Global Housing Crisis — End of Affordability

Relevance: GS Paper II — Governance, Urbanisation; GS Paper III — Indian Economy

Source: UN-Habitat, 13th World Urban Forum, Baku, 2026

1 · Context

The United Nations Human Settlements Programme (UN-Habitat) has flagged a worsening housing crisis at the 13th World Urban Forum in Baku. About 3.4 billion people — four in ten globally — lack adequate housing, with over one billion in slums and informal settlements — the highest figure ever recorded.

2 · Affordability at a glance

GLOBAL BENCHMARKS & INDIA’S MARKET SHIFT

House Price-to-Income (P/I) Ratio — UN-Habitat benchmark

Affordable · ≤ 3

Stress · 3 – 5

Severely unaffordable · > 5

‘Stress-burdened’ household = more than 30% of budget on housing. Globally, 44% of households cross this threshold.

India’s top 8 cities — share of affordable units in new housing

2018 · > 50% Affordable housing constituted over half of all new units built.

2025 · < 20% Plummeted to fewer than two out of every ten units; developers chased luxury margins.

Price-to-income ratios in Central & Southern Asia surged 73% between 2010 and 2023.

3.4 billion lack adequate housing

1+ billion in slums (highest ever)

44% households stress-burdened

3 · Defining affordability

• Stress-burdened household: spends more than 30% of its budget on housing.
• House Price-to-Income (P/I) Ratio: ≤ 3 → affordable; > 5 → severely unaffordable.

4 · The Indian context

• 73% surge in P/I ratios across Central & Southern Asia (including India) between 2010 and 2023.
• Affordable units in top 8 cities: over 50% (2018) → under 20% (2025).
• ‘Financialisation’ of housing: homes treated as investment assets, not shelter — NRIs and domestic investors park wealth in luxury real estate.
• Spatial planning failure: over 50,000 government-built flats on Delhi’s outskirts lie unoccupied for want of livelihoods.

5 · Key institutions and schemes

• UN-Habitat: United Nations Human Settlements Programme; headquartered in Nairobi, Kenya.
• Pradhan Mantri Awas Yojana – Urban (PMAY-U): implemented by the Ministry of Housing and Urban Affairs (MoHUA); targets EWS, LIG and MIG categories.
• Real Estate (Regulation and Development) Act, 2016 (RERA): protects home-buyers, boosts transparency.
• AMRUT (Atal Mission for Rejuvenation and Urban Transformation): ensures urban infrastructure keeps pace with housing.

VALUE BOX · QUICK REVISION UN-Habitat HQ: Nairobi, Kenya. Report released at 13th World Urban Forum, Baku. Affordability metric: P/I ≤ 3 affordable · 3–5 stress · > 5 severely unaffordable. Stress-burdened: > 30% of budget on housing. Global figures: 3.4 billion lack adequate housing · 1+ billion in slums · 44% stress-burdened. India top 8 cities: affordable share fell from >50% (2018) to <20% (2025). Key schemes: PMAY-U & AMRUT (MoHUA) · RERA, 2016.

MCQ · PRELIMS PRACTICE

Consider the following statements regarding the global housing affordability framework:

1. UN-Habitat — the United Nations Human Settlements Programme — is headquartered in Nairobi, Kenya.
2. According to the UN-Habitat definition, housing is considered ‘affordable’ when the median house price is no more than five times the median household income, while a ratio above three indicates severe unaffordability.
3. The Pradhan Mantri Awas Yojana – Urban (PMAY-U) is implemented by the Ministry of Housing and Urban Affairs.

Which of the statements given above are correct?

(a) 1 and 2 only	(b) 2 and 3 only
(c) 1 and 3 only	(d) 1, 2 and 3

Answer: (c) 1 and 3 only

Statement 1 — Correct. UN-Habitat is headquartered in Nairobi, Kenya.

Statement 2 — Incorrect (the trap). The two thresholds are reversed. Housing is ‘affordable’ when the median price is no more than three times (not five) the median income, and a P/I ratio above five (not three) indicates severe unaffordability.

Statement 3 — Correct. PMAY-U is implemented by the Ministry of Housing and Urban Affairs (MoHUA) and targets the EWS, LIG and MIG categories.