OECD urban policy head: put affordable city housing first

What are the most pressing urban policy trends you’re seeing among OECD countries?

The biggest challenge is to provide affordable living space in cities. We’ve been looking at the connection between the rules that govern planning and land use in cities, and then the outcome with respect to housing. It’s very important to have regulation, but a lot of it is currently [misguided].

There’s a global trend of rising house prices, and in a lot of OECD countries prices have more than doubled since 2000. In bigger, more dynamic cities, prices have been even higher. This can be explained, most significantly, by the fact that not enough houses get built due to preventative regulations in fast-growing cities. Ever more people are [moving] to attractive cities, and housing construction is lagging.

This problem is apparent around the globe. There might be good intentions for such regulations, but the impact has not been thoroughly thought through. 

Greenfield FDI into European real estate hit a record high in 2017, why?

European economies are picking up, hence this new optimism. It’s also a response to house prices in cities rising strongly, so finally the supply response is materialising. It will take some years to build the number of houses that are required, given the demand that is there.

On the less positive side, we’re also seeing that lots of this new supply comes in greenfield FDI, whereas we would like to see more brownfield projects and, therefore, a certain amount of densification taking place. We’re not advocating maximum density, but livable densities that enable public transport to work, and this is still not the case in certain OECD cities.

Those urban fringes that, historically, used to be villages are now in central locations, but the density of those areas often hasn’t developed [proportionately] because of regulation, and are therefore inadequate. The fact that there’s so much greenfield investment attests that there’s not enough brownfield projects due to regulatory challenges.

What are the dangers of urbanisation?

People over the last decades have increasingly moved into cities. The problem is when you have badly managed urbanisation. Cities need the right infrastructure – without it you have very negative effects. Traffic congestion levels and slums are a good indication of this.

Historically, those countries that feared urbanisation for political reasons did not prepare for it but are now dealing with the negative effects; it was a self-fulfilling problem. Countries really need to think to allow their cities to become the liveable, sustainable and carbon-friendly places we want them to be.

Are mega cities making enough progress to go ‘green’?

A lot of cities are making very serious efforts in this direction. On the other hand, there a strong degree of economic growth is the developing world. As people get richer, consumption levels – and therefore pollution levels – increase. Carbon emissions increase the more the world moves out of poverty, so it’s really important that everybody in all countries does what needs to be done to achieve the targets fixed at the Paris climate accords.