Many people assume that the world’s most expensive housing markets are located in developed countries such as the United States, Canada, Australia, or the United Kingdom, where cities like New York, Sydney, and London are known for soaring property prices.
However, a recent study highlighted by The Economist suggests that some of the most unaffordable housing markets relative to income are actually found in emerging and developing economies across Asia.
According to the report, titled “The World’s Most Unaffordable Housing Is Not Where You Think,” the gap between housing prices and average household incomes has made home ownership increasingly difficult in several Asian countries. Sri Lanka has reportedly been ranked among the region’s least affordable housing markets, with only Manila in the Philippines recording a more severe affordability challenge.
Analysts attribute the situation to several factors. One of the primary reasons is the widening gap between income levels and property prices. While housing prices in many Western countries are high, average incomes are also comparatively higher. In contrast, property prices in Colombo and other urban centres have risen sharply despite relatively modest wage growth.
Rapid urbanisation has also contributed to the problem. As more people migrate to major cities in search of employment, education, and better living conditions, demand for housing has increased significantly.
Another major concern is the shortage of affordable housing for middle- and lower-income families. Many new residential developments are focused on luxury apartments and high-end housing projects aimed at affluent buyers and investors, leaving limited options for ordinary home seekers.
Sri Lanka’s recent economic challenges have further intensified the situation. Rising construction costs, inflation, and higher interest rates on housing loans have made it increasingly difficult for average-income earners to build or purchase homes.
The report notes that housing affordability has become one of the most pressing social and economic issues facing many Asian cities today.
It also warns that unless governments introduce effective housing policies, expand affordable housing programmes, and provide greater access to concessionary financing, urban inequality and housing-related pressures are likely to increase in the years ahead.
